Contract
Exhibit
4.20
THIS
NOTE
AND
THE
STOCK INTO WHICH IT IS CONVERTIBLE HAVE
NOT
BEEN REGISTERED
UNDER THE SECURITIES ACT
OF
1933, AS AMENDED,
OF THE UNITED STATES
OF
AMERICA (THE "ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
("STATE ACT"). THIS
NOTE
HAS BEEN ACQUIRED FOR INVESTMENT AND
NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OF DISTRIBUTION THEREOF,
AND MAY NOT BE
OFFERED, SOLD, PLEDGED,
HYPOTHECATED, OR
OTHERWISE
TRANSFERRED
FOR
VALUE,
DIRECTLY OR
INDIRECTLY, IN
THE
ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND COMPLIANCE
WITH APPLICABLE STATE ACTS, OR
PURSUANT TO AN EXAMPTION FROM
REGISTRAITON UNDER THE ACT
AND
UNDER APPLICABLE STATE ACTS, THE AVAILABILITY
OF
WHICH
ARE ESTABLISHED BY MEANS OF AN
OPINION
TO SUCH EFFECT
IN
FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY AND RENDERED BY
LEGAL
COUNSEL SATISFACTORY TO THE COMPANY.
GLOBAL
IT HOLDINGS, INC.
SERIES
A 6.5% CONVERTIBLE PROMISSORY NOTE
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1.
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Promise
to Pay. FOR
VALUE RECEIVED, GLOBAL IT HOLDINGS, INC,
a Nevada corporation
(the "Company") promises
to pay, in lawful money of the United States of America, to the
order of
Xxxxx Xxxxx or assignee (the "Holder"), at
New York, NY or at such other place as Holder shall from time to
time
direct, on or before December 31, 2004,
the principal amount of Fifty
Thousand Dollars and no cents ($50,000.00) plus interest on the
unpaid principal balance thereof
at a rate of Six and one-half percent (6.5%) per year from the
date hereof
until paid
in full. Interest
on this note shall be computed on a 365/365 simple
interest basis, that is, by applying the ratio of the annual interest
rate
by the number of days in the
year times, outstanding principal balance
times the actual number of days that the principal balance is outstanding.
This
Note shall be payable interest-only, in arrears, on the last day
of each
calendar months, commencing
upon the first such date subsequent to the date of execution hereof,
and
due and payable in
full, principal and
interest, twenty-four months from the date hereof. At
the option of the Holder, the interest payable
may be paid in cash or convertible into common stock in
accordance with Section 3, herein
provided, however, that in no event shall the Holder be entitled
to
convert this Debenture for
a number of shares of Common Stock in excess of that number of
shares
of
Common Stock which,
upon giving effect to such conversion, would cause the aggregate
number of shares of Common
Stock beneficially owned by the Holder and its
affiliates to exceed 4.99% of the outstanding shares of the Common
Stock
following such conversion. All payments shall be applied
first to accrued, unpaid interest, next to any collection costs,
and
the remainder against principal.
The Company at its option shall have the right to redeem the Note
as set
forth
below.
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2.
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Default.
The
Company shall be in default under this Note upon the occurrence
of any
of
the following
events:
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2.1
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The
Company fails to timely perform any of its obligations under, or
otherwise breaches any
covenants or warranties of this Note;
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2.2
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Any
statement, representation, or warranty made by the Company or its
agents
to
Holder shall prove to have been false or materially misleading
when made;
and/or,
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2.3
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The
Company shall become insolvent, or unable to meet its obligations
as
they become due,
or shall file or have filed against it, voluntarily or involuntarily,
a
petition under the United
States Bankruptcy Code or shall procure or suffer the appointment
of
a receiver for
any substantial portion of its properties, or shall make an assignment
for
benefit of creditors,
or shall initiate or have initiated against it, voluntarily or
involuntarily, any act, process,
or proceedings under any insolvency law or other statute or law
providing
for
the modifications
or adjustment of the rights of
creditors.
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Upon
any
event of default, Xxxxxx may declare the entire unpaid principal balance
of this Note
and
all accrued unpaid interest immediately due, without notice, and the Company
agrees
to
pay such amount
immediately in such event. In
the
event
of
default, the Company agrees
to
pay all of Xxxxxx's costs of collection, including attorney's fees;
this shall
include
legal
expenses for
the
bankruptcy proceedings or insolvency proceedings (including efforts to
modify
or vacate
any automatic
stay or injunction), court costs, appeals, post-judgment collection expenses
and
any other amount provided by
law.
