EXHIBIT 4.1
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 ARRIN CORPORATION, THAT SUCH REGISTRATION IS NOT REQUIRED.
CONVERTIBLE NOTE
FOR VALUE RECEIVED, Arrin Corporation, a Nevada corporation (hereinafter
called the "BORROWER"), hereby promises to pay to Xxxxxxx X. Xxx (the "HOLDER")
on order, without demand, the sum of Two Hundred Fifty Thousand Dollars
($250,000), with simple interest accruing at the annual rate of five percent
(5%), on February 8, 2012 (the "Maturity Date").
The following terms shall apply to this Note:
ARTICLE I
DEFAULT RELATED PROVISIONS
1.1 Payment Grace Period. The Borrower shall have a five (5) day grace
period to pay any monetary amounts due under this Note, after which grace period
a default interest rate of five percent (5%) per annum above the then applicable
interest rate hereunder shall apply to the amounts owed hereunder.
1.2 Conversion Privileges. The Conversion Privileges set forth in Article
II shall remain in full force and effect immediately
1.3 Interest Rate. Interest payable on this Note shall accrue at the annual
rate of five percent (5%) and be payable semi-annually from the execution date
of this Note.
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ARTICLE II
CONVERSION RIGHTS
At any time during the term of this Note, provided the conditions of
Section 1.2 above are satisfied, the Holder may deliver a written notification
(the "NOTICE OF CONVERSION") to the Borrower setting forth the portion of the
principal amount of the Note and/or interest due and payable (the "INVESTMENT
AMOUNT") that the Holder exercises its conversion rights with respect thereto,
subject to the terms and provisions set forth below.
2.1. Conversion into the Borrower's Common Stock
(a) The Holder shall have the right, but not the obligation, from and after
the Borrower's receipt of an Notice of Conversion or the occurrence of any Event
of Default, as the case may be, provided the conditions of Section 2.1 have been
fulfilled, and then at any time until this Note is fully paid, to convert the
principal portion of this Note and/or interest due and payable set forth in each
such Notice of Conversion or the entire principal portion of this Note and/or
interest due and payable following the occurrence or an Event of Default, as the
case may be, into fully paid and nonassessable shares of common stock of the
Borrower as such stock exists on the date of issuance of this Note, or any
shares of capital stock of the Borrower into which such stock shall hereafter be
changed or reclassified (the "COMMON STOCK") at the conversion price as defined
in Section 2.1(b) hereof (the "CONVERSION PRICE"), determined as provided
herein. Upon delivery to the Borrower of a Notice of Conversion substantially in
the form attached to this Note, giving the Holder's written request for
conversion (the date of giving such notice of conversion being a "CONVERSION
DATE"), the Borrower shall issue and deliver to the Holder within three business
days from the Conversion Date that number of shares of Common Stock for the
portion of the Note converted in accordance with the foregoing. The number of
shares of Common Stock to be issued upon each conversion of this Note shall be
determined by dividing that portion of the principal of the Note to be converted
and interest, if any, by the Conversion Price, and then multiplied by One
Hundred Twenty Percent (120%).
(b) Subject to adjustment as provided in Section 2.1(c) hereof, the
Conversion Price per share shall be the the average of the three lowest closing
bid prices for the Common Stock on the OTC Bulletin Board, NASDAQ SmallCap
Market, NASDAQ National Market System, American Stock Exchange, or New York
Stock Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock, the "PRINCIPAL Market"), or if not then
trading on a Principal Market, such other principal market or exchange where the
Common Stock is listed or traded, for the thirty (30) trading days prior to but
not including the Conversion Date.
(c) The Conversion Price described above shall be subject to adjustment
from time to time upon the happening of certain events while this conversion
right remains outstanding, as follows:
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X. Xxxxxx, 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 person or entity, 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. Stock Sale. If, prior to conversion of the entirety of this Note, the
Borrower enters into any agreement to sell its Common Stock or a convertible
instrument that converts into its Common Stock prior to conversion of this Note
at a price less than the Conversion Price of this Note, then the Conversion
Price of any outstanding principal and interest of this Note shall be reset to
the price of that offering.
