Form of Note
Form
of Note
THIS NOTE
HAS NOT BEEN REGISTERED 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.
THIS NOTE
IS SUBJECT TO THE SECURITIES PURCHASE AGREEMENT DATED AS OF MARCH 13, 2009, BY
AND BETWEEN FREZER, INC. AND THE HOLDERS AS DEFINED BELOW (THE “SECURITIES
PURCHASE AGREEMENT”).
(A Nevada
Corporation)
15%
CONVERTIBLE NOTE
FOR VALUE RECEIVED, Frezer, Inc., a
Nevada corporation (the “Company”), hereby
unconditionally promises to pay to [
] (together with its registered
assigns, the “Holder”)
on the Maturity Date, as defined below, the principal sum of
_____________________(U.S.$_________), and to pay to the Holder interest on the
unpaid principal amount of this Note as provided in Article I
hereof. This is the Note referred to in the Securities Purchase
Agreement. Capitalized terms used but not otherwise defined herein
have the respective meanings given to such terms in the Securities Purchase
Agreement.
ARTICLE
I
PRINCIPAL
AND INTEREST
Section
1.1 Principal. Subject
to Section 6.1 herein,
the entire unpaid principal amount of this Note shall be paid on the Maturity
Date if pursuant to a notice from the Holder under Section 2.1 hereof, the
Holder elects to receive the Cash Repayment as defined
thereunder. Promptly following the payment in full of this Note, the
Holder shall surrender this Note to the Company for cancellation.
Section
1.2 Interest. Interest
shall accrue (on a compounded basis) on the daily unpaid principal amount of
this Note, for each day during the period from and including the date hereof
(the “Commencement
Date”) to but excluding the date such Note shall be paid in full, at a
rate of fifteen percent (15%) per annum (the “Interest Rate”) and shall be
payable on the Maturity Date, unless pursuant to a notice from the Holder under
Section 2.1 hereof, the Holder elects to receive the Share Repayment as defined
thereunder, in which case the interest under Section 1.2 shall be waived in its
entirety.
Section
1.3 Default
Interest. Without duplication of any interest payable under
Section 1.2 hereof, the
Company hereby unconditionally promises to pay to the Holder interest (computed
on a compounded basis) on any principal or interest payable by the Company under
this Note that shall not have been paid in full when due (whether at stated
maturity, by acceleration, upon prepayment or otherwise), for the period from
and including the due date of such payment to but excluding the date the same is
paid in full, at a rate per annum equal to the Interest Rate plus 5%, which
interest shall be payable from time to time on demand of the Holder in the event
there are defaults as set forth under Section 4.1.
ARTICLE
II
PAYMENTS
Section
2.1 Election of Payments and Payments
Generally. At least twenty (20) Business Days prior to the
Maturity Date, the Holder shall send the Company a notice which the Holder
elects, at Holder’s option, to convert the outstanding principal (excluding any
accrued interest) of this Note into the Company’s Common Stock (the “Share
Repayment”) or to receive cash repayment of the outstanding principal plus
accrued interest (the “Cash Repayment”). The Holder must choose either the Share
Repayment or the Cash Repayment and may not combine them in the notice to the
Company. If the Holder elects to receive the Cash Repayment, all payments of
principal and interest to be made by the Company in respect of this Note shall
be made in Dollars by delivery to the Holder, at the address the Holder provides
to the Company, not later than 12:00 noon New York time on the date on which
such payment shall be due. If the due date of any payment in respect
of this Note would otherwise fall on a day that is not a Business Day, such due
date shall be extended to the next succeeding Business Day, and interest shall
be payable on any principal so extended for the period of such
extension. All payments by the Company under this Note will be made
without setoff or counterclaim and free and clear of, and without deductions
for, any taxes, fees or other expenses or claims of any kind.
Section
2.2 Prepayments. This
Note may not be pre-paid by the Company.
ARTICLE
III
CONVERSION
OF NOTES
Section
3.1 Conversion of
Notes.
(a) Subject to and
in compliance with the provisions of this Note, the Holder shall have the right,
at the Holder's option, at any time prior to or on the close of business on the
Maturity Date to convert the principal amount of this Note only, without
any interest, into that number of fully paid and non-assessable shares at the
initial rate of one share for each $0.1597 of principal and interest, which may
be adjusted pursuant to Section 3.2 below (the “Conversion
Price”).
(b) In order to
exercise the conversion privilege with respect to this Note, the Holder shall
give a conversion notice (the “Conversion Notice”) in the
form attached hereto as Exhibit A (or such other notice which is acceptable
to the Company) to the Company. A Conversion Notice may be given by facsimile
transmission to the numbers set forth on the form of Conversion Notice. If
the conversion is to occur on the Maturity Date, the Conversion Notice shall be
sent to the Company at least twenty (20) Business Days in advance as set forth
under Section 2.1 hereof.
(c) As promptly as
practicable, but in no event later than 10 days (except for the conversion on
the Maturity Date, in which case the Company can issue shares in twenty (20)
Business Days after a Conversion Notice is given), after a Conversion Notice is
given, the Company shall issue and shall deliver to the Holder or the Holder's
designee the number of full shares issuable upon such conversion of this Note or
portion hereof in accordance with the provisions of this Article 3.
