Contract
Exhibit 4.2
This
note has not been registered under the Securities Act of 1933, as amended, or
applicable state securities laws. This note has been acquired for
investment and not with a view to distribution or resale, and may not be sold,
mortgaged, pledged, hypothecated or otherwise transferred without an effective
registration statement for such securities under the Securities Act of 1933, as
amended, and any applicable state securities laws, or the availability of an
exemption from the registration provisions of the Securities Act of 1933, as
amended, and applicable state securities laws, as represented by an opinion of
counsel reasonably satisfactory to the company if reasonably requested by the
company.
This
note is subject to those restrictions on transfer as set forth herein, and is
negotiable only in compliance with the terms of this note.
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$____________.00
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_______________,
2009
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FOR VALUE RECEIVED, the undersigned,
EnterConnect Inc., a Nevada corporation (the “Company”), hereby promises to
pay to _________________ (“Payee,” and, together with any
permitted transferee then the duly endorsed and recorded holder hereof, the
“the Holder”), the
principal amount of ___________________________ and No/100 Dollars ($_______.00)
plus interest at the rate provided for herein from the date hereof on such
principal amount or such lesser amount as is then currently outstanding, in such
currency of the United States of America as at the time will be legal tender for
the payment of public and private debts, with principal and interest payable as
herein provided.
1.
INTEREST RATE
AND PAYMENT PROVISIONS.
(a) Except
as otherwise provided herein, the principal amount of this Convertible
Promissory Note (this “Note”) outstanding from time
to time will bear interest from the date hereof through the date on which the
principal amount hereof and all accrued interest thereon are paid in full, at a
simple interest rate equal to five percent (5%) per annum (the “Note Rate”).
(b) Unless
previously converted into Series A Securities (as defined below), all unpaid
interest and principal on this Note will be due and payable by the Company in
full on the first date on which the restrictions on payment of this Note under
the terms of Section 2 below are no longer in effect, or (ii) immediately before
a Liquidation Transaction (the “Maturity Date”); provided that
such date may be extended by consent of the Company and the
Holder. For purposes hereof, a “Liquidation Transaction” means
a liquidation, dissolution, or winding up of the Company, or the Company’s sale,
lease, conveyance, or other disposition of all or substantially all of its
property or business or merger with or into or consolidation with any other
corporation, limited liability company or other entity (other than a
wholly-owned subsidiary of the Company). All payments made by the
Company on this Note will be applied first to the payment of accrued but unpaid
interest on this Note and then to the reduction of the unpaid principal amount
of this Note.
(c) If
the principal amount of this Note, and all accrued but unpaid interest thereon,
is not paid on the Maturity Date, then interest will accrue on such unpaid
amount at the Note Rate plus five percent (5%) from and after any such date or
occurrence to the date of the payment in full of the principal amount of this
Note and all accrued but unpaid interest thereon.
2.
SUBORDINATION. EXCEPT
AS OTHERWISE PROVIDED HEREIN, THIS NOTE WILL BE SUBORDINATED IN RIGHT OF PAYMENT
TO ALL OBLIGATIONS OF THE COMPANY OWING ON THOSE CERTAIN SENIOR SECURED NOTES
ISSUED BY THE COMPANY PURSUANT TO THAT CERTAIN SECURITIES PURCHASE AGREEMENT,
DATED AS OF DECEMBER 20, 2007, BY AND AMONG THE COMPANY, HIGHBRIDGE