The parties
intend this provision to
be
given the most liberal construction possible and to apply
to
any circumstances
in which such
party reasonably incurs expenses. No
delay
or omission on the part of any Holder hereof
in
exercising any right or option herein given to such Holder shall impair
such right or option or be considered as a waiver thereof or acquiescence
in
any
default hereunder. The
Company hereby waives any applicable statue of limitations, presentment,
demand
for payment,
protest and notice of dishonor.
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3.
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Conversion.
The Holder shall have conversion rights
as
follows (the "Conversion Rights"):
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3.1
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Right
To Convert. Subject to subsection 3.3, this Note shall be convertible,
in
whole or in
part, at the option of the Holder, at any time after the date of
issuance
of this Note, and
from
time to time thereafter, at the office of the Company, into such
number of
fully paid
and
non-assessable shares of Common Stock of
the Company as is determined as follows:
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The
Conversion Price per share shall be equal to the lesser of (1) the average
of
the lowest of three day trading prices during the five
trading
days immediately prior
to
the Conversion Date multiplied by .80, or (2) the average of the lowest of
three
day trading prices during the five trading days immediately prior to
the
funding
date(s).
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3.2
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Mechanics
of Conversion. Before Holder shall he entitled to convert this
Note,
in
whole
or
in part, into shares of Common Stock, he shall surrender this Note
at the
office
of the Company,
and shall give written notice in person, or by facsimile, mail,
postage
prepaid,
to
the Company at its principal corporate office, of Xxxxxx's election
to
convert the
Note
and shall state therein the portion of the principal amount of
the Note to
be converted and
the name or names in which thecertificate
or certificates for shares of Common Stock are
to
be issued, the address of such persons to
be used for record purposes, and the address(es)
to which the certificate(s) should be delivered if
different from the record address.
Such
notice shall be on the form attached to this Note as Exhibit 'A'.
The
Company shall as soon as
practicable thereafter, issue and deliver to Holder, or to the
nominee
or nominees of Holder, a certificate or certificates for
the number of shares of Common
Stock to which Holder shall be entitled as
aforesaid
and, if less than the full principal
amount of the note is converted, a new
Note representing the uncoverted balance
which remains outstanding. Any interest accrued but unpaid on the
converted portion
of the Note shall be paid upon conversion; any interest accrued
but unpaid
on
the non-converted portion of the Note shall be paid in due course
under
the replacement Note.
Such conversion shall be deemed to have been made immediately prior
to
the
close of
business on the date of such surrender of the Note to be converted,
and
the person or
persons entitled to receive the shares of Common Stock issuable
upon such
conversion shall
be treated for all purposes as the record holder or holders of
such shares
of Common Stock
as of such
date.
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3.3
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No
Impairment. The
Company will not, by amendment of its Articles of Incorporation
or
through any reorganization, recapitalization, transfer of assets,
consolidation,
merger, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of
any of the
terms to be observed or performed hereunder
by the Company, but will at all times in good faith assist in the
carrying
out
of all the provisions of this Section 3 and in the taking of
all such action as may be necessary or appropriate in order to
protect the
Conversion Rights of the Holder against impairment.
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3.4
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No
Fractional Shares and Certificates as to Conversion. No fractional
shares
shall be issued
upon conversion of the Note, and the number of shares of Common
Stock
to be issued
shall be rounded to the nearest whole
share.
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3.5
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Notices
of Record Date. In
the event of any taking by the Company of a record of the holders
of any class of securities for the purpose of determining the holders
thereof
who are
entitled to receive any dividend or other distribution, any
right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other
securities or
property,
or to receive any other right, the Company shall mail to Holder,
at least
20 days
prior
to the date specified therein, a notice specifying the date on
which any
such record
is
to be taken for the purpose of such dividend, distribution, or
right, and
the
amount and character
of such dividend, distribution, or right. In
the case of rights to acquire any shares
of stock or any other class of securities or property, Company
shall grant
to Holder
the
same rights as if the Holder had converted his Note upon the Record
Date.
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3.6
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Reservation
of Stock Issuable Upon Conversion. The
Company shall at all times reserve
and keep available out of its authorized but unissued shares of
Common Stock solely
for the purpose of effecting the conversion of the Notes such number
of
shares of Common
Stock as shall from time to time be sufficient to effect the conversion
of
all outstanding
Notes; and if at any time the number of authorized but unissued
shares
of Common Stock shall not be sufficient to effect the conversion
of
all then-outstanding Notes,
in addition to such other remedies as shall
be available to the Holder, the Company will take such corporate
action as
may, in
the opinion of its counsel, be necessary
to increase its authorized but unissued shares
of Common Stock to such number
of shares as shall be sufficient for such purposes.
