CONVERTIBLE NOTE
Exhibit
4.7
THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 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 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO INNOVATIVE FOOD HOLDINGS, INC. THAT SUCH REGISTRATION IS
NOT
REQUIRED.
FOR
VALUE
RECEIVED, INNOVATIVE FOOD HOLDINGS, INC., a Florida corporation (hereinafter
called "Borrower"), hereby promises to pay to ___________, Fax: ( ) -
,
(the
"Holder") or its registered assigns or successors in interest or order, without
demand, the sum of Twenty-Five Thousand Dollars ($25,000.00) (“Principal
Amount”), with simple and unpaid interest thereon, on August 25, 2007 (the
"Maturity Date"), if not sooner paid.
This
Note
has been entered into pursuant to the terms of a subscription agreement between
the Borrower and the Holder, dated of even date herewith (the “Subscription
Agreement”), and shall be governed by the terms of such Subscription Agreement.
Unless otherwise separately defined herein, all capitalized terms used in
this
Note shall have the same meaning as is set forth in the Subscription Agreement.
The following terms shall apply to this Note:
ARTICLE
I
INTEREST;
AMORTIZATION
1.1. Interest
Rate.
Subject
to Section 5.7 hereof, interest payable on this Note shall accrue at a rate
per
annum (the "Interest Rate") of eight percent (8%). Interest on the Principal
Amount shall accrue from the date of this Note and shall be payable
semi-annually, in arrears, six months after the date of this Date and each
six
months thereafter and on the Maturity Date, whether by acceleration or
otherwise.
1.2. Minimum
Monthly Principal Payments.
Amortizing payments of the outstanding Principal Amount of this Note shall
commence on February 1, 2006 and on the first business day of each consecutive
calendar month thereafter (each a “Repayment Date”) until the Principal Amount
has been repaid in full, whether by the payment of cash or by the conversion
of
such principal into Common Stock pursuant to the terms hereof. Subject to
Section 2.1 and Article 3 below, on each Repayment Date, the Borrower shall
make
payments to the Holder in the amount of one-eighteenth (1/18th)
of the
initial Principal Amount (the "Monthly Principal Amount"), together with
any
other amounts, except for regular interest, which are then owing under this
Note
that have not been paid
(the
Monthly Principal Amount, together with such accrued and unpaid interest
and
such other amounts, collectively, the "Monthly Amount"). Amounts of conversions
of Principal Amount made by the Holder or Borrower pursuant to Section 2.1
or
Article III shall be applied to Monthly Amounts commencing with the Monthly
Amounts first payable and then Monthly Amounts thereafter in chronological
order. Any Principal Amount, interest and any other sum arising under the
Subscription Agreement that remains outstanding on the Maturity Date shall
be
due and payable on the Maturity Date.
THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 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 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO INNOVATIVE FOOD HOLDINGS, INC. THAT SUCH REGISTRATION IS
NOT
REQUIRED.
FOR
VALUE
RECEIVED, INNOVATIVE FOOD HOLDINGS, INC., a Florida corporation (hereinafter
called "Borrower"), hereby promises to pay to MOMONA CAPITAL, 0 Xxxxxx Xxxx,
Xxxxxx, Xxx Xxxx 00000, Fax: (000) 000-0000
(the
"Holder") or its registered assigns or successors in interest or order, without
demand, the sum of Twenty-Five Thousand Dollars ($25,000.00) (“Principal
Amount”), with simple and unpaid interest thereon, on August 25, 2007 (the
"Maturity Date"), if not sooner paid.
This
Note
has been entered into pursuant to the terms of a subscription agreement between
the Borrower and the Holder, dated of even date herewith (the “Subscription
Agreement”), and shall be governed by the terms of such Subscription Agreement.
Unless otherwise separately defined herein, all capitalized terms used in
this
Note shall have the same meaning as is set forth in the Subscription Agreement.
