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 PRODUCTS, INC.
SERIES B 6.5% CONVERTIBLE PROMISSORY NOTE
$50,000.00 BOCA RATON, FLORIDA
APRIL 15, 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 TRIPLE CROWN CONSULTING
INC., or assignee (the "Holder"), at Boca Raton, Florida or at such
other place as Holder shall from time to time direct, on or before
April 14, 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, twelve
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 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 .70, 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 Voting Rights. If at any time or from time to time there
occurs matters that require a vote by the shareholders of the
Company, the Holder shall have the right to cast votes equal
to twenty times the number of shares then convertible as of
the date of the vote required.
3.4 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
2
3.5 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.
3.6 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.
3.7 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.
3.8 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.
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 200% of the then shares to be issued upon conversion of the
Notes. A copy of this Registration
3
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 ninety days from
the date of its initial filing, 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.
7.1 No additional Issuance with Registration Rights. Company
agrees that without the written consent of the Holder, it
shall not issue common shares or securities that are
convertible into common shares that have piggyback or demand
registration rights while the Note is still outstanding.
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 0000 XX 000xx Xxxxxx, Xxxxxxxxx Xxx, Xxxxx Xxxxx
Xxxxx, XX 00000. Notices to the Holder shall be directed to
Xxxxxx at the Holder's address of record on the Company's
books. A party may change its address for notice by giving
written notice to the other party in accordance with this
Section.
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
4
arbitration, brought by any party in which this Note is a
subject shall be brought in Florida
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/s Xxxxx Xxxxxxxx
5
EXHIBIT `A'
CONVERSION NOTICE
TO: ChampionLyte Products, Inc.
0000 XX 000xx Xxxxxx, Xxxxxxxxx Xxx.,
Xxxxx Xxxxx Xxxxx, XX 00000
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due April
14, 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.
0000 XX 000xx Xxxxxx, Xxxxxxxxx Xxx.,
Xxxxx Xxxxx Xxxxx, XX 00000
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due April 14, 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
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 PRODUCTS, INC.
SERIES B 6.5% CONVERTIBLE PROMISSORY NOTE
$50,000.00 BOCA RATON, FLORIDA
JUNE 30, 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 TRIPLE CROWN
XXXXXXXXXX.XXX, or assignee (the "Holder"), at Boca Raton, Florida or
at such other place as Holder shall from time to time direct, on or
before June 29, 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, twelve
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 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 .70, 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 Voting Rights. If at any time or from time to time there
occurs matters that require a vote by the shareholders of the
Company, the Holder shall have the right to cast votes equal
to twenty times the number of shares then convertible as of
the date of the vote required.
3.4 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
2
3.5 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.
3.6 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.
3.7 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.
3.8 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.
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 200% of the then shares to be issued upon conversion of the
Notes. A copy of this Registration
3
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 ninety days from
the date of its initial filing, 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.
7.1 No additional Issuance with Registration Rights. Company
agrees that without the written consent of the Holder, it
shall not issue common shares or securities that are
convertible into common shares that have piggyback or demand
registration rights while the Note is still outstanding.
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 0000 XX 000xx Xxxxxx, Xxxxxxxxx Xxx, Xxxxx Xxxxx
Xxxxx, XX 00000. Notices to the Holder shall be directed to
Xxxxxx at the Holder's address of record on the Company's
books. A party may change its address for notice by giving
written notice to the other party in accordance with this
Section.
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,
4
brought by any party in which this Note is a subject shall be
brought in Florida
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/s Xxxxx Xxxxxxxx
5
EXHIBIT `A'
CONVERSION NOTICE
TO: ChampionLyte Products, Inc.
0000 XX 000xx Xxxxxx, Xxxxxxxxx Xxx.,
Xxxxx Xxxxx Xxxxx, XX 00000
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due June
29, 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.
0000 XX 000xx Xxxxxx, Xxxxxxxxx Xxx.,
Xxxxx Xxxxx Xxxxx, XX 00000
Attn: Corporate Secretary
The undersigned owner of this 6.5% Convertible Note due June 29, 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):
------------------------
------------------------
------------------------
------------------------
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