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3.7
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Notices.
Any
notice required by the provisions of this Section 3 to
be given to the Holder
shall be deemed given if deposited in the United States mail, postage
prepaid and
certified,
return receipt requested and addressed to
Xxxxxx of record at his address appearing
on the books of the Company.
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Redemption.
The
Company at its option shall have the right to redeem, with three
(3)
business days
advance
written notice (the "Redemption
Notice"), a
portion or all outstanding convertible debenture. The
redemption price shall be one hundred twenty percent (120%)
of the amount redeemed plus accrued
interest.
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5.
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Assignment.
Subject to the restrictions on transfer herein, the Holder may
transfer
this Note in whole or
in part, in the event of partial transfer(s), the Company will
exchange
this
Note for new Notes as instructed by the Holder equal to the total
of this
Note, by endorsement (by the Holder of this Note executing
the form of assignment attached to this Note as Exhibit 'B') and
delivery
in
the same manner as
any negotiable
instrument transferable by endorsement and delivery. Until
this Note is transferred on
the Company books, the Company may treat the registered Holder
of this
Note as the absolute owner
of this Note for all purposes, despite any notice to the
contrary. The Company's obligations hereunder
may not be transferred without prior written consent of the Holder;
any
attempt to transfer without
consent shall be void ab
initio.
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6.
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Restrictions
on Transfer. This Note and the stock into which it is convertible
have
not been registered under the Securities act of 1933, as amended,
of the
United States
of America (the "Act") or the securities
laws of any sate of the United States ("State Act"). This
Note
and the stock into which it is convertible
have been acquired for investment and not with a view to, or in
connection
with,
the sale or distribution,
thereof, and may not be offered, sold, pledged, hypothecated. Or
otherwise transferred for value
directly or indirectly, in the absence of an effective registration
statement under the Act and compliance
with applicable State Acts, or pursuant to an exemption from
registration under the Act and
under applicable State Acts, the availability of which are established
by
means of an opinion to such
effect. In form and substance satisfactory to the Company and rendered
by
legal counsel .satisfactory
to the Company. Thecertificates
representing the shares into
which this Note is convertible
shall bear the foregoing legend.
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7.
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Registration
of Underlying Stock & Penalties. The
Company agrees that within ninety days of the date
of this Note, the Company shall file a registration statement with
the Securities and Exchange Commission
on Form SB-2 or other applicable form to register 250% of the then
shares to
be
issued upon conversion of the Notes. The
registrations statement shall call for, amongst other items more
fully
described therein, the Company to use its best efforts to have
such
registration statement declared effective
at the earliest possible time. Should
such registration statement not be deemed effective within
one hundred and eighty days from the date of the date of the funding
of
the Note, the Company shall
pay a penalty to the Holder in an amount equal to 2% of the principal
balance and any and all accrued
interest then outstanding per month or any part
thereof,
until such time as the registration statement
is declared effective. Company agrees to keep such registration
statement
effective until the maturity
of the Note. Should there come a time when the number of shares
that have
been registered is
less than 200% of the total number of shares to be issued upon
conversion,
the Company agrees that it will amend such registration statement
such
that a minimum of 200% of the shares to be issued upon conversion
are on such registration statement.
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8.
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Replacement.
On
receipt of evidence reasonably satisfactory to the Company of the
loss,
theft,
destruction
or mutilation of this Note and, in the event of such occurrence,
on
delivery of an indemnity agreement
or bond reasonably satisfactory in form and amount to the Company
or, in
the case of mutilation,
on surrender and cancellation of this Note, the Company at its
expense
will execute and deliver,
in lieu of this Note, a new Note of like tenor. On surrender of
this Note
for exchange and subject
to the provisions of this Note on compliance with the Securities
Act, the
Company, at its expense
will issue to or on the order of the Holder of this Note a new
Note or
Notes of like tenor, in the name
of that Holder or as that Holder (on payment by the Holder of any
applicable transfer taxes) may direct, in the same total principal
amount
as this Note.
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9.
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Appointment
of Agent. The Company may, on written notice to the Holder of this
Note,
appoint an agent
for the purposes of issuing Common Stock or other securities on
the
conversion of this Note and of
replacing or exchanging this Note; and after that appointment occurs
any
such issuance, replacement,
or exchange shall be made at that office by that agent.
