NUMBER 00-10- $10,000.00
UNITED STATES OF AMERICA
STATE OF NEVADA
CAVALCADE OF SPORTS MEDIA, INC.
2000 CONVERTIBLE SUBORDINATED CAPITAL NOTE
CAVALCADE OF SPORTS MEDIA, INC., a Nevada corporation, (hereinafter
called the "COMPANY"), for value received, hereby promises to pay to:
Name:_________________________________________________________________________
Address_______________________________________________________________________
or registered assigns, in legal tender of the United States of America, the
principal sum of Ten Thousand Dollars ($10,000.00), with interest at the rate of
twelve percent (12%) calculated from the date of issuance of this Capital Note
to the earlier of maturity or payment in full if paid before maturity. Unless
this Capital Note has been converted, as provided below, the principal sum
remaining and all accrued interest thereon shall be due and payable, in full, on
December 31, 2000. In the event that this note is not converted to Common Stock
of the COMPANY or paid on or before such date, then in that event interest shall
be accrued on the principal sum and all accrued but unpaid interest to December
31, 2000 at the rate of eighteen percent (18%) per annum calculated from January
1, 2001 to the date of payment in full.
All payments shall be paid to the registered owner of this Capital Note
as of the date of payment and no proration shall be required.
The indebtedness of the COMPANY evidenced by this Capital Note,
including the principal and any interest thereon, shall be subordinate and
junior in right of payment of its obligations to its other creditors, whether
now outstanding or hereafter incurred, (except as to any obligation of the
COMPANY ranking on a parity with or junior to this Capital Note) so that in case
of any insolvency proceedings, receivership, conservatorship, reorganization,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings relating to the COMPANY or any liquidation or winding-up of the
COMPANY, whether voluntary or involuntary, all such obligations (other than
those above excepted) shall be entitled to be paid in full before any
1
payment shall be made on account of the principal of, or interest on, this
Capital Note. In the event of any such proceeding, after payment in full of all
sums owing with respect of such prior obligations, the Holder of this Capital
Notes, together with the holders of any obligations of the COMPANY ranking on a
parity with this Capital Note, shall be entitled to be paid from the remaining
assets of the COMPANY the unpaid principal thereof and any interest thereon
before any payment or other distribution, whether in cash, property or
otherwise, shall be made on account of any capital stock of the COMPANY, or any
obligations of the COMPANY ranking junior to this Capital Note. Subject to the
payment in full of all such prior obligations, the Holder of this Capital Note
shall be subrogated to the rights of the holders of such prior obligations to
receive payments or distributions of cash, property or securities of the COMPANY
applicable to such prior obligations.
In the event that the COMPANY shall file a registration statement with
the Securities and Exchange Commission under the Securities Act of 1933 for the
registration of any securities, the COMPANY shall register sufficient shares of
its Common Stock to permit the conversion of this Capital Note to such
registered shares of Common Stock. The Holder of this Capital Note shall have
the right, for a period of thirty (30) business days following effectiveness of
any such registration statement, to convert the principal and accrued but unpaid
interest into shares of the COMPANY's Common Stock. The principal sum ($10,000)
of this Capital Note and the accrued but unpaid interest thereon shall be
convertible into Common Stock at a price of One Dollar and Twenty-five Cents
($1.25) per share. Upon any conversion of this Capital Note into Common Stock of
the COMPANY, this Capital Note shall be deemed retired and not to be outstanding
and shall not be entitled to any benefit except to receive the Common Stock
entitled to as a result of the conversion. Such conversion shall be subject to
anti-dilution protection in the event of a stock dividend, stock split, or other
restructuring of the capital structure.
Upon the occurrence and continuance of default, the principal of this
Capital Note may be declared due and payable prior to its regular maturity. The
COMPANY shall be in default under this INSTRUMENT upon the happening of any of
the following events or conditions: (a) Failure or omission(s) to pay, or other
delinquency in the payment of; any interest upon this Capital Note as and when
the same shall become due and payable, and continuance of such delinquency for a
period of thirty (30) days; or
(b) Failure or omission(s) to pay, or other default in the payment of
the principal of this Capital Note as and when the same shall become due and
payable either upon redemption, by declaration or otherwise; or
2
(c) If the COMPANY becomes insolvent or unable to pay its debts as they
mature or makes an assignment for the benefit of its creditors, or a proceeding
is instituted by or against the COMPANY alleging that the COMPANY is insolvent
or unable to pay its debts as they mature and such proceeding remains
undismissed for ninety (90) days; or
(d) Failure on the part of the COMPANY duly to observe or perform any
of the covenants or agreements on the part of the COMPANY contained in this
Capital Note for a period of ninety (90) days after the date on which the
earliest written notice of such failure, requiring the COMPANY to remedy the
same, shall have been given to the COMPANY by the Holder; or
(e) If the COMPANY shall, on a petition in bankruptcy or reorganization
filed against it, be adjudicated a bankrupt, or if a court of competent
jurisdiction shall enter an order or decree appointing, without the consent of
the COMPANY, a receiver of the COMPANY or of the whole or substantially all of
its property, or approving a petition filed against it seeking reorganization or
arrangement of the COMPANY under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state thereof,
and such adjudication, order, or decree shall not be vacated or set aside or
stayed within ninety (90) days from the date of the entry thereof. If the
COMPANY shall default, as defined herein, then and in each and every such case,
unless the principal of this Capital Note shall have already become due and
payable, the Holder, by notice in writing to the COMPANY, may declare the
principal of this Capital Note to be due and payable immediately, and upon such
declaration the same shall become and shall be immediately due and payable,
anything in this Capital Note contained to the contrary notwithstanding.
This Capital Note is subject to call and redemption at any time prior
to its regular maturity upon payment of the principal amount of this Capital
Note, without a redemption premium or prepayment penalty.
Subject to the transfer restrictions of federal and state securities
laws, this Capital Note is transferable on the books of the Company, to be kept
at the office of the Company in Del Mar, California, by the registered owner
hereof in person, or by an attorney duly authorized in writing, upon surrender
and cancellation of this Capital Note. Upon any such transfer, a new registered
Capital Note or Capital Notes of the same issue and for the same aggregate
original face amount shall be issued to the transferee in exchange therefor;
provided, nevertheless, that the actual liability of the Company shall be
limited to the actual unpaid principal amount outstanding as of the date of
transfer, together with any accrued but unpaid interest thereon.
3
The Company may deem or treat the person in whose name this Capital
Note shall at the time be registered as the absolute owner hereof for the
purposes of transfer and receiving payment of principal and/or interest as well
as for all other purposes whatsoever and the Company shall not be affected by
any notice to the contrary.
IN WITNESS WHEREOF, the COMPANY has caused this Capital Note to be
executed by the signatures of its duly authorized officers, and the corporate
seal hereunto affixed.
Dated:
CAVALCADE OF SPORTS MEDIA, INC.
ATTEST:
/s/ Xxxxxx X. Xxxxxx
---------------------
Xxxxxx X. Xxxxxx, President
/s/ Xxxxxx Xxxxxxx
------------------
Secretary
TRANSFER RESTRICTION NOTICE
This Capital Note has not been registered under the Securities Act of
1933. Accordingly, this Capital Note may not be transferred unless subsequently
registered or unless, in the opinion of counsel satisfactory to the Company,
such registration is not required.
4