2.2 Method of Conversion. This Note may be converted by the Holder in whole
or in part as described in Section 2.1(a) hereof. Upon partial conversion of
this Note, a new Note containing the same date and provisions of this Note
shall, at the request of the Holder, be issued by the Borrower to the Holder for
the principal balance of this Note and interest which shall not have been
converted or paid.
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ARTICLE III
EVENT 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, all without demand, presentment or
notice, or grace period, all of which hereby are expressly waived, except as set
forth below:
3.1 Failure to Pay Principal or Interest. The Borrower fails to pay any
installment of principal or interest hereon or on any other promissory note
issued pursuant to the Purchase Agreement, when due and such failure continues
for a period of five (5) days after the due date.
3.2 Breach of Covenant. The Borrower breaches any material covenant or
other term or condition of this Note in any material respect and such breach, if
subject to cure, continues for a period of seven (7) days after written notice
to the Borrower from the Holder.
3.3 Breach of Representations and Warranties. Any material representation
or warranty of the Borrower made herein, or in any agreement, statement or
certificate given in writing pursuant hereto or in connection therewith shall be
false or misleading.
3.4 Receiver or Trustee. The Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed.
3.5 Judgments. Any money judgment, writ or similar final process shall be
entered or filed against the Borrower or any of its property or other assets for
more than $50,000, and shall remain unvacated, unbonded or unstayed for a period
of forty-five (45) days.
3.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower.
3.7 Delisting. Delisting of the Common Stock from the Principal Market or
such other principal exchange on which the Common Stock is listed for trading;
the Borrower's failure to comply with the conditions for listing; or
notification that the Borrower is not in compliance with the conditions for such
continued listing.
3.8 Concession. A concession by the Borrower, after applicable notice and
cure periods, under any one or more obligations in an aggregate monetary amount
in excess of $50,000.
3.9 Stop Trade. An SEC stop trade order or Principal Market trading
suspension.
3.10 Failure to Deliver Common Stock or Replacement Note. The Borrower's
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note or, if required, a replacement Note.
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ARTICLE IV
MISCELLANEOUS
4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of
the 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.
4.2 Notices. Any notice herein required or permitted to be given shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party notified, (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day,
(c) five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Borrower at the following address:
Arrin Corportation
and to the Holder at the following address:
Xxxxxxx X. Xxx
with a copy to Xxxx X. Xxxx, Esq., Law Offices of Xxxx X. Xxxx, 0000
Xxxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxxxx, XX 00000, Facsimile: 213-384-1035, or at
such other address as the Borrower or the Holder may designate by ten days
advance written notice to the other parties hereto. A Notice of Conversion shall
be deemed given when made to the Borrower by telecopying an executed and
completed Notice of Conversion to the Borrower via confirmed telecopier
transmission. The Holder will not be required to surrender the Note until the
Note has been fully converted or satisfied. Each date on which a Notice of
Conversion is telecopied to the Company in accordance with the provisions hereof
shall be deemed a Conversion Date.
4.3 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.
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4.4 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, and may be assigned by the Holder.
4.5 Cost of Collection. If default is made in the payment of this Note, the
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys' fees.
4.6 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of California, without regard to
principles of conflicts of laws. 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 or in the federal courts located in the city
of Los Angeles and state of California. 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.
4.7 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.
4.8 Prepayment. This Note may be paid (in whole or in part) prior to the
Maturity Date without the consent of the Holder.
4.9 Construction. Each party 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.
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its
name by its Chief Financial Officer on this ___ day of February, 2010.
Arrin Corporation
By: /s/ Xxxxxx Xxx
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Xxxxxx Xxx, CFO
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NOTICE OF CONVERSION
(To be executed by the 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 Arrin Corporation on
_________, 2010 into Shares of Common Stock of Arrin Corporation (the "Company")
according to the conditions set forth in such Note, as of the date written
below.
Date of Conversion:____________________________________________________________
Conversion Price:______________________________________________________________
Shares To Be Delivered:________________________________________________________
Signature:_____________________________________________________________________
Print Name:____________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________
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