ROKWADER, INC. (a delaware corporation) 6% Subordinated Convertible Promissory Note
EXHIBIT
10.11
(a
delaware corporation)
__________________________________
6%
Subordinated Convertible Promissory Note
_____________________________________
NEITHER
THIS NOTE NOR THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF AS PROVIDED
HEREIN HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER THE LAWS OF ANY STATE OR OTHER JURISDICTION. TRANSFER OF THIS NOTE AND
SUCH SECURIITES IS RESTRICTED PURSUANT TO SUCH LAWS.
$75,000.00
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Calabasas,
California
November
13, 2007
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1. |
Note.
FOR
VALUE RECEIVED, ROKWADER,
Inc.,
a
Delaware corporation (the “Company” or the “Borrower”), hereby promises to
pay to the order of Brooktide, LLC (the “Holder”) the amount of $75,000.00
on demand (“Due Date”) and to pay interest at the rate of six (6 %) per
annum on the outstanding principal. Interest payments shall be made
with
principal on the due date, to the Holder in lawful money of the United
States at 00000 Xxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000, or at such other
place as the Holder may specify in
writing.
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2.
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Default.
In
the event of an occurrence of any event of default specified below,
the
principal and all accrued interest on the Note shall become immediately
due and payable without notice, except as specified below. The occurrence
of any of the following events shall constitute an event of default
under
this Note:
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2.1
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The
Company fails to make any payment hereunder when due, which failure
has
not been cured within thirty (30) days following such
failure.
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2.2
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If
the Borrower shall file a petition to take advantage of any insolvency
act; make an assignment for the benefit of its creditors; commence
a
proceeding for the appointment of a receiver, trustee, liquidator
or
conservator of itself of a whole or any substantial part of its property;
file a petition or answer seeking reorganization or arrangement or
similar
relief under the federal bankruptcy laws or any other applicable
law or
statute of the United States of America or any state;
or
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2.3
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If
a court of competent jurisdiction shall enter an order, judgment
or decree
appointing a custodian, receiver, trustee, liquidator or conservator
of
the Borrower or of the whole or any substantial part of its properties,
or
approve a petition filed against the Borrower seeking reorganization
or
arrangement or similar relief under the federal bankruptcy laws or
any
other applicable law or statute of the United States of America or
any state; or if, under the provisions of any other law for the relief
or
aid of debtors, a court of competent jurisdiction shall assume custody
or
control of the Borrower or of the whole or any substantial part of
its
properties; or if there is commenced against the Borrower any proceeding
for any of the foregoing relief and such proceeding or petition remains
undismissed for a period of thirty (30) days; or if the Borrower
by any
act indicates its consent to or approval of any such proceeding or
petition; or
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2.4
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If
(i) any judgment remaining unpaid, unstayed or undismissed for a
period of sixty (60) days is rendered against the Borrower which
by itself
or together with all other such judgments rendered against the Borrower
remaining unpaid, unstayed or undismissed for a period of sixty (60)
days,
is in excess of $100,000, or (ii) there is any attachment or
execution against the Borrower’s properties remaining unstayed or
undismissed for a period of sixty (60) days which by itself or together
with all other attachments and executions against the Borrower’s
properties remaining unstayed or undismissed for a period of 60 days
is
for an amount in excess of
$100,000.00.
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3. |
Conversion
- Holder
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3.1
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Conversion
Rights.
At
any time from the date hereof the Holder will have the right, at
its
option, to convert the Note into Shares of Common Stock of the Company
(the “Shares”) at the conversion rate then in
effect.
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The
initial conversion rate is thirty-seven and one-half cents ($.375)
per
share or 200,000 Shares if the entire Note was converted, subject
to
adjustments in certain events. No fractional Share or scrip representing
a
fractional Share will be issued upon conversion of the Notes. Cash
will be
paid in lieu of any fractional Shares equal to the then current market
value of such fractional Share.
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The
conversion rate will be appropriately adjusted if the Company
(a) pays a dividend or makes a distribution on its Shares of Common
Stock which is paid or made in Shares of Common Stock, (b) subdivides
or reclassifies its outstanding Shares of Common Stock, (c) combines
its outstanding Shares of Common Stock into a smaller number of Shares
of
Common Stock, (d) issues Shares of Common Stock, or issues rights or
warrants to all Holders of its Common Stock entitling them to subscribe
for or purchase Shares of Common Stock (or securities convertible
into
Common Stock), at a price per Share less than $.375 per Share, or
(e) distributes to all Holders of its Common Stock evidences of its
indebtedness or assets (excluding any dividend paid in cash out of
legally
available funds) subject to the limitation that adjustments by reason
of
any of the foregoing need not be made until they result in a cumulative
change in the conversion rate of at least five percent (5%). The
conversion rate will not be adjusted upon the conversion of presently
outstanding stock options or
warrants.
