EXHIBIT 4.3
CONVERTIBLE NOTE
THIS NOTE AND THE COMMON STOCK INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE
"SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") OR UNDER THE LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY
NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS THAT TERM IN
IS DEFINED IN REGULATION S UNDER THE ACT), UNLESS THEY ARE REGISTERED UNDER THE
ACT AND UNDER THE LAWS OF THE STATES WHERE EACH SALE IS MADE, OR AN EXEMPTION
FROM REGISTRATION REQUIREMENTS IS AVAILABLE IN THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY.
FOR VALUE RECEIVED, OmniComm Systems, Inc., a Florida corporation
(hereinafter called "Borrower"), hereby promises to pay to _____________(the
"Holder") or order without demand, the sum of _________, with interest accruing
at an annual rate of ten percent (10%), on June 30, 2004 (the "Maturity Date"),
as such date may be extended by agreement of the parties hereto. This
Convertible Note is issued pursuant to a subscription agreement by and between
the Borrower and the Holder dated the date hereof (the "Subscription Agreement")
the terms and conditions of which are hereby incorporated herein by this
reference.
The following terms shall apply to this Note:
ARTICLE I
DEFAULT REALTED PROVISIONS
1.1 PAYMENT GRACE PERIOD. The Borrower shall have a thirty (30) day
grace period to pay any monetary amounts due under this Note.
1.2 CONVERSION PRIVILEGES. The Conversion Privileges set forth in
Article II shall remain in full force and effect from the date of this Note
until the Note principal and accrued interest is paid in full.
1.3 INTEREST RATE. Borrower shall pay interest on the outstanding
principal amount of the Note (a) semi-annually on June 30th and December 31st of
each year, and if either June 30th or December 31st of any year is not a
business day then on the next succeeding business day (an "Interest Payment
Date"), at a rate of 10% per annum or (b) at the option of the Holder made in
writing to the Borrower at least 30 days prior to an Interest Payment Date, to
be carried forward as accrued interest on the Note and paid on the next Interest
Payment Date unless further deferred and, if there is no next Interest Payment
Date, paid at the Maturity Date, accelerated or otherwise, at the annual rate of
10% per annum together with such principal payment.
1.4 INTEREST RATE ADJUSTMENT. In the event 50% of the cumulative Holder
or Holders demand registration pursuant to such registration rights as set in
the Subscription Agreement and the registration statement is not declared
effective within 90 days after the date of notice of demand, then the interest
rate on the Convertible Note beginning on the next quarter following expiration
of the 90 day period, shall be increased to 15%, and shall remain at 15% until
said registration statement is effective, at which time the interest rate shall
revert back to 10%.
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ARTICLE II
CONVERSION RIGHTS
2.1 The Holder shall have the right to convert the principal amount and
accrued and unpaid interest due under this Note into shares of the Borrower's
Common Stock as set forth below.
(a) RIGHT TO CONVERT. The holder of a Convertible Note may, at
any time, without the payment of any additional consideration therefore, convert
the then outstanding principal amount into that number of fully paid and
nonassessable shares of common stock, $.001 par value, of the Corporation (the
"Shares") as is determined by dividing the then outstanding principal amount by
$1.25 ("Conversion Price").
(b) MECHANICS OF CONVERSION. No fractional Shares shall be
issued upon conversion of the Convertible Note. If upon conversion of a
Convertible Note held by a registered holder, such registered holder would, but
for the provisions of this Section 2(b), receive a fraction of a Share, then in
lieu of any such fractional share to which such holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the Conversion Price. Before any holder of Convertible Notes shall be entitled
to convert the same into full Shares, such holder shall surrender the
Convertible Note or Convertible Notes therefor, duly endorsed, at the office of
the Corporation or any transfer agent for the Convertible Note, and shall give
written notice by facsimile or otherwise (the "Conversion Notice") to the
Corporation at such office that such holder elects to convert the same and shall
state therein such holder's name or the name of its nominees in which such
holder wishes the certificate or certificates for Shares to be issued. The
Corporation shall, as soon as practicable thereafter, but in any event within
three business days of the date of its receipt of the Conversion Notice, issue
and deliver or cause to be issued and delivered to such holder of a Convertible
Note, or to its nominee or nominees, a certificate or certificates for the
number of Shares to which such holder shall be entitled, together with cash in
lieu of any fraction of a share. Such conversion shall be deemed to have been
made on the date that the Corporation receives the Conversion Notice by
facsimile or otherwise, and the person or persons entitled to receive the Shares
upon conversion shall be treated for all purposes as the record holder or
holders of such Shares on such date.
(c) NOTICES OF RECORD DATE. In the event of (i) any
declaration by the Corporation of a record date 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 or (ii) any capital reorganization
of the Corporation, any classification or recapitalization of the capital stock
of the Corporation, any merger or consolidation of the Corporation, and any
transfer of all or substantially all of the assets of the Corporation to any
other Corporation, or any other entity or person, or any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to each holder of a Convertible Note at least twenty (20)
days prior to the record date specified therein, a notice specifying (A) the
date on which any such record is to be declared for the purpose of such dividend
or distribution and a description of such dividend or distribution, (B) the date
on which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective
and (C) the time, if any, that is to be fixed, as to when the holders of record
of common stock (or other securities) shall be entitled to exchange their
Shares(or other securities) for securities or other property deliverable upon
such reorganization, transfer, consolidation, merger, dissolution or winding up.
