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 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.
CHAMPIONLYTE PRODUCTS, INC.
SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE
$250,000.00 BOCA RATON, FLORIDA
JANUARY 7, 2003
1. Promise to Pay. FOR VALUE RECEIVED, CHAMPIONLYTE PRODUCTS, INC, a
Florida corporation (the "Company") promises to pay, in lawful money of
the United States of America, to the order of ADVANTAGE FUND I, LLC or
assignee (the "Holder"), at Boca Raton, Florida or at such other place
as Holder shall from time to time direct, on or before January 6, 2004,
the principal amount of Two Fifty Thousand Dollars and no cents
($250,000.00) 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. Conversion. All payments shall be
applied first to accrued, unpaid interest, next to any collection
costs, and the remainder against principal. This note may be not be
redeemed by the Company prior to its due date without the express
permission of the Holder. This Note is one of a series of identical
notes, except to principal amount and due date (collectively, the
"Notes").
2. Default. The Company shall be in default under this Note upon the
occurrence of any of the following events:
2.1 The Company fails to timely perform any of its obligations
under, or otherwise breaches any covenants or warranties of
this Note;
2.2 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,
2.3 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.
UPON ANY EVENT OF DEFAULT, HOLDER 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
1
AGREES TO PAY ALL OF HOLDER'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-JUDGEMENT
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 STATUtE OF LIMITATIONS, PRESENTMENT, DEMAND FOR
PAYMENT, PROTEST AND NOTICE OF DISHONOR.
3. Conversion. The Holder shall have conversion rights as follows (the
"Conversion Rights"):
3.1 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:
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).
3.2 Mechanics of Conversion. Before Holder shall be 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 the certificate 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(s) 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.
3.3 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
3.4 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.
2
3.5 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.
3.6 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.
3.7 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.
4. Redemption. The Company, may not redeem this Note at any time prior to
the maturity date.
5. 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.
6. 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 sTate 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. The certificates
representing the shares into which this Note is convertible shall bear
the foregoing legend.
7. Registration of Underlying Stock & Penalties. The Company agrees that
within thirty 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 shall amend its present SB-2 registration statement to
register 250% of the then shares to be issued upon conversion of the
Notes. A copy of this Registration Statement is attached hereto as
Exhibit `C'. The registration 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 twenty days from the date of the date of
the funding of the Note, the
3
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.
8. 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.
9. 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.
10. Miscellaneous.
10.1 Amendment. No supplement, modification, or amendment of this
Note shall be binding unless executed in writing by all the
parties hereto.
10.2 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.
10.3 Timeliness. Time is of the essence of this Note and each and
all of its provisions.
10.4 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 1356 N.W. Boca Raton Blvd., Boca Raton, FL 33432.
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.
10.5 Governing Law and Venue. This Note shall be construed in
accordance with, and governed by, the laws of the State of
Florida, and any action or proceeding, including arbitration,
brought by any party in which this Note is a subject shall be
brought in Florida
4
10.6 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.
10.7 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.
10.8 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.
ChampionLyte Products, Inc.
By: /s/ Xxxxxxxx Xxxxxx
Interim Chief Operating Officer
5
EXHIBIT `A'
CONVERSION NOTICE
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due
January 6, 2004 (the "Note") issued by ChampionLyte Products, 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 into ______________ 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):
------------------------
------------------------
------------------------
6
EXHIBIT 'B'
ASSIGNMENT FORM
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due January 6, 2004 (the
"Note") issued by ChampionLyte Products, Inc. (the "Company") hereby irrevocably
assigns its rights, title and ownership in $ of the Note, inclusive of all
principal and pro-rata interest, to the party more fully described below in
accordance with Section 5 of the Note. Accordingly, the undersigned directs
that, if the Assignment is for less than the outstanding principal amount of the
Note that it be reissued in the Principal Amount not being surrendered for
assignment hereby, to the undersigned with the amount being assigned reissued
for the amount being assigned hereunder to the name that has been indicated
below. All capitalized terms used and not defined herein have the respective
meanings assigned to them in the Note. The Assignment 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 amount herein assigned, set forth above shall cease and the Person or
Persons indicated below shall be deemed to have become the holder or holders of
record of any or all of the Note assigned herein and shall have all voting and
other rights associated with the beneficial ownership of the Note and 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, and social security or
tax identification number):
------------------------
------------------------
------------------------
------------------------
AMENDMENT TO THE SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE
This Amendment to the Series A 6.5% Convertible Promissory Note dated
July 3, 2003 between Championlyte Holdings, Inc. (f/k/a Championlyte Products,
Inc.), ("Championlyte") and Advantage Fund I, LLC ("Advantage Fund").