Section
3.2 Adjustment of Conversion
Price. The
Conversion Price shall be adjusted from time to time by the Company as
follows:
(i)
In case the
Company shall on or after the date hereof pay a dividend or make a distribution
to all holders of the outstanding shares in shares, the Conversion Price in
effect at the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a fraction
of which the numerator shall be the number of Shares outstanding at the close of
business on the record date fixed for such determination and the denominator
shall be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following such
record date. If any dividend or distribution of the type described in
this Section 3(d)(i) is declared, but not so paid or made, the Conversion Price
shall again be adjusted to the Conversion Price which would then be in effect if
such dividend or distribution had not been declared.
(ii) In
case the outstanding Shares shall on or after the issuance date be subdivided
into a greater number of Shares, the Conversion Price then in effect shall be
proportionately reduced, and conversely, in case outstanding Shares shall be
combined into a smaller number of Shares, the Conversion Price then in effect
shall be proportionately increased, such reduction or increase, as the case may
be, to become effective immediately after the day upon which such subdivision or
combination becomes effective.
(iii)
Whenever the Conversion Price is adjusted as herein provided, the Company shall
promptly, but in no event later than five days thereafter, give a notice to the
Holder setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. Failure to
deliver such notice shall not affect the legality or validity of any such
adjustment.
(e) Effect of
Conversion. The Company shall not be obligated to issue
certificates evidencing the Shares issuable on such conversion unless the Note
is either delivered to the Company or its transfer agent, or the Holder notifies
the Company or its transfer agent that such Note has been lost, stolen or
destroyed and executes an agreement satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection with such
Note. The Company shall, as soon as practicable after such delivery,
or such agreement and indemnification, issue and deliver to such Holder of such
Note, a certificate or certificates for the securities to which the Holder shall
be entitled. The Company shall not issue fractional shares but shall
round up the number of shares issued to the next whole number. Any
conversion effected in accordance with this Section 3 shall be binding upon the
Holder hereof.
ARTICLE
IV
EVENTS
OF DEFAULT
Section
4.1 Event of
Default. "Event of Default", wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental
body):
(a) default
in the payment of any interest in respect of this Note within ten (10) Business
Days following the Maturity Date, if the Holder elects to receive Cash
Repayment; or
(b) default
in the payment of the outstanding principal amount of this Note on the Maturity
Date, if the Holder elects to receive Cash Repayment; or
(c) a
default by the Company of any of its obligations under the Securities Purchase
Agreement; provided, however, that such default shall not constitute an Event of
Default until notice has been given by the Holder to the Company of the
occurrence of such event and such event shall have persisted for more than 10
business days following such notice; and provided further, any such event shall
not constitute an Event of Default unless such event, individually or in the
aggregate, shall have a Material Adverse Effect (after given effect to the
passage of any grace period thereunder); or
(d)
the entry of a decree or order by a court having
jurisdiction in the premises adjudging any of the Group Companies a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company under
Federal bankruptcy law or any other applicable Federal or state law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of the property of
the Company, or ordering the winding up or liquidation of the affairs of the
Company; or
(e)
the institution by any of the Group Companies of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by any of
the Group Companies to the institution of bankruptcy or insolvency proceedings
against it, or the filing by any of the Group Companies of a petition or answer
or consent seeking reorganization or relief under Federal bankruptcy law or any
other applicable Federal or state law, or the consent by the Company to the
filing of such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator or similar official of any of the Group
Companies or of any substantial part of the property of any of the Group
Companies, or the making by any of the Group Companies of an assignment for the
benefit of creditors, or the admission by any of the Group Companies in writing
of its inability to pay its debts generally as they become due, or the taking of
corporate action by any of the Group Companies in furtherance of any such
action.
(f)
the Company’s Common Stock is no longer quoted on
the OTC Bulletin Board or listed on an exchange within 12 months after the date
of this Note.
Section
4.2 Acceleration of
Note.
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(a)
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If
an Event of Default referenced in any of paragraphs (a), (b), (c) and (f)
of Section 4.1
occurs and is continuing, then in every such case the Holder may declare
the outstanding principal amount of this Note (including accrued interest
as provided in Section
1.2 and 1.3 hereof) to be due and payable immediately, by a notice
in writing to the Company, and upon any such declaration such principal
(including accrued interest as provided in Sections 1.2 and 1.3
hereof) shall become immediately due and
payable.
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(b)
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Notwithstanding
the foregoing, if an Event of Default referenced in paragraph (d) or
paragraph (e) of Section
4.1 occurs, the outstanding principal amount of this Note
(including accrued interest as provided in Sections 1.2 and 1.3
hereof) shall automatically become due and payable immediately without any
declaration or other action on the part of the
Holder.
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(c)
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Notwithstanding
the foregoing to the contrary, at any time after the outstanding principal
amount of this Note shall become immediately due and payable, the Holder,
by written notice to the Company, may rescind and annul any acceleration
and its consequences.