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In
case of any consolidation or merger to which the Company is a party
other
than a merger or consolidation in which the Company is the surviving
corporation, or in case of any sale or conveyance to another corporation
of the property of the Company as an entirety or substantially as
an
entirety, or in case of any statutory exchange of securities with
another
corporation, there will be no adjustment of the conversion price,
but each
Holder of the Notes then outstanding will have the right thereafter
to
convert such Notes into the kind and amount of securities, cash or
other
property which he would have owned or have been entitled to receive
immediately after such consolidation, merger, statutory exchange,
sale or
conveyance had such Notes been converted immediately prior to the
effective date of such consolidation, merger, statutory exchange,
sale or
conveyance. In the case of a cash merger of the Company into another
corporation or any other cash transaction of the type mentioned above,
the
effect of these provisions would be that the conversion features
of the
Notes would thereafter be limited to converting the Notes at the
conversion price in effect at such time into the same amount of cash
per
Share that such Holder would have received had such Holder converted
the
Notes into Common Stock immediately prior to the effective date of
such
cash merger or transaction.
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3.2
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Mechanics
of Conversion.
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The
Note may be converted upon a notice from the Company to the Note
holder
and surrender of the Notes at any time from the date hereof, at the
offices of the Company, 00000 Xxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000,
with
the form of “Notice of Conversion” duly completed and executed as
indicated. Shares of Common Stock issued upon conversion will be
fully
paid and non-assessable.
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4.
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Prepayment.
Borrower may prepay any or all amounts due under this Note at any
time
from the date of this Note at one hundred percent (100%) of the principal
amount of the Note together with accrued interest; provided, however,
that
Borrower, as a condition to prepayment of some or all of the balance
hereof, shall deliver written notice of its intention to prepay at
least
thirty (30) calendar days prior to the date of such prepayment
(“Prepayment Date”).
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5.
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Subordination.
Indebtedness evidenced by the Note will be subordinated in right
of
payment to the prior payment in full of all existing and future Senior
Indebtedness of the Company. Senior Indebtedness is defined as the
principal of (and premium, if any) and unpaid interest or accrued
original
issue discount on and other amounts due on or in connection with
any Debt
(as defined below) incurred, assumed or guaranteed by the Company,
whether
outstanding on the date of the issuance of the Note or thereafter
incurred, assumed or guaranteed and all renewals, extensions and
refundings of any such Debt; provided, however, that the following
will
not constitute Senior Indebtedness:
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(i)
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any
Debt as to which, in the instrument creating or evidencing the same
or
pursuant to which the same is outstanding, it is expressly provided
that
such Debt is subordinate in right of payment to all other debt of
the
Company not expressly subordinated to such
Debt;
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(ii)
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any
Debt which by its terms refers explicitly to the Note and states
that such
Debt shall not be senior in right of payment
thereto;
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(iii)
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any
Debt of the Company in respect of the
Note;
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(iv)
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any
Debt of the Company to any Subsidiary of the Company;
and
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(v)
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any
Debt of the Company to any joint venture or partnership, which joint
venture or partnership is required, under generally accepted accounting
principles, to be consolidated in the Company’s consolidated financial
statements.
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Debt
is defined to mean, with respect to any person at any date, without
duplication:
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(a)
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all
obligations of such person for borrowed
money,
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(b)
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all
obligations of such person evidenced by bonds, debentures, note or
other
similar instruments,
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(c)
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all
Debt of others secured by a lien on any asset of such person, whether
or
not such Debt is assumed by such
person,
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(d)
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all
Debt of others for the payment of which such person is responsible
or
liable as obligor or guarantor,
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(e)
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all
obligations of such person in respect of letters of credit or other
similar instruments (or reimbursement obligations with respect
thereto),
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(f)
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all
obligations of such person to pay the deferred purchase price of
property
or services, except Trade Payables,
and
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(g)
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all
reimbursement, reserve funding and other obligations of such person
in
respect of surety bonds executed by such person or at the request
of and
for the benefit of such person.