RECITALS:
A. WHEREAS, the parties entered into a Series A 6.5% Convertible
Promissory Note dated January 7, 2003, ("Note"), whereby Championlyte agreed to
pay to Advantage the principal sum of $250,000 plus interest as set forth in the
Note on or before January 6, 2003.
B. WHEREAS, the parties to the Agreement desire to amend the terms of
the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Amendment and other valuable consideration, the receipt of which is
acknowledged, the parties to this Agreement agree as follows:
1. PROMISE TO PAY: The parties agree to amend this Note to increase the
amount to be paid by Championlyte to Advantage to $350,000 and to
extend the due date for such payment until December 31, 2004.
2. CONSIDERATION: In consideration for the extension of the due date set
forth above, Championlyte will allow Advantage to place a lien on the
capital stock and assets of Championlyte Beverages, Inc., the wholly
owned subsidiary of Championlyte.
3. FULL FORCE OF AGREEMENT: All representations, covenants and warranties
as well as all other conditions and obligations set forth in the
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
and entered into as of the date first above written.
ATTEST: CHAMPIONLYTE HOLDINGS, INC.
F/K/A CHAMPIONLYTE PRODUCTS, INC.
/s/ By: /s/ Xxxxx Xxxxxxxx
-----------------------
XXXXX XXXXXXXX
President
ATTEST: ADVANTAGE FUND I, LLC
/s/ By: Xxxxx Xxxxxxxxx
----------------------- XXXXX XXXXXXXXX, President
Second Amendment to the Series A 6.5% Convertible
Promissory Note
This Second Amendment to the Series A 6.5% Convertible Promissory Note
dated January 7, 2003 and amended on July 3, 2003 between Championlyte Holdings,
Inc. (f/k/a Championlyte Products, Inc.), ("Championlyte") and Advantage Fund I,
LLC ("Advantage").
RECITALS:
---------
A. WHEREAS, the parties entered into a Series A 6.5% Convertible
Promissory Note dated January 7, 2003, ("Note"), whereby
Championlyte agreed to pay to Advantage the principal sum of
$250,000 plus interest as set forth in the Note on or before
January 6, 2003 and whereas the parties then entered into
amendment of the Note dated July 3, 2003 (the "Amended Note"),
whereby the Note was increased by $100,000, the due date
extended until December 31, 2004 and Advantage was allowed to
place a lien on the capital stock and assets of Championlyte
Beverages, Inc., the wholly owned subsidiary of Championlyte.
B. WHEREAS, the parties to the Agreement desire to amend the
terms of the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Amendment and other valuable consideration, the receipt of which
is acknowledged, the parties to this Agreement agree as follows:
1. PROMISE TO PAY: The parties agree to amend this Note to
increase the amount to be paid by Championlyte to Advantage to
$400,000 and to extend the date by which the current
registration on file with the Securities and Exchange
Commission needs to become effective before penalties apply to
180 days from execution of this amendment.
2. FULL FORCE OF AGREEMENT: All representations, covenants and
warranties as well as all the conditions and obligations set
forth in the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, and entered int
as of the date first above written.
ATTEST CHAMPIONLYTE HOLDINGS, INC.
F/K/A CHAMPIONLYTE PRODUCTS, INC.
/s/ By: /s/ Xxxxx Xxxxxxxx
---------------------- -----------------------
XXXXX XXXXXXXX
President
ATTEST ADVANTAGE FUND I, LLC
/s/ By: /s/ Xxxxx Xxxxxxxxx
---------------------- -----------------------
XXXXX XXXXXXXXX
President
ASSIGNMENT FORM
TO: ChampionLyte Holdings, Inc.
0000 XX 000xx Xxxxxx
Xxxxx Xxxxx Xxxxx, XX 00000
Attn: Corporate Secretary
The undersigned owner of that certain 6.5% Convertible Note originally issued
January 6, 2003, amended and reissued on July 3, 2003 and October , 2003, which
is due December 31, 2004 in the principal amount of $400,000 (the "Note") issued
by ChampionLyte Holdings, Inc. (formerly ChampionLyte Products, Inc.) (the
"Company") hereby irrevocably assigns its rights, title and ownership in
$200,000 of the principal amount of the Note, exclusive of accrued interest,
damages and penalties, to the party more fully described below in accordance
with Section 5 of the Note. Accordingly, the undersigned directs that, since the
Assignment is for less than the outstanding principal amount of the Note that it
be reissued in the Principal Amount not being surrendered for assignment hereby,
to the undersigned with the amount being assigned reissued for the amount being
assigned hereunder to the name that has been indicated below. All capitalized
terms used and not defined herein have the respective meanings assigned to them
in the Note. The Assignment 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 amount herein
assigned, set forth above shall cease and the Person or Persons indicated below
shall be deemed to have become the holder or holders of record of any or all of
the Note assigned herein and shall have all voting and other rights associated
with the beneficial ownership of the Note and shall at such time vest with such
Person or Persons.
