EXHIBIT 10.2
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
PRINCIPAL HEREOF OR INTEREST HEREON HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION
(TOGETHER, THE "SECURITIES LAWS") AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ENCUMBERED IN THE ABSENCE OF COMPLIANCE WITH SUCH
SECURITIES LAWS AND UNTIL THE ISSUER THEREOF SHALL HAVE RECEIVED AN OPINION FROM
COUNSEL ACCEPTABLE TO IT THAT THE PROPOSED DISPOSITION WILL NOT VIOLATE ANY
APPLICABLE SECURITIES LAWS.
CONVERTIBLE NOTE
Principal Amount: $______________ November ____, 2004
FOR VALUE RECEIVED, FastFunds Financial Corporation, a Nevada corporation
(the "Company"), hereby promises to pay to the order of ___________________
("Holder"), the principal sum of ________________________________________ AND
NO/100 DOLLARS ($_________.00), together with accrued interest on the unpaid
principal balance thereof at the rate of Nine and One-Half percent (9.50%) per
annum, calculated on the basis of actual days elapsed in a year of 360 days.
ARTICLE 1
PAYMENTS
1.1 PRINCIPAL AND INTEREST. Except in the event of a conversion of this
Note in accordance with Article 2, the principal balance and all accrued
interest due hereunder shall be due and payable on Xxxxxx's demand at any time
from and after __________, 2005. Any payments received shall be applied first to
any other charges due under this Note, second to the payment of accrued interest
hereunder, and third to the payment of the principal balance of this Note. In
lieu of cash, Holder shall have the right to elect to receive any payment of
interest under this Note in shares of Common Stock (as defined herein) issued at
the same Conversion Price determined under Article 2; PROVIDED, HOWEVER, that
Xxxxxx has the right to convert this Note under Article 2 at the time of such
election.
1.2 MANNER OF PAYMENT. All payments of principal and interest shall be made
at such place as Holder shall designate to the Company in writing. If any
payment of principal or interest on this Note is due on a day that is not a
Business Day, such payment shall be due on the next succeeding Business Day, and
such extension of time shall not be taken into account in calculating the amount
of interest payable under this Note. "Business Day" means any day other than a
Saturday, Sunday or legal holiday in the State of Minnesota.
1.3 PREPAYMENT. This Note may be prepaid, in whole or in part, by the
Company at any time and from time to time, without premium or penalty; PROVIDED,
HOWEVER, that the Company may not prepay this Note prior to Holder's demand
unless at least 50% of the outstanding amount due Whitebox Hedged High Yield
Partners, L.P. and Pandora Select Partners, L.P. under those certain promissory
notes of Equitex, Inc. dated March 8, 2004 (aggregating to $5,000,000) has been
paid. At Holder's option, any payments on this Note shall be applied first to
pay Holder for all costs of collection of any kind, including reasonable
attorneys' fees and expenses, next to the payment of interest accrued through
the date of payment, and thereafter to the payment of principal.
ARTICLE 2
CONVERSION
2.1 CONVERSION. At Holder's option, Holder shall have the right at any time
during the Conversion Period (as defined below) to convert this Note, in
accordance with the provisions of Section 2.2, in whole or in part, into fully
paid and nonassessable shares of the Company's common stock, par value $.001 per
share (the "Common Stock"). The number of shares of Common Stock into which this
Note may be converted ("Conversion Shares") shall be determined by dividing the
outstanding principal amount of this Note to be converted, together with accrued
interest thereon to the date of conversion (if elected by Holder to be paid in
shares of Common Stock in lieu of cash), by an initial price of One Dollar
($1.00) (the "Conversion Price"). For all purposes of this Note, the "Conversion
Period" shall mean that period of from __________, 2005 until _________, 2008.