The following terms shall apply to this Note:
ARTICLE
I
INTEREST;
AMORTIZATION
1.1. Interest
Rate.
Subject
to Section 5.7 hereof, interest payable on this Note shall accrue at a rate
per
annum (the "Interest Rate") of eight percent (8%). Interest on the Principal
Amount shall accrue from the date of this Note and shall be payable
semi-annually, in arrears, six months after the date of this Date and each
six
months thereafter and on the Maturity Date, whether by acceleration or
otherwise.
1.2. Minimum
Monthly Principal Payments.
Amortizing payments of the outstanding Principal Amount of this Note shall
commence on February 1, 2006 and on the first business day of each consecutive
calendar month thereafter (each a “Repayment Date”) until the Principal Amount
has been repaid in full, whether by the payment of cash or by the conversion
of
such principal into Common Stock pursuant to the terms hereof. Subject to
Section 2.1 and Article 3 below, on each Repayment Date, the Borrower shall
make
payments to the Holder in the amount of one-eighteenth (1/18th)
of the
initial Principal Amount (the "Monthly Principal Amount"), together with
any
other amounts, except for regular interest, which are then owing under this
Note
that have not been paid
(the
Monthly Principal Amount, together with such accrued and unpaid interest
and
such other amounts, collectively, the "Monthly Amount"). Amounts of conversions
of Principal Amount made by the Holder or Borrower pursuant to Section 2.1
or
Article III shall be applied to Monthly Amounts commencing with the Monthly
Amounts first payable and then Monthly Amounts thereafter in chronological
order. Any Principal Amount, interest and any other sum arising under the
Subscription Agreement that remains outstanding on the Maturity Date shall
be
due and payable on the Maturity Date.
THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 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 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO INNOVATIVE FOOD HOLDINGS, INC. THAT SUCH REGISTRATION IS
NOT
REQUIRED.
FOR
VALUE
RECEIVED, INNOVATIVE FOOD HOLDINGS, INC., a Florida corporation (hereinafter
called "Borrower"), hereby promises to pay to LANE VENTURES, INC., 000 Xxxx
Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, Fax: (000) 000-0000
(the
"Holder") or its registered assigns or successors in interest or order, without
demand, the sum of Ten Thousand Dollars ($10,000.00) (“Principal Amount”), with
simple and unpaid interest thereon, on August 25, 2007 (the "Maturity Date"),
if
not sooner paid.
This
Note
has been entered into pursuant to the terms of a subscription agreement between
the Borrower and the Holder, dated of even date herewith (the “Subscription
Agreement”), and shall be governed by the terms of such Subscription Agreement.
Unless otherwise separately defined herein, all capitalized terms used in
this
Note shall have the same meaning as is set forth in the Subscription Agreement.
The following terms shall apply to this Note:
ARTICLE
I
INTEREST;
AMORTIZATION
1.1. Interest
Rate.
Subject
to Section 5.7 hereof, interest payable on this Note shall accrue at a rate
per
annum (the "Interest Rate") of eight percent (8%). Interest on the Principal
Amount shall accrue from the date of this Note and shall be payable
semi-annually, in arrears, six months after the date of this Date and each
six
months thereafter and on the Maturity Date, whether by acceleration or
otherwise.
1.2. Minimum
Monthly Principal Payments.
Amortizing payments of the outstanding Principal Amount of this Note shall
commence on February 1, 2006 and on the first business day of each consecutive
calendar month thereafter (each a “Repayment Date”) until the Principal Amount
has been repaid in full, whether by the payment of cash or by the conversion
of
such principal into Common Stock pursuant to the terms hereof. Subject to
Section 2.1 and Article 3 below, on each Repayment Date, the Borrower shall
make
payments to the Holder in the amount of one-eighteenth (1/18th)
of the
initial Principal Amount (the "Monthly Principal Amount"), together with
any
other amounts, except for regular interest, which are then owing under this
Note
that have not been paid
(the
Monthly Principal Amount, together with such accrued and unpaid interest
and
such other amounts, collectively, the "Monthly Amount"). Amounts of conversions
of Principal Amount made by the Holder or Borrower pursuant to Section 2.1
or
Article III shall be applied to Monthly Amounts commencing with the Monthly
Amounts first payable and then Monthly Amounts thereafter in chronological
order. Any Principal Amount, interest and any other sum arising under the
Subscription Agreement that remains outstanding on the Maturity Date shall
be
due and payable on the Maturity Date.