In addition, Advantage Fund I, LLC and the Company hereby agree that any and all
security granted by the Company to Advantage Fund I, LLC and the Assignee,
respectively, pursuant to certain Security Agreements entered into amongst the
parties on even date herewith shall be securitized proportionately based on each
party's respective interests in the Note, or specifically, Advantage Fund I, LLC
- 50% and Assignee - 50%.
Date: October 20, 2003
ADVANTAGE FUND I, LLC
/s/ Xxxxx Xxxxxxxxx
Signature: Xxxxx Xxxxxxxxx, President
Fill in for registration of Note:
ASSIGNEE:
---------
ALPHA CAPITAL AKTIENGESELLSCHAFT
Pradafant 7
9490 Furstentums
Vaduz, Lichtenstein
Fax: 000-00-00000000
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.
CHAMPIONLYTE HOLDINGS, INC.
(formerly known as Championlyte Products, Inc.)
SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE
$200,000.00 Aventura, Florida
October 20, 2003
THIS PROMISSORY NOTE REPRESENTS THE INITIAL $200,000 OF NOTE PRINCIPAL OF THAT
CERTAIN ORIGINAL SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE IN THE PRINCIPAL
AMOUNT OF $250,000 ORIGINALLY ISSUED ON JANUARY 7, 2003 AND AMENDED JULY 3, 2003
TO INCREASE THE PRINCIPAL AMOUNT TO $350,000, AND FURTHER AMENDED OCTOBER 16,
2003 TO INCREASE THE PRINCIPAL AMOUNT TO $400,000 AND EXTEND THE DATE BY WHICH
THE CURRENT REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION NEEDS TO BECOME EFFECTIVE BEFORE PENALTIES APPLY TO 180 DAYS FROM
OCTOBER 16, 2003.
1. Promise to Pay. FOR VALUE RECEIVED, CHAMPIONLYTE PRODUCTS, INC, a
Florida corporation (the "Company") promises to pay, in lawful money
of the United States of America, to the order of Alpha Capital
Aktiengesellschaft or assignee (the "Holder"), at Boca Raton, Florida
or at such other place as Holder shall from time to time direct, on or
before December 31, 2004, the principal amount of Two Hundred Thousand
Dollars and no cents ($200,000.00) 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. Conversion. All
payments shall be applied first to accrued, unpaid interest, next to
any collection costs, and the remainder against principal. This note
may be not be redeemed by the Company prior to its due date without
the express permission of the Holder. This Note is one of a series of
identical notes, except to principal amount and due date
(collectively, the "Notes").
2. Default. The Company shall be in default under this Note upon the
occurrence of any of the following events:
2.1 The Company fails to timely perform any of its obligations under,
or otherwise breaches any covenants or warranties of this Note;
2.2 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,
1
2.3 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.
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-judgement 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.
3 Conversion. The Holder shall have conversion rights as follows (the
"Conversion Rights"):
3.1 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:
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).
3.2 Mechanics of Conversion. Before Holder shall be 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 the certificate 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(s) 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.
3.3 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
2
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
3.4 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.
3.5 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.
3.6 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.
3.7 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.
4 Redemption. The Company, may not redeem this Note at any time prior to
the maturity date.
5 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.
6 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. The
certificates representing the shares into which this Note is
convertible shall bear the foregoing legend.
3
7 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. A copy of this Registration
Statement is attached hereto as Exhibit `C'. 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 twenty 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.
8 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.
9 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.
10 Miscellaneous.
10.1 Amendment. No supplement, modification, or amendment of this Note
shall be binding unless executed in writing by all the parties
hereto.
10.2 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.
10.3 Timeliness. Time is of the essence of this Note and each and all
of its provisions.
10.4 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 1356 N.W.
Boca Raton Blvd., Boca Raton, FL 33432. 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.