2.2 METHOD OF CONVERSION. To convert this Note, Holder must deliver a
conversion notice substantially in the form attached hereto as Annex A during
the Conversion Period. No fractional shares of Common Stock shall be issued upon
conversion of this Note. In lieu of any fractional share to which Xxxxxx would
otherwise be entitled upon conversion of this Note, the Company will pay to
Holder in cash the amount of the unconverted principal balance (plus interest,
if being converted) of this Note that would otherwise be converted into such
fractional share. Upon the conversion of this Note, Xxxxxx shall surrender this
Note, duly endorsed, at the Company's principal office, and the Company shall,
at its expense and as soon as practicable thereafter, issue and deliver to
Holder at such principal office one or more certificates for the number of
shares of Common Stock to which Holder is entitled (bearing such legends as are
required by applicable state and federal securities laws in the opinion of
counsel to the Company), together with a check payable to Holder for any cash
amounts payable as described herein. Any conversion of this Note shall be deemed
to have been made immediately prior to the close of business on the date of this
Note's surrender, and the person or persons entitled to receive Common Stock
upon such conversion shall be treated for all purposes as the record holder or
holders of such Common Stock as of such date. Upon this Note's conversion, the
Company will be forever released from all of its obligations and liabilities
hereunder with regard to that portion of the principal amount (and accrued
interest, if any) being converted, including without limitation the obligation
to pay such portion of the principal amount and accrued interest. If this Note
is converted in part only, the Company shall execute and deliver to Holder a new
unsecured promissory note in the principal amount equal to the unconverted
portion of this Note.
ARTICLE 3
CONVERSION PRICE ADJUSTMENTS
3.1 ADJUSTMENT FOR STOCK SPLITS OR COMBINATIONS. In the event of: (i) the
payment of dividends on any of Company's capital stock payable in Common Stock
or securities convertible into or exercisable for Common Stock ("Common Stock
Equivalents"); (ii) the subdivision of the Company's outstanding shares of
Common Stock into a greater number of shares; or (iii) the combination of the
Company's outstanding shares of Common Stock, by reclassification or otherwise;
then, the quotient (rounded to the nearest full cent) obtained by dividing (a)
the number of shares of Common Stock outstanding immediately prior to such
event, multiplied by the then-existing Conversion Price, by (b) the total number
of shares of Common Stock outstanding immediately after such event, shall be the
adjusted Conversion Price per share.
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3.2 NOTICE OF ADJUSTMENT. Upon any adjustment of the Conversion Price, the
Company shall give written notice thereof within 30 days, by first-class mail,
postage prepaid, addressed to Holder as shown on the Company's books, which
notice shall state the adjusted Conversion Price and set forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.
3.3 EFFECT OF REORGANIZATION, RECLASSIFICATION, MERGER, ETC. If at any time
the Company: (i) reorganizes its capital stock (other than by the issuance of
shares of Common Stock in subdivision of outstanding shares of Common Stock, and
other than by a share combination, as provided for in Section 3.1), (ii)
consolidates or merges with another corporation, or any sells, conveys, leases
or otherwise transfers all or substantially all of its property to any other
corporation, which transaction is effected in a manner such that the holders of
Common Stock shall be entitled to receive cash, stock, securities or assets with
respect to or in exchange for Common Stock, or (iii) pays a dividend or makes
any other distribution upon any class of its capital stock, which dividend or
distribution is payable in Company securities or other Company property (other
than cash); then, as a part of such transaction, lawful provision shall be made
so that Holder shall have the right thereafter to receive, upon conversion of
this Note, the number of shares of stock or other securities or property of the
Company or of the successor corporation resulting from such transaction, or of
the corporation to which the Company property has been sold, conveyed, leased or
otherwise transferred, as the case may be, which Xxxxxx would have been entitled
to receive upon transaction if this Note had been converted immediately prior
thereto. In any such case, appropriate adjustments (as determined by the
Company's board of directors) shall be made in the application of the provisions
set forth in this Note (including the adjustment of the Conversion Price) to the
end that the provisions set forth herein shall thereafter be applicable, as near
as reasonably may be, in relation to any shares or other property thereafter
deliverable upon the conversion of this Note as if the Note had been converted
immediately prior to such transaction and Holder had carried out the terms of
the exchange as provided for by such transaction. The Company shall not effect
any such capital reorganization, consolidation, merger or transfer unless, upon
or prior to the consummation thereof, the successor corporation(s) to which
Company property has been sold, conveyed, leased or otherwise transferred shall
assume by written instrument the obligation to deliver to Holder such shares of
stock, securities, cash or property which Holder is entitled to purchase under
the foregoing provisions of this Section 3.3.