1.3. Default
Interest Rate.
Following the occurrence and during the continuance of an Event of Default,
which, if susceptible to cure is not cured within twenty (20) days, otherwise
then from the first date of such occurrence, the annual interest rate on
this
Note shall (subject to Section 6.7) automatically be increased to fifteen
percent (15%), and all outstanding obligations under this Note, including
unpaid
interest, shall continue to accrue interest from the date of such Event of
Default at such interest rate applicable to such obligations until such Event
of
Default is cured or waived.
ARTICLE
II
CONVERSION
REPAYMENT
2.1. (a) Payment
of Monthly Amount in Cash or Common Stock.
Subject to Section 3.2 hereof, the Borrower, at the Borrower’s election, shall
pay the Monthly Amount (i) in cash within three (3) business days after the
applicable Repayment Date, or (ii) in registered, unlegended, free-trading
Common Stock at an applied conversion rate equal to the lesser of (a) the
Conversion Price, or (b) eighty-five percent (85%) of the average of the
five
(5) closing bid prices of the Common Stock as reported by Bloomberg L.P.
for the
five (5) trading days preceding such Repayment Date. Such shares of Common
Stock
must be delivered to the Holder not later than three (3) business days of
the
applicable Repayment Date. Whichever of the Pink Sheets, NASD, OTC Bulletin
Board, NASDAQ SmallCap Market, NASDAQ National Market System, American Stock
Exchange, or New York Stock Exchange or such other principal market or exchange
where the Common Stock is listed or traded is the principal trading exchange
or
market for the Common Stock is the Principal Market. The Borrower must send
notice to the Holder by confirmed telecopier not later than 3:00 PM, New
York
City time on each Repayment Date notifying Holder of Borrower’s election to pay
the Monthly Redemption Amount in cash or stock. The Notice must state the
amount
of cash and or stock to be paid and include supporting calculations. Elections
by the Borrower must be made to all Holders of Notes similar to this Note
in
proportion to the relative Note principal held by such Note Holders. If such
notice is not timely sent or if the Monthly Redemption Amount is not timely
delivered, then Holder shall have the right, instead of the Company, to elect
within five trading days after the later of the applicable Repayment Date
or
required delivery date, as the case may be, whether to be paid in cash or
Common
Stock. Such Holder’s election shall not be construed to be a waiver of any
default by Borrower relating to non-timely compliance by Borrower with any
of
its obligations under this Note.
(b) Application
of Conversion Amounts.
Any
amounts paid or converted by the Borrower pursuant to Section 2.1(b) shall
be
deemed to constitute payments of and applied (i) first, against outstanding
fees, (ii) second, against accrued interest on the Principal Amount, and
(iii)
third, against the Principal Amount.
2.2. No
Effective Registration.
Notwithstanding anything to the contrary herein, no amount payable hereunder
may
be
paid in
shares
of Common
Stock by
the Borrower without the Holder’s consent unless (a) either (i) an effective
current Registration Statement covering the shares of Common Stock to be
issued
in satisfaction of such obligations exists, or (ii) an exemption from
registration of the Common Stock is available pursuant to Rule 144(k) of
the
Securities Act, and (b) no Event of Default hereunder exists and is continuing,
unless such Event of Default is cured within any applicable cure period or
is
otherwise waived in writing by the Holder in whole or in part at the Holder's
option.