10.5 Governing Law and Venue. This Note shall be construed in
accordance with, and governed by, the laws of the State of
Florida, and any action or proceeding, including arbitration,
brought by any party in which this Note is a subject shall be
brought in Florida
4
10.6 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.
10.7 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.
10.8 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.
ChampionLyte Holdings, Inc.
By: s/s Xxxxx Xxxxxxxx
President
5
EXHIBIT `A'
CONVERSION NOTICE
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due
January 6, 2004 (the "Note") issued by ChampionLyte Products, 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 into ______________ 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):
------------------------
------------------------
------------------------
6
EXHIBIT `B'
ASSIGNMENT FORM
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due January 6, 2004 (the
"Note") issued by ChampionLyte Products, Inc. (the "Company") hereby irrevocably
assigns its rights, title and ownership in $_____________________- of the Note,
inclusive of all principal and pro-rata interest, to the party more fully
described below in accordance with Section 5 of the Note. Accordingly, the
undersigned directs that, if the Assignment is for less than the outstanding
principal amount of the Note that it be reissued in the Principal Amount not
being surrendered for assignment hereby, to the undersigned with the amount
being assigned reissued for the amount being assigned hereunder to the name that
has been indicated below. All capitalized terms used and not defined herein have
the respective meanings assigned to them in the Note. The Assignment 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 amount herein assigned, set forth above shall cease
and the Person or Persons indicated below shall be deemed to have become the
holder or holders of record of any or all of the Note assigned herein and shall
have all voting and other rights associated with the beneficial ownership of the
Note and 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, and social security or
tax identification number):
------------------------
------------------------
------------------------
------------------------
7
ASSIGNMENT FORM
TO: ChampionLyte Holdings, Inc.
0000 XX 000xx Xxxxxx
Xxxxx Xxxxx Xxxxx, XX 00000
Attn: Corporate Secretary
The undersigned owner of that certain 6.5% Convertible Note originally issued
January 6, 2003, amended and reissued on July 3, 2003 and October 16, 2003,
which is due December 31, 2004 in the principal amount of $400,000 (the "Note")
issued by ChampionLyte Holdings, Inc. (formerly ChampionLyte Products, Inc.)
(the "Company") hereby irrevocably assigns its rights, title and ownership in
$50,000 of the principal amount of the Note, exclusive of accrued interest,
damages and penalties, to the party more fully described below in accordance
with Section 5 of the Note. Accordingly, the undersigned directs that, since the
Assignment is for less than the outstanding principal amount of the Note that it
be reissued in the Principal Amount not being surrendered for assignment hereby,
to the undersigned with the amount being assigned reissued for the amount being
assigned hereunder to the name that has been indicated below. All capitalized
terms used and not defined herein have the respective meanings assigned to them
in the Note. The Assignment 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 amount herein
assigned, set forth above shall cease and the Person or Persons indicated below
shall be deemed to have become the holder or holders of record of any or all of
the Note assigned herein and shall have all voting and other rights associated
with the beneficial ownership of the Note and shall at such time vest with such
Person or Persons.
In addition, Advantage Fund I, LLC and the Company hereby agree that any and all
security granted by the Company to Advantage Fund I, LLC and Alpha Capital
Aktiengesellschaft, respectively, pursuant to that certain Security Agreement
entered into amongst the parties on October 20, 2003 shall be amended on
Schedule A so that it shall add Assignee as a secured party and be securitized
proportionately based on each party's respective interests in the Note, or
specifically, Advantage Fund I, LLC - 37.50%; Alpha Capital Aktiengesellschaft -
50% and Assignee - 12.50%. In addition that certain Collatreal Agent Agreement
entered into amongst the parties on October 20, 2003 shall also be amended on
Schedule A to proportionately state the parties respective interests in the
Note, or specifically, Advantage Fund I, LLC - 37.50%, Alpha Capital
Aktiengesellschaft - 50% and Assignee - 12.50%.
Date: November 3, 2003
ADVANTAGE FUND I, LLC
s/s Xxxxx Xxxxxxxxx
Signature: President
Fill in for registration of Note:
ASSIGNEE:
GAMMA OPPORTUNITY CAPITAL PARTNERS, LP
British Colonial Centre of Commerce
Xxx Xxx Xxxxxx, Xxxxx 000
Xxxxxx (NP), The Bahamas
Fax: (000) 000-0000
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.
CHAMPIONLYTE HOLDINGS, INC.
(formerly known as Championlyte Products, Inc.)
SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE
$50,000.00 Aventura, Florida
November 3, 2003
THIS PROMISSORY NOTE REPRESENTS $50,000 OF THE INITIAL $250,000 OF NOTE
PRINCIPAL OF THAT CERTAIN ORIGINAL SERIES A 6.5% CONVERTIBLE PROMISSORY NOTE IN
THE PRINCIPAL AMOUNT OF $250,000 ORIGINALLY ISSUED ON JANUARY 7, 2003 AND
AMENDED JULY 3, 2003 TO INCREASE THE PRINCIPAL AMOUNT TO $350,000, AND FURTHER
AMENDED OCTOBER 16, 2003 TO INCREASE THE PRINCIPAL AMOUNT TO $400,000 AND EXTEND
THE DATE BY WHICH THE CURRENT REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION NEEDS TO BECOME EFFECTIVE BEFORE PENALTIES APPLY TO 180
DAYS FROM OCTOBER 16, 2003.
1. Promise to Pay. FOR VALUE RECEIVED, CHAMPIONLYTE PRODUCTS, INC, a
Florida corporation (the "Company") promises to pay, in lawful money
of the United States of America, to the order of Gamma Opportunity
Capital Partners, L.P. or assignee (the "Holder"), at Boca Raton,
Florida 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. Conversion. All
payments shall be applied first to accrued, unpaid interest, next to
any collection costs, and the remainder against principal. This note
may be not be redeemed by the Company prior to its due date without
the express permission of the Holder. This Note is one of a series of
identical notes, except to principal amount and due date
(collectively, the "Notes").
2. Default. The Company shall be in default under this Note upon the
occurrence of any of the following events:
2.1 The Company fails to timely perform any of its obligations under,
or otherwise breaches any covenants or warranties of this Note;
2.2 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,
1
2.3 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.
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-judgement 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.
3 Conversion. The Holder shall have conversion rights as follows (the
"Conversion Rights"):
3.1 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:
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).
3.2 Mechanics of Conversion. Before Holder shall be 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 the certificate 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(s) 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.
3.3 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
2
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
3.4 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.
3.5 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.
3.6 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.
3.7 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.
4 Redemption. The Company, may not redeem this Note at any time prior to
the maturity date.
5 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.
6 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. The
certificates representing the shares into which this Note is
convertible shall bear the foregoing legend.
3
7 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. A copy of this Registration
Statement is attached hereto as Exhibit `C'. 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 twenty 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.
8 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.
9 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.
10 Miscellaneous.
10.1 Amendment. No supplement, modification, or amendment of this Note
shall be binding unless executed in writing by all the parties
hereto.
10.2 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.
10.3 Timeliness. Time is of the essence of this Note and each and all
of its provisions.
10.4 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 1356 N.W.
Boca Raton Blvd., Boca Raton, FL 33432. 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.
10.5 Governing Law and Venue. This Note shall be construed in
accordance with, and governed by, the laws of the State of
Florida, and any action or proceeding, including arbitration,
brought by any party in which this Note is a subject shall be
brought in Florida
4
10.6 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.
10.7 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.
10.8 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.
ChampionLyte Holdings, Inc.
By: /s/ Xxxxx Xxxxxxxx
President
5
EXHIBIT `A'
CONVERSION NOTICE
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due
January 6, 2004 (the "Note") issued by ChampionLyte Products, 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 into ______________ 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):
------------------------
------------------------
------------------------
6
EXHIBIT `B'
ASSIGNMENT FORM
TO: ChampionLyte Products, Inc.
1356 N.W. Boca Raton Blvd.
Boca Raton, FL 33432
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due January 6, 2004 (the
"Note") issued by ChampionLyte Products, Inc. (the "Company") hereby irrevocably
assigns its rights, title and ownership in $________________________ of the
Note, inclusive of all principal and pro-rata interest, to the party more fully
described below in accordance with Section 5 of the Note. Accordingly, the
undersigned directs that, if the Assignment is for less than the outstanding
principal amount of the Note that it be reissued in the Principal Amount not
being surrendered for assignment hereby, to the undersigned with the amount
being assigned reissued for the amount being assigned hereunder to the name that
has been indicated below. All capitalized terms used and not defined herein have
the respective meanings assigned to them in the Note. The Assignment 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 amount herein assigned, set forth above shall cease
and the Person or Persons indicated below shall be deemed to have become the
holder or holders of record of any or all of the Note assigned herein and shall
have all voting and other rights associated with the beneficial ownership of the
Note and 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, and social security or
tax identification number):
------------------------
------------------------
------------------------
------------------------
7