INTERNATIONAL LLC (“HIGHBRIDGE”), AND VARIOUS OTHER
INVESTORS IN THE SENIOR NOTES, AS AMENDED BY THOSE CERTAIN AMENDMENTS ENTITLED
AMENDMENT AND WAIVER AGREEMENT, DATED AS OF DECEMBER 17, 2008, AND SECOND
AMENDMENT AND WAIVER AGREEMENT, DATED AS OF MARCH 9, 2009, BY AND AMONG THE
COMPANY AND THE HOLDERS OF
CONVERTIBLE PROMISSORY NOTES ISSUED PURSUANT TO THE SECURITIES PURCHASE
AGREEMENT, AS AMENDED, REPRESENTING AT LEAST A MAJORITY OF THE AGGREGATE
PRINCIPAL AMOUNT OF SUCH NOTES THEN OUTSTANDING (THE “SENIOR
NOTES PURCHASE AGREEMENT”), NOW OR HEREAFTER
ARISING, TOGETHER WITH ALL COSTS OF COLLECTING SUCH OBLIGATIONS (INCLUDING
REASONABLE ATTORNEYS’ FEES), INCLUDING, WITHOUT LIMITATION, ALL INTEREST
ACCRUING AFTER THE COMMENCEMENT BY OR AGAINST THE COMPANY OF ANY BANKRUPTCY,
REORGANIZATION OR SIMILAR PROCEEDING, AND ALL OBLIGATIONS UNDER THE SENIOR NOTES
PURCHASE AGREEMENT (THE “SENIOR
DEBT”). THE HOLDER
WILL NOT DEMAND OR RECEIVE FROM THE COMPANY (AND THE COMPANY WILL NOT PAY TO THE
HOLDER) ALL OR ANY PART OF THE AMOUNTS OWING UNDER THIS NOTE, BY WAY OF PAYMENT,
PREPAYMENT, SETOFF, LAWSUIT OR OTHERWISE, NOR WILL THE HOLDER COMMENCE,
PROSECUTE OR PARTICIPATE IN ANY ADMINISTRATIVE, LEGAL OR EQUITABLE ACTION
ADVERSARIAL TO THE COMPANY IN RESPECT OF THIS NOTE, FOR SO LONG AS ANY PORTION
OF THE SENIOR DEBT REMAINS OUTSTANDING AND UNTIL 91 DAYS AFTER ANY PORTION OF IT
REMAINS OUTSTANDING.
3.
LOSS, THEFT, DESTRUCTION OR
MUTILATION OF NOTE. UPON RECEIPT OF EVIDENCE SATISFACTORY TO IT OF
THE LOSS, THEFT, DESTRUCTION OR MUTILATION OF THIS NOTE OR ANY NOTE ISSUED IN
EXCHANGE THEREFOR AND, IF REQUESTED IN THE CASE OF ANY SUCH LOSS, THEFT OR
DESTRUCTION, UPON DELIVERY OF AN INDEMNITY AGREEMENT REASONABLY SATISFACTORY TO
THE COMPANY, OR, IN THE CASE OF ANY SUCH MUTILATION, UPON SURRENDER AND
CANCELLATION OF THIS NOTE, THE COMPANY WILL ISSUE A NEW NOTE OF LIKE TENOR AND
AMOUNT AND DATED THE DATE OF THE ORIGINAL NOTE, IN LIEU OF SUCH LOST, STOLEN,
DESTROYED OR MUTILATED NOTE.
4.
SERIES A FINANCING AND
CONVERSION OF NOTE.
(a) The
parties acknowledge that (i) the Company is seeking to issue and sell, within
the ninety (90) day period following the date hereof, shares of its Series A
Convertible Preferred Stock, accompanied by warrants to purchase the Company’s
Common Stock (collectively, the “Series A Securities”), to
existing and potentially new investors in the Company, and that Payee, as a
placement agent, and potentially other placement agents, may assist with the
placement of the Series A Securities, and (ii) the Company will seek to raise a
maximum of One Million Dollars ($1,000,000.00) of equity capital through such
issuance and sale (the “Financing”). The
Holder will have the option, but not the obligation, concurrent with the closing
of the Financing (whether the Financing occurs within such ninety (90) day
period, or whether Company, in its sole discretion, extends the ninety (90) day
period in order to raise the minimum amount), to convert the outstanding
principal balance of this Note plus any unpaid accrued interest as of the date
of the Financing into Series A Securities on the same terms and conditions as
given to the other investors in the Financing. The Company will give
the Holder written notice of the Financing, which notice will include the
material terms of the Financing, at least five (5) business days prior to the
consummation of the Financing, which notice will be deemed waived by the Holder
if the Holder converts this Note into Series A Securities as a part of the
Financing. At the closing of the Financing, if the Holder has elected
to convert this Note as part of the Financing, the Holder will deliver to the
Company this Note to be converted into Series A Securities, this Note will be
canceled and of no further force and effect, and the Company will issue the
Series A Securities to the Holder.