ARTICLE
III
CONVERSION
RIGHTS
3.1. Holder's
Conversion Rights.
Subject
to Section 3.2 and the mandatory conversion provisions therein, the Holder
shall
have the right, but not the obligation, to convert all or any portion of
the
then aggregate outstanding Principal Amount of this Note, together with interest
and fees due hereon, and any sum arising under the Subscription Agreement
and
the Transaction Documents, including but not limited to Liquidated Damages,
into
shares of Common Stock, subject to the terms and conditions set forth in
this
Article III at the rate of $0.005 per share of Common Stock (“Fixed Conversion
Price” as same may be adjusted pursuant to this Note and the Subscription
Agreement. The Holder may exercise such right by delivery to the Borrower
of a
written Notice of Conversion pursuant to Section 3.3.
3.2. Conversion
Limitation.
Notwithstanding anything contained herein to the contrary, the Holder shall
not
be entitled to convert pursuant to the terms of this Note nor may this Note
be
converted in whole or in part into an amount of Common Stock that would be
convertible into that number of Common Stock which would exceed the difference
between the number of shares of Common Stock beneficially owned by such Holder
and 4.99% of the outstanding shares of Common Stock. For the purposes of
the
immediately preceding sentence, beneficial ownership shall be determined
in
accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
thereunder. The foregoing limitation shall be calculated as of each Conversion
Date. Aggregate
conversions over time shall not be limited to 4.99%. The Holder may waive
the
Conversion Share limitation described in this Section 3.2, in whole or in
part,
upon 61 days prior notice to the Borrower. The Holder may allocate which
of the
equity of the Borrower deemed beneficially owned by the Holder shall be included
in the 4.99% amount described above and which shall be allocated to the excess
above 4.99%.
3.3. Mechanics
of Holder's Conversion.
(a) In
the
event that the Holder elects to convert any amounts outstanding under this
Note
into Common Stock, the Holder shall give notice of such election by delivering
an executed and completed notice of conversion (a "Notice of Conversion")
to the
Borrower, which Notice of Conversion shall provide a breakdown in reasonable
detail of the Principal Amount, accrued interest and amounts being converted.
The original Note is not
required
to be surrendered to the Borrower
until
all sums due under the Note have been paid. On each Conversion Date (as
hereinafter defined) and in accordance with its Notice of Conversion, the
Holder
shall make the appropriate reduction to the Principal Amount, accrued interest
and fees as entered in its records and shall provide written notice thereof
to
the Borrower within three (3) business days after the Conversion Date. Each
date
on which a Notice of Conversion is delivered or telecopied to the Borrower
in
accordance with the provisions hereof shall be deemed a "Conversion Date."
A
form of Notice of Conversion
to be employed by the Holder is annexed hereto as Exhibit A.
(b) Pursuant
to the terms of a Notice of Conversion, the Borrower will issue instructions
to
the transfer agent accompanied by an opinion of counsel, if so required by
the
Borrower's transfer agent, within two
(2)
business days
after
the date of the delivery to Borrower of the Notice of Conversion and shall
cause
the transfer agent to transmit the certificates representing the Conversion
Shares to the Holder by crediting the account of the Holder's designated
broker
with the Depository Trust Corporation ("DTC") through its Deposit Withdrawal
Agent Commission ("DWAC") system within three (3) business days after receipt
by
the Borrower of the Notice of Conversion (the "Delivery Date"). In the case
of
the exercise of the conversion rights set forth herein the conversion privilege
shall be deemed to have been exercised and the Conversion Shares issuable
upon
such conversion shall be deemed to have been issued upon the date of receipt
by
the Borrower of the Notice of Conversion. The Holder shall be treated for
all
purposes as the record holder of such shares of Common Stock, unless the
Holder
provides the Borrower written instructions to the contrary. Notwithstanding
the foregoing to the contrary, the Borrower or its transfer agent shall only
be
obligated to issue and deliver the shares to the DTC on the Holder’s behalf via
DWAC (or certificates free of restrictive legends) if the registration statement
providing for the resale of the shares of Common Stock issuable upon the
conversion of this Note is effective and the Holder has complied with all
applicable securities laws in connection with the sale of the Common Stock,
including, without limitation, the prospectus delivery requirements. In the
event that Conversion Shares cannot be delivered to the Holder via DWAC,
the
Borrower shall deliver physical certificates representing the Conversion
Shares
by the Delivery Date.