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ARTICLE
V
DEFINITIONS
Section
5.1 Definitions. The
following terms shall have the meanings set forth below:
“Business Day” means a day
other than Saturday, Sunday or any day on which banks located in the State of
New York are authorized or obligated to close.
“Default” means an event that,
with giving of written notice or passage of time or both, would constitute an
Event of Default.
“Dollars” and “$” means lawful money of the
United States of America.
“Event of Default” has the
meaning set forth under Section 4.1 of this Note.
“Material Adverse Effect”
means any material adverse effect on the business, operations,
properties, or financial condition of the Company, its subsidiaries and Dalian
Befut and/or any condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company to perform any of
its obligations under the Purchase Agreement in any material
respect.
“Maturity Date” shall mean
March 12, 2010.
“Maximum Rate” means the
highest non-usurious rate of interest (if any) permitted from day to day by
applicable law.
“Note” means this Note of the
Company issued to the Holder, as modified and supplemented and in effect from
time to time.
“Person” means any person or
entity of any nature whatsoever, specifically including an individual, a firm, a
company, a corporation, a partnership, a limited liability company, a trust or
other entity.
“Stock” means the $.001 par
value per share common stock of the Company.
ARTICLE
VI
Section
6.1 Usury
Laws. Regardless of any provision contained in this Note,
Holder shall never be deemed to have contracted for, or be entitled to receive,
collect, or apply as interest on this Note (whether termed interest herein or
deemed to be interest by judicial determination or operation of law) any amount
in excess of the Maximum Rate, and, in the event that Holder ever receives,
collects, or applies as interest any such excess, such amount which would be
excessive interest shall be applied to the reduction of the unpaid principal
balance of this Note, and, if the principal balance of this Note is paid in
full, then any remaining excess shall forthwith be paid to the Company. In
determining whether or not the interest paid or payable under any specific
contingency exceeds the highest Maximum Rate, the Company and Holder shall, to
the maximum extent permitted under applicable law, (a) characterize any
non-principal payment (other than payments which are expressly designated as
interest payments hereunder) as an expense or fee rather than as interest, (b)
exclude voluntary prepayments and the effect thereof, and (c) spread the total
amount of interest throughout the entire contemplated term of this Note so that
the interest rate is uniform throughout such term; provided, that if this Note
is paid and performed in full prior to the end of the full contemplated term
hereof, and if the interest received for the actual period of existence thereof
exceeds the Maximum Rate, if any, then Payee or any holder hereof shall refund
to the Company the amount of such excess, or credit the amount of such excess
against the aggregate unpaid principal balance of all advances made by the
Holder or any holder hereof under this Note at the time in
question.
ARTICLE
VI
MISCELLANEOUS
Section
7.1 Governing Law;
Jurisdiction. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the
conflicts of laws provisions thereof. The Company hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Courts of the State of New York in any action or proceeding
arising out of or relating to this Note, or for recognition or enforcement of
any judgment, and hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in the
State of New York. The Company hereby agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. The Company irrevocably consents to service of
process in the manner provided for notices below. Nothing in this
Agreement will affect the right of the Holder to serve process in any other
manner permitted by law.
Section
7.2 Successors. All
agreements of the Company in this Note shall bind its successors and permitted
assigns. This Note shall inure to the benefit of the Holder and its
permitted successors and assigns. The Company shall not delegate any
of its obligations hereunder without the prior written consent of
Holder.
Section
7.3 Amendment, Modification or
Waiver. No provision of this Note may be amended, modified or
waived except by an instrument in writing signed by the Company and the
Holder.
Section
7.4 Legend. This Note,
and any note issued in exchange or substitution for this Note, shall bear the
legend appearing on the first page hereof.
Section
7.5 Notices. All
notices and other communications in respect of this Note (including, without
limitation, any modifications of, or requests, waivers or consents under, this
Note) shall be given or made in writing (including, without limitation, by
telecopy) at the addresses specified in the Securities and Note Purchase
Agreement. Except as otherwise provided in this Note, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
Section
7.6 Delay or Omission Not
Waiver. No failure or delay on the part of the Holder 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 right, power or
privilege. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.
IN WITNESS WHEREOF, the Company has
caused this Note to be duly executed by an authorized officer thereof as of the
date and year first above written.
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By:
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Name:
Xxxxxx Xxx
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Title:
President and Chief Executive
Officer
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EXHIBIT
A
NOTICE
OF CONVERSION
(To be
executed by the Holder in order to Convert the Note)
The undersigned, the holder of the
below-referenced Note, hereby irrevocably elects to convert $ of the principal
amount of the Note (the “Note”) issued by Frezer, Inc. (the “Company”) into
shares of Common Stock of the Company according to the conditions set forth in
the Note and below.
Date of
Conversion: ___________________________________________________________________________________
Principal
Amount to be Converted:
_______________________________________________________________________
Applicable
Conversion
Price:___________________________________________________________________________
Signature:__________________________________________________________________________________________
[Name]
Address:___________________________________________________________________________________________
___________________________________________________________________________________________