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(b) Any
conversion under Section 4.1 above will be subject to all the terms and
conditions of the Financing applicable to the holders of the Series A Securities
to be issued to the other investors, including, but not limited to, the
conversion rights or exercise rights, preemptive rights, registration rights and
other protective rights granted and the benefit of any representations and
warranties made in connection with the Series A Securities being issued in the
Financing, and the Holder, upon conversion, will be entitled to all such
benefits and rights of the purchaser(s) of Series A Securities. Upon
any conversion under Section 4.1 above, the Holder will become a party to and
execute any agreements that are being entered into by the other purchasers of
Series A Securities in connection with their issuance and sale.
(c) Notwithstanding
any other provisions herein, upon the closing of the Financing, if any amounts
remain outstanding under this Note, the Company will pay the Holder all amounts
owing under this Note out of the proceeds from the Financing.
5.
PAYEE
REPRESENTATIONS. THIS NOTE IS ISSUED TO PAYEE IN RELIANCE ON PAYEE’S
REPRESENTATIONS TO THE COMPANY, AS FOLLOWS:
(a) This
Note is acquired for investment for its own account, not as a nominee or agent,
and not with a view to the sale or distribution of any part thereof, and Payee
has no present intention of selling, granting participation in, or otherwise
distributing this Note.
(b) Payee
has no contract, undertaking, agreement, or arrangement with any person to sell,
transfer or grant participations to such person, or to any third person, with
respect to this Note.
(c) Payee
understands that this Note has not been registered under the Securities Act of
1933 (the “Act”),
because the issuance of this Note is exempt from registration under the Act, and
the Company’s reliance on such exemption is predicated in part on Xxxxx’s
representations set forth herein.
(d) Payee
is experienced in evaluating early-stage companies such as the Company, is able
to fend for itself in the transactions such as the issuance of this Note, has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment, has the ability to bear
the economic risks of its investment, has had access, prior to the issuance of
this Note, to all such information as it deemed necessary or appropriate (to the
extent the Company possessed such information or could acquire it without
unreasonable effort or expense), has had, prior to the issuance of this Note,
the opportunity to ask questions of, and receive answers from, the Company
concerning the terms and conditions of the Company’s offering of this Note, (to
the extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to it or to which it had access.
6.
COMPANY
REPRESENTATION. COMPANY XXXXXX REPRESENTS THAT IT HAS THE REQUISITE
CORPORATE POWER AND AUTHORITY TO ISSUE AND SELL THIS NOTE TO
PAYEE.
7.
RESTRICTION
ON TRANSFER. PAYEE ACKNOWLEDGES THAT NEITHER THIS
NOTE, NOR SERIES A SECURITIES THAT MAY BE PURCHASED BY THE HOLDER
PURSUANT TO EXERCISE OF THE HOLDER’S OPTION DESCRIBED IN SECTION 4.1 ABOVE, MAY
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION UNDER THE ACT
OR AN EXEMPTION THEREFROM, AND THAT, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT COVERING THIS NOTE OR THE PARTICULAR SERIES A SECURITIES IN QUESTION,
OR AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT, THIS NOTE AND ANY
SERIES A SECURITIES AS APPLICABLE MUST BE HELD INDEFINITELY. THE
HOLDER AGREES THAT IN NO EVENT WILL IT MAKE A TRANSFER OR DISPOSITION OF ANY OF
THIS NOTE OR ANY SERIES A SECURITIES, UNLESS AND UNTIL (I) THE HOLDER WILL
HAVE NOTIFIED THE COMPANY OF THE PROPOSED DISPOSITION AND THE CIRCUMSTANCES
SURROUNDING THE DISPOSITION, AND (II) IF REQUESTED BY THE COMPANY, THE
HOLDER WILL HAVE FURNISHED TO THE COMPANY, AT ITS EXPENSE, AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH
TRANSFER MAY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES
ACT. PAYEE ACKNOWLEDGES THAT NO PUBLIC MARKET NOW EXISTS FOR THIS
NOTE OR WILL EXIST FOR THE SERIES A SECURITIES, AND THAT THERE IS NO ASSURANCE
THAT A PUBLIC MARKET WILL EVER EXIST FOR ANY SUCH
SECURITIES.