3.4. Conversion
Mechanics.
(a) The
number of shares of Common Stock to be issued upon each conversion of this
Note
pursuant to this Article III shall be determined by dividing that portion
of the
Principal Amount and interest and fees to be converted, if any, by the then
applicable Fixed Conversion Price.
(b) The
Fixed
Conversion Price and number and kind of shares or other securities to be
issued
upon conversion shall be subject to adjustment from time to time upon the
happening of certain events while this conversion right remains outstanding,
as
follows:
A. Merger,
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
an adjusted number of such securities and kind of securities as would have
been
issuable as 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. So long as this Note is outstanding, if the Borrower shall issue
any
Common Stock except for the Excepted Issuances (as defined in the Subscription
Agreement), prior to the complete conversion of this Note for a consideration
less than the Fixed Conversion Price that would be in effect at the time
of such
issue, then, and thereafter successively upon each such issuance, the Fixed
Conversion Price shall be reduced to such other lower issue price. For purposes
of this adjustment, the issuance of any security or debt instrument of the
Borrower carrying the right to convert such security or debt instrument into
Common Stock or of any warrant, right or option to purchase Common Stock
shall
result in an adjustment to the Fixed Conversion Price upon the issuance of
the
above-described security, debt instrument, warrant, right, or option and
again
upon the issuance of shares of Common Stock upon exercise of such conversion
or
purchase rights if such issuance is at a price lower than the then applicable
Conversion Price. The reduction of the Fixed Conversion Price described in
this
paragraph is in addition to the other rights of the Holder described in the
Subscription Agreement.
(c) Whenever
the Conversion Price is adjusted pursuant to Section 3.4(b) above, the Borrower
shall promptly mail to the Holder a notice setting forth the Conversion Price
after such adjustment and setting forth a statement of the facts requiring
such
adjustment.
3.5. Reservation.
During
the period the conversion right exists, Borrower will reserve from its
authorized and unissued Common Stock not less than
one
hundred
fifty percent
(150%)
of the
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. Borrower 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.
3.6 Issuance
of Replacement Note.
Upon
any partial conversion of this Note, a replacement Note containing the same
date
and provisions of this Note shall,
at the
written request of the Holder, be
issued
by the Borrower to the Holder for the outstanding Principal Amount of this
Note
and accrued interest which shall not have been converted or paid, provided
Holder has surrendered an original Note to the Company. In the event that
the
Holder elects not to surrender a Note for reissuance upon partial payment
or
conversion, the Holder hereby indemnifies the Borrower against any and all
loss
or damage attributable to a third-party claim in an amount in excess of the
actual amount then due under the Note.
ARTICLE
IV
SECURITY
INTEREST
4. Security
Interest/Waiver of Automatic Stay.