(d) STOCK DIVIDENDS; STOCK SPLITS; ETC. In the event that the
Corporation shall (i) take a record of holders of shares of the common stock for
the purpose of determining the holders entitled to receive dividends payable in
shares of common stock, (ii) subdivide the outstanding shares of common stock,
(iii) combine the outstanding Shares into smaller number of shares or (iv)
issue, by reclassification of the common stock, any other securities of the
Corporation, then, in each such case, the Conversion Price then in effect shall
be adjusted so that upon conversion of a Convertible Note then outstanding the
number of Shares into which such Convertible Note are convertible after the
happening of any of the events described in clauses (i) through (iv) above shall
be the number of such Shares into which such shares would have been converted if
so converted immediately after the happening of such event or any record date
with respect thereto.
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(e) COMMON STOCK RESERVED. The Corporation shall reserve and
keep available out of its authorized but unissued common stock such numbers of
Shares as shall from time to time be sufficient to effect conversion of all of
the then outstanding shares of Convertible Note. In the event there are
insufficient shares to effect a conversion, the Corporation shall increase the
number of authorized shares to effect conversion. In the event shareholder
approval is required to increase the authorized shares, the holder shall be
entitled to vote with the holders of the common stock, as a single class, where
each Convertible Note shall be entitled to that number of votes to which it
would be entitled had all of the Convertible Note had been converted into Shares
were notice of conversion given on the date of such vote. No sale or disposition
of all or substantially all of the Corporation's assets shall take place without
the approval of the holders of the Convertible Note, voting as a single class.
(f) VOTING RIGHTS OF CONVERTIBLE NOTE HOLDERS. Except as
provided for in Section 2(e), the holders of a Convertible Note shall not be
entitled to vote on any matters submitted to the stockholders of the
Corporation.
(g) RANKING. The Convertible Note shall rank senior to any
other class of capital stock of the Corporation now or hereafter issued as to
the payment of dividends and the distribution of assets on redemption,
liquidation, dissolution or winding up of the Corporation.
ARTICLE III
PREPAYMENT
3.1 PREPAYMENT AT THE OPTION OF THE BORROWER. The principal amount
outstanding on the Note, and all interest accrued thereon, may be prepaid by the
Borrower, in whole but not in part; provided, that written notice is delivered
to the Holder not more than sixty (60) days nor less than thirty (30) days prior
to the applicable prepayment date. Holder may exercise any rights or options it
may xxxx hereunder up until any such prepayment is made.
ARTICLE IV
EVENTS OF DEFAULT
4.1 The occurrence of any of the following events of default ("Event of
Default") shall, at the option of the Holder hereof, make all sums or principal
and interest then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable, all without demand, presentment of
notice, or grace period, all of which hereby are expressly waived, except as set
forth below:
(a) FAILURE TO PAY PRINCIPAL OR INTEREST. The Borrower fails
to pay any installment of principal or interest hereon when due and such failure
continues for a period of thirty (30) days after written notice to the Borrower
from the Holder.
(b) BREACH OF COVENANT. The Borrower breaches any covenant or
other term or condition of this Note and such breach continues for a period of
ten (10) days after written notice to the Borrower from the Holder.
(c) BREACH OF REPRESENTATIONS AND WARRANTIES. Any
representation or warranty of the Borrower made herein, in the Subscription
Agreement, or in any statement or certificate given in writing pursuant hereto
or in connection herewith shall be false or misleading in any material respect.
(d) RECEIVER OR TRUSTEE. The Borrower shall make an assignment
for the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business; or such a receiver or trustee shall otherwise be appointed.
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(e) JUDGMENTS. Any money judgment, writ or similar process
shall be entered or filed against Borrower or any of its property or other
assets for more than $25,000, and shall remain unvacated, unbonded or unstayed
for a period of sixty (60) days.
(f) BANKRUPTCY. Bankruptcy, insolvency, reorganization or
liquidation proceeding or other proceedings for relief under any bankruptcy law
or any law for the relied of debtors shall be instituted by or against the
Borrower.
ARTICLE V
MISCELLANEOUS
5.1 FAILURE OR INDULGENCY NOT WAIVER. No failure or delay on the part
of Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedied existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
5.2 NOTICES. Any notice herein required or permitted to be given shall
be in writing and may be personally served and shall be deemed to be delivered
upon receipt or shall be deemed to have been given three (3) days after being
deposited in the United States mail, certified, registered, with postage
pre-paid and properly addressed or on receipt, or sent by fax transmission (with
the original sent by certified or registered mail or by overnight courier) and
shall be deemed to have been delivered on the day telecopied. Both Xxxxxx and
Borrower may change the addresses and fax number for service of written or fax
notice to the other as herein provided.
5.3 AMENDMENT PROVISIONS. The term "Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or later amended or supplemented, then as so amended or supplemented.
5.4 ASSIGNABILITY. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns.
5.5 COST OF COLLECTION. If default is made in the payment of this Note,
Borrower shall pay the Holder hereof costs of collection, including attorney's
fees.
5.6 GOVERNING LAW. This Note shall be governed by the internal laws of
the State of Florida, without regard to the principles of conflict of laws.
IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be signed by the
undersigned on this 26th day of March, 1999.
OMNICOMM SYSTEMS, INC.
By:
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Xxxxx X. Xxxxxxxxx, Director
and Chief Financial Officer
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