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8.
UNCONDITIONAL OBLIGATION;
FEES, WAIVERS, ETC.
(a) The
obligations to make the payments provided for in this Note are absolute and
unconditional and not subject to any defense, set-off, counterclaim, rescission,
recoupment or adjustment whatsoever.
(b) If
the Holder will seek to enforce the collection of any amount of principal of or
interest on this Note or the terms of this Note, there will be immediately due
and payable from the Company, in addition to the then unpaid principal of, and
accrued unpaid interest on, this Note, all costs and expenses incurred by the
Holder in connection therewith, including, without limitation, reasonable
attorneys’ fees and disbursements. Any such costs and expenses will be paid
directly by the Company, or will be paid by the Company to the Holder as and
when bills are received or such costs and expenses are incurred.
(c) No
forbearance, indulgence, delay or failure to exercise any right or remedy with
respect to this Note will operate as a waiver, or as acquiescence in any
default, nor will any single or partial exercise of any right or remedy preclude
any other or further exercise thereof or the exercise of any other right or
remedy.
(d) This
Note may be amended only upon the written agreement of the Company and the
Holder. Compliance with a provision of this Note may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only in writing by the party exercising the waiver.
(e) The
Company hereby expressly waives demand and presentment for payment, notice of
nonpayment, notice of dishonor, protest, notice of protest, bringing of suit,
and diligence in the Holder’s taking any action to collect amounts called for
hereunder, and will be directly and primarily liable for the payment of all sums
owing and to be owing hereon, regardless of and without any notice, diligence,
act or omission with respect to the collection of any amount called for
hereunder.
9.
MISCELLANEOUS.
(a) The
headings of the various paragraphs of this Note are for convenience of reference
only and will in no way modify any of the terms or provisions of this
Note.
(b) All
notices, demands and other communications provided for hereunder will be in
writing and will be deemed effective: (a) upon personal delivery to the party to
be noticed; (b) upon electronic confirmation when sent via facsimile; or (c) one
(1) business day after deposit with a nationally recognized overnight carrier,
specifying next day delivery, with written verification of
receipt. All communications and notices will be sent as
follows:
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If
to the Company, to:
000
Xxxxxxx Xxxxxx Xxxxx, Xxx. 000
Xxx
Xxxx, XX 00000-0000
Attention: Chief
Executive Officer
Facsimile: (000)
000-0000
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If
to Payee, to:
Attention:
Facsimile:
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or to
such other address as such party (or, where applicable, the Holder) will
designate in writing, and will be deemed given when received.
(c) This
Note and the obligations of the Company and the rights of the Holder will be
governed by and construed in accordance with the laws of the New York, without
giving effect to its principles regarding conflicts of law.
(d) This
Note may be transferred or assigned only upon its surrender to the Company for
registration of transfer, duly endorsed, accompanied by a duly executed written
instrument of transfer in a form reasonably satisfactory to the
Company. Thereupon, this Note will be reissued to, and registered in
the name of, the transferee, or a new Note for like principal amount and
interest will be issued to, and registered in the name of, the
transferee. Interest and principal will be paid solely to the
registered Holder of this Note. Such payment will constitute full
discharge of the Company’s obligation to pay such interest and
principal. Neither this Note nor any of the rights, interests or
obligations hereunder may be assigned, by operation of law or otherwise, in
whole or in part, by the Company without the prior written consent of the
Holder.
(e) This
Note will be binding upon and will inure to the benefit of the Company, the
Payee, and their respective successors and permitted assigns.
[Signature follows on next
page]
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IN WITNESS WHEREOF, the
Company has executed and delivered this Convertible Promissory Note as of the
date first written above.
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EnterConnect Inc. | ||||
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By: | ||||
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Xxx
Xxxxxxxxx, Chief Executive Officer
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Acknowledged
and Agreed:
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By:
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Name:
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Title:
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