This
Note is secured by a security interest granted to the Collateral Agent for
the
benefit of the Holder pursuant to a Security Agreement, as delivered by Borrower
to Holder. The Borrower acknowledges and agrees that should a proceeding
under
any bankruptcy or insolvency law be commenced by or against the Borrower,
or if
any of the Collateral (as defined in the Security Agreement) should become
the
subject of any bankruptcy or insolvency proceeding, then the Holder should
be
entitled to, among other relief to which the Holder may be entitled under
the
Transaction Documents and any other agreement to which the Borrower and Holder
are parties (collectively, "Loan Documents") and/or applicable law, an order
from the court granting immediate relief from the automatic stay pursuant
to 11
U.S.C. Section 362 to permit the Holder to exercise all of its rights and
remedies pursuant to the Loan Documents and/or applicable law. THE BORROWER
EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION
362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER
11
U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER
STATUTE
OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY,
INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER
TO
ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
APPLICABLE LAW. The Borrower hereby consents to any motion for relief from
stay
that may be filed by the Holder in any bankruptcy or insolvency proceeding
initiated by or against the Borrower and, further, agrees not to file any
opposition to any motion for relief from stay filed by the Holder. The Borrower
represents, acknowledges and agrees that this provision is a specific and
material aspect of the Loan Documents, and that the Holder would not agree
to
the terms of the Loan Documents if this waiver were not a part of this Note.
The
Borrower further represents, acknowledges and agrees that this waiver is
knowingly, intelligently and voluntarily made, that neither the Holder nor
any
person acting on behalf of the Holder has made any representations to induce
this waiver, that the Borrower has been represented (or has had the opportunity
to he represented) in the signing of this Note and the Loan Documents and
in the
making of this waiver by independent legal counsel selected by the Borrower
and
that the Borrower has discussed this waiver with counsel.
ARTICLE
V
EVENTS
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 amounts payable hereunder immediately
due
and payable, upon demand, without presentment, or grace period, all of which
hereby are expressly waived, except as set forth below:
5.1 Failure
to Pay Principal or Interest.
The
Borrower fails to pay any installment of Principal Amount, interest or other
sum
due under this Note or any Transaction Document when due and such failure
continues for a period of five (5) business days after the due
date.
5.2 Breach
of Covenant.
The
Borrower breaches any material covenant or other term or condition of the
Subscription Agreement, this Note or Transaction Document in any material
respect and such breach, if subject to cure, continues for a period of ten
(10)
business days after written notice to the Borrower from the Holder.
5.3 Breach
of Representations and Warranties.
Any
material representation or warranty of the Borrower made herein, in the
Subscription Agreement, Transaction Document or in any agreement, statement
or
certificate given in writing pursuant hereto or in connection herewith or
therewith shall be false or misleading in any material respect as of the
date
made and a Closing Date.
5.4 Receiver
or Trustee.
The
Borrower or any Subsidiary of Borrower shall make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver or
trustee for them or for a substantial part of their property or business;
or
such a receiver or trustee shall otherwise be appointed.
5.5 Judgments.
Any
money judgment, writ or similar final process shall be entered or filed against
Borrower or any subsidiary of Borrower or any of their property or other
assets
for more than $50,000,
and
shall remain unvacated, unbonded or unstayed for a period of forty-five (45)
days.
5.6 Non-Payment.
A
default by the Borrower under any one or more obligations in an aggregate
monetary amount in excess of $50,000
for more
than twenty
(20)
days after the due date.
5.7 Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings or relief under any bankruptcy law or any law, or the issuance
of
any notice in relation to such event, for the relief of debtors shall be
instituted by or against the Borrower or any Subsidiary of Borrower and if
instituted against them are not dismissed within forty-five (45)
days of
initiation.
5.8 Delisting.
Delisting of the Common Stock from the OTC Bulletin Board (“Bulletin Board”) or
such other principal exchange on which the Common Stock is listed for trading;
failure to comply with the requirements for continued listing on the Bulletin
Board for a period of seven consecutive trading days; or notification from
the
Bulletin Board or any Principal Market that the Borrower is not in compliance
with the conditions for such continued listing on the Bulletin Board or other
Principal Market.
5.9 Failure
to Obtain Bulletin Board Listing.
Failure
of the Company to file a form 15c2-11 within 65 days of the Closing Date
and
failure to obtain a listing of its Common Stock on the Bulletin Board within
93
days of the Closing Date.
5.10 Stop
Trade.
An SEC
or judicial stop trade order or Principal Market trading suspension with
respect
to Borrower’s Common Stock that lasts for five or more consecutive trading
days.