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By
reason
of such subordination, in the event of dissolution, insolvency, bankruptcy
or
other similar proceedings, upon any distribution of assets, (i) holders of
Senior Indebtedness will be entitled to be paid in full before payments may
be
made on the Note, and the Holder of the Note will be required to pay over their
share of such distribution to the holder of Senior Indebtedness until such
Senior Indebtedness is paid in full and (ii) creditors of the Company who
are neither holders of Notes nor holders of Senior Indebtedness may recover
less, ratably, than holders of Senior Indebtedness and may recover more,
ratably, than the Holder of the Note.
6.
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Securities
Law Compliance.
The Holder understands that the right of conversion of this Note
is
subject to full compliance with the provisions of all applicable
securities laws and the availability thereunder upon any conversion
of any
exemption from registration thereunder for such conversion, and that
the
certificate or certificates evidencing such Note will bear a legend
to the
following effect:
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“THE
SECURITIES EVIDENCED HEREBY MAY NOT BE TRANSFERRED WITHOUT (i) THE OPINION
OF COUNSEL SATISFACTORY TO THIS CORPORATION THAT SUCH TRANSFER MAY LAWFULLY
BE
MADE WITHOUT REGISTRATION UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED,
OR (ii) SUCH REGISTRATION.”
7.
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Notices.
Any notice herein required or permitted to be given shall be in writing
and may be personally served, sent by United States Mail, certified,
or by overnight delivery service. For the purposes hereof, the address
of
the Holder and the address of the Company shall be as reflected in
the
Subscription Agreement between the Holder and the Company of even
date
herewith. Both the Holder and the Company may change the address
for
service by written notice to the other as herein
provided.
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8.
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No
Waiver Rights and Remedies Cumulative.
No
failure on the part of the Holder to exercise, and no delay in exercising
any right hereunder shall operate as a waiver thereof; nor shall
any
single or partial exercise by the Holder of any right hereunder preclude
any other or further exercise thereof or the exercise of any other
right.
The rights and remedies herein provided are cumulative and not exclusive
of any remedies or rights provided by law or by any other agreement
between the Borrower and the
Holder.
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9.
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Amendments.
No
amendment, modification or waiver of any provision of this Note nor
consent to any departure by the Holder therefrom shall be effective
unless
the same shall be in writing and signed by the Holder and then such
waiver
or consent shall be effective only in the specific instance and for
the
specific purpose for which given.
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10.
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Successors
and Assigns.
This Note shall be binding upon the Borrower and its successors and
assigns and the terms hereof shall inure to the benefit of the Holder
and
its successors and assigns, including subsequent holders
hereof.
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11.
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Severability.
The provisions of this Note are severable, and if any provision shall
be
held invalid or unenforceable in whole or in part in any jurisdiction,
then such invalidity or unenforceability shall not in any manner
affect
such provision in any other jurisdiction or any other provision of
this
Note in any jurisdiction.
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12.
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Waiver
of Notice.
The Borrower hereby waives presentment, demand for payment, notice
of
protest and all other demands in connection with the delivery, acceptance,
performance, default or enforcement of this
Note.
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13.
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Governing
Law.
This Note has been executed in and shall be governed by the laws
of the
State of California.
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14.
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Note
Holder is Not a Shareholder.
No
Holder of this Note, solely by virtue of the ownership of this Note,
shall
be considered a shareholder of the Company for any purpose, nor shall
anything in this Note be construed to confer on any Holder of this
Note
any rights of a shareholder of the Company including, without limitation,
any right to vote, give or withhold consent to any corporate action,
receive notice of meetings of shareholders or receive
dividends.
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15.
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Exchange
and Replacement of Note.
Upon surrender of this Note to the Borrower, the Borrower shall execute
and deliver, at its expense, one or more new Notes of such denominations
and in such names, as requested by the holder of the surrendered
Note.
Upon receipt of evidence satisfactory to the Company of the loss,
theft,
mutilation, or destruction of any Note, the Borrower will make and
deliver
a new Note of like tenor at the request of the holder of such
Note.
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IN
WITNESS WHEREOF, the Company has caused this Note to be signed by its authorized
officers as of the 13th day of November, 2007.
By:
/s/ Xxxxxxxx Xxxx
Xxxxxxxx
Xxxx, Secretary
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