ARTICLE 4
DEFAULT AND REMEDIES
4.1 DEFAULT. The occurrence of any of the following events shall constitute
a "Default" under this Note:
(a) Company's failure to remit to Holder the principal or interest
hereof as the same becomes due hereunder;
(b) Company's assignment for the benefit of creditors, or filing of a
petition in bankruptcy or for reorganization or to effect a plan or
arrangement with creditors;
(c) Company's application for, or voluntary permission of, the
appointment of a receiver of trustee for any or all Company property;
(d) any action or proceeding described in the foregoing paragraphs (b)
and (c) is commenced against Company and such action or proceeding is not
vacated within 60 days of its commencement;
(e) Company's dissolution or liquidation; or
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(f) Company's material breach of the Purchase Agreement by and between
Company and Holder, of even date herewith (the "Purchase Agreement").
4.2 REMEDIES UPON DEFAULT. Upon any Default:
(a) Holder may without further notice declare the entire remaining
principal sum of this Note, together with all interest accrued thereon,
immediately due and payable; and Xxxxxx's failure to declare the entire
remaining principal sum of this Note, together with all interest accrued
thereon, immediately due and payable shall not constitute a waiver by
Holder of its right to so declare at any other time;
(b) Xxxxxx may employ an attorney to enforce its rights and remedies
hereunder and Company xxxxxx agrees to pay Xxxxxx's reasonable attorneys'
fees and other reasonable expenses incurred by Xxxxxx in exercising any of
Xxxxxx's rights and remedies upon Default; and
(c) Xxxxxx's rights and remedies provided hereunder shall be
cumulative and may be pursued singly, successively or together in Xxxxxx's
sole discretion; and Xxxxxx's failure to exercise any such right or remedy
shall not be a waiver or release of such rights or remedies or the right to
exercise any of them at another time.
ARTICLE 5
GENERAL PROVISIONS
5.1 WAIVER OF PROTEST, PRESENTMENT AND NOTICE. The Company hereby waives
presentment, demand for payment, notice of nonpayment or dishonor, protest, and
notice of protest, and agrees to continue to be bound for the payment of
principal, interest and all other sums due under this Note notwithstanding any
extension or alteration of the time or terms of payment hereon, any renewal or
any acceptance of security of any kind. Company also hereby waives the right to
protest the domestication or collection of any judgment obtained against the
Company with respect to this Note in any jurisdiction where the Company may now
or hereafter maintain assets or be registered or qualified to transact business.
5.2 OBLIGATIONS ABSOLUTE. Company's obligations hereunder are absolute, and
Company hereby waives any and all rights to offset, deduct or withhold any
payments or charges due hereunder for any reason whatsoever.
5.3 ENTIRE AGREEMENT. This Note and the terms and conditions of the
Purchase Agreement constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof.
5.4 GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of Nevada without regard to its
conflicts-of-law principles.
5.5 SEVERABILITY. If any provision in this Note is held invalid or
unenforceable by a court of competent jurisdiction, the other provisions of this
Note will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
5.6 WAIVER OF RIGHT OR REMEDY. No waiver of any right or remedy under this
Note shall be valid unless in writing executed by the Holder hereof, and any
such waiver shall be effective only in the specific instance and for the
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specific purpose given. All rights and remedies of all present and future
Holders of this Note shall be cumulative and may be exercised singly,
concurrently or successively. This Note shall bind the Company and its
successors and assigns.
5.7 NOTICES. Any notice required or permitted to be given hereunder shall
be given in accordance with the Purchase Agreement.
5.8 CONSTRUCTION. The headings of Sections in this Convertible Note are
provided for convenience only and will not affect its construction or
interpretation. All references to Articles or Sections refer to Articles and
Sections of this Note unless otherwise specified.
IN WITNESS WHEREOF, the Company has executed and delivered this
Convertible Note as of the date first set forth below.
FASTFUNDS FINANCIAL CORPORATION
By:
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XXXX XXXXX, CHIEF FINANCIAL OFFICER
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NOTICE OF CONVERSION
(TO BE SIGNED ONLY UPON CONVERSION OF NOTE)
To FastFunds Financial Corporation
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
The undersigned, the Holder of the Convertible Note of FastFunds
Financial Corporation dated ___________, 2004, hereby surrenders such
Convertible Note for conversion into shares of Common Stock of FastFunds
Financial Corporation, to the extent of $___________________ of the unpaid
principal and accrued interest of such Convertible Note, and requests that the
certificates for such shares be issued in the name, and delivered to the address
set forth below:
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Exact Name in which shares are to be registered
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Address, city, state and zip code
Dated:
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HOLDER:
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Signature
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Name (print or type)
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(Address)