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10.
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Miscellaneous.
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10.1
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Amendment.
No supplement, modification, or amendment of this Note shall be
binding
unless executed in writing by all the parties hereto.
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10.2
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Waiver.
No waiver of any of the provisions of this Note shall be deemed,
or shall
constitute,
a waiver of any other provision, whether or not similar, nor shall
any
waiver constitute
a continuing waiver. No waiver shall be binding unless executed
in writing
by the
party making the waiver. Neither the acceptance of any partial
or
delinquent payment by
the Holder nor the Holder's failure to exercise any of its rights
or
remedies on default by
the Company shall be a waiver by the Holder of any default or the
Company
obligations
under this Note, or a waiver of any subsequent default by the
Company.
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10.3
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Timeliness.
Time is of the essence of this Note and each and all of its
provisions.
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10.4
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Notices.
Notices
given under this Note shall be in writing and shall be delivered
personally,
by messenger, by certified U.S. mail, return receipt requested,
or by a
common
overnight carrier delivery service. Notices
shall be deemed received upon receipt of same. Notices to the Company
shall be addressed to 000 0xx Xxxxxx, Xxxxx 0000,
Xxx Xxxx, XX 00000. Notices to the Holder shall be directed to
Xxxxxx at
the Holder's
address of record on the Company's books. A party may change its
address
for notice
by giving written notice to the other party in accordance with
this
Section.
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10.5
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10.6
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Effect
of Headings. The headings of the sections of this Note are included
for
purposes of convenience only, and shall not affect the construction
or
interpretation of any of its provisions.
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10.7
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Invalidity.
Any provision of this Note which is invalid, void, or illegal,
shall not
affect, impair,
or
invalidate
any other provision of this Note, and such other provisions of
this
Note
shall remain in full force and
effect.
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10.8
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Professional
Fees
and
Costs.
If
any legal or equitable action, arbitration, or other proceeding,
whether on the merits or on motion, are brought or undertaken,
or an
attorney is
retained to enforce this Note, or because of an alleged dispute,
breach,
default, or misrepresentation
in connection with any of the provisions of
this Note, then the successful
or prevailing party or parties in such undertaking (or the party
that
would prevail
if an action were brought) shall be entitled to recover reasonable
attorney's fees
and
other professional fees and other costs incurred
in such action, proceeding or discussions,
in addition to any other relief to which such party would be
entitled.
The
parties intend this provision be given the most liberal construction
possible and
to apply to
any circumstances in which such party reasonably incurs
expenses.
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| Global It Holdings, Inc. | ||
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| By: | /s/ Xxxxx Xxxxx | |
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Name: Xxxxx Xxxxx |
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| Title: President | ||
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EXHIBIT
'A'
CONVERSION
NOTICE
| TO: | Global IT Holdings, Inc. |
| 000 0xx Xxxxxx, Xxxxx 0000 | |
| New York, NY 10017 | |
| Attn: Corporate Secretary |
The
undersigned owner of this 6.5%
Convertible
Note due December 31, 2004 (the "Note")
issued by Global IT Holdings, Inc. (the "Company") hereby
irrevocably exercises its option to convert
$________ Principal
Amount of the Note into shares of Common Stock in accordance with the
terms
of
the Note. The undersigned hereby instructs the Company to convert the portion
of
the Note specified
above unto shares
of
Common Stock issued at Conversion in accordance with the
provisions of Article 3 of the Note. Attached hereto is the undersigned's
calculation for the Conversion Price.
The
undersigned directs that the Common Stock and certificates therefore deliverable
upon conversion,
the Note reissued in the Principal Amount not being surrendered for conversion
hereby, together with any check in payment for fractional Common Stock, be
registered in the name of and/or delivered to the undersigned unless a different
name has been indicated below. All capitalized terms used and
not
defined herein have the respective meanings assigned to them in the Note.
The
conversion pursuant hereto shall be deemed to have been effected at the date
and
time specified below, and at such time
the
rights of the undersigned as a Holder of the Principal Amount of the Note
set
forth above shall cease
and
the Person or Persons in whose name or names the Common Stock issued at
Conversion shall be registered
shall be deemed to have become the holder or holders of record of the Common
Shares represented
thereby and all voting and other rights associated with the beneficial ownership
of such Common
Shares shall at such time vest with such Person or Persons.
Date
and
time:
______________________________
Signature
Fill
in
for registration of Note:
Please
print name and address
(including
ZIP code number):
_______________________
_______________________
_______________________
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