5.11 Failure
to Deliver Common Stock or Replacement Note.
Borrower's failure to timely deliver Common Stock to the Holder pursuant
to and
in the form required by this Note or the Subscription Agreement, and, if
requested by Borrower, a replacement Note.
5.12 Non-Registration
Event.
The
occurrence of a Non-Registration Event as described in the Subscription
Agreement.
5.13 Reverse
Splits.
The
Borrower effectuates a reverse split of its Common Stock without the prior
written consent of the Holder.
5.14 Cross
Default.
A
default by the Borrower of a material term, covenant, warranty or undertaking
of
any Transaction Document or other agreement to which the Borrower and Holder
are
parties, or the occurrence of a material event of default under any such
other
agreement which is not cured after any required notice and/or cure
period.
ARTICLE
VI
MISCELLANEOUS
6.1 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.
6.2 Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or
the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Borrower to: Innovative
Food Holdings, Inc., 0000 Xxxxx Xxxxxx Xxx, Xxxxx #0, Xxxxxx, XX 00000, Attn:
Xxx Xxxxxxxx, CEO & President, telecopier number: (000) 000-0000, with an
additional copy by telecopier only to: Xxxxxx Xxxxxxxxx, Esq., Feder, Kaszovitz,
Isaacson, Weber, Xxxxx, Bass & Rhine LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX
00000-0000, telecopier number: (000) 000-0000, and (ii) if to the Holder,
to the
name, address and telecopy number set forth on the front page of this Note,
with
a copy by telecopier
only to
Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx
00000, telecopier number: (000) 000-0000.
6.3 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.
6.4 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.
6.5 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.
6.6 Governing
Law.
This
Note
shall be governed by and construed in accordance with the laws of the State
of
New York, without regard to conflicts
of laws
principles that would result in the application of the substantive laws of
another jurisdiction. 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. Both parties
and
the individual signing this Note 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. In the event
that
any provision of this Note is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to
the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid
or
unenforceable under any law shall not affect the validity or unenforceability
of
any other provision of this Note. Nothing contained herein shall be deemed
or
operate to preclude the Holder from bringing suit or taking other legal action
against the Borrower in any other jurisdiction to collect on the Borrower's
obligations to Holder, to realize on any collateral or any other security
for
such obligations, or to enforce a judgment or other court in favor of the
Holder.
6.7 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.
6.8. Construction.
Each
party acknowledges that its legal counsel participated in the preparation
of
this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Note to favor any party
against
the other.
6.9 Redemption.
This
Note may not be redeemed or called without the consent of the Holder except
as
described in this Note.
6.10 Shareholder
Status.
The
Holder shall not have rights as a shareholder of the Borrower with respect
to
unconverted portions of this Note. However, the Holder will have the rights
of a
shareholder of the Borrower with respect to the Shares of Common Stock to
be
received after delivery by the Holder of a Conversion Notice to the
Borrower.
IN
WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by an authorized officer
as of the ____ day of August, 2005.
INNOVATIVE
FOOD HOLDINGS, INC.
By:________________________________
Name:
Xxxxxxxx Xxxxxxxx
Title:
President
WITNESS:
______________________________________
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 Innovative Food Holdings, Inc.
on
August 25, 2005 into Shares of Common Stock of Innovative Food Holdings,
Inc.
(the "Borrower") according to the conditions set forth in such Note, as of
the
date written below.
Date
of
Conversion:____________________________________________________________________
Conversion
Price:______________________________________________________________________
Number
of
Shares of Common Stock Beneficially Owned on the Conversion Date:
Less
than 5% of the outstanding Common Stock of Innovative Food Holdings,
Inc.
Shares
To
Be
Delivered:_________________________________________________________________
Signature:___________________________________________________________________________
Print
Name:__________________________________________________________________________
Address:____________________________________________________________________________
____________________________________________________________________________
