EXHIBIT 10.26
THE SHARES REPRESENTED BY THIS CONVERTIBLE NOTE AND THE CONVERTIBLE NOTE HAVE
NOT BEEN REGISTERED UNDER THE FEDERAL OR ANY STATE SECURITIES LAWS AND MAY NOT
BE SOLD, TRANSFERRED OR HYPOTHECATED IN ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH LAWS AS MAY BE APPLICABLE OR, AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM SUCH APPLICABLE LAWS EXIST.
CONVERTIBLE NOTE
$_______________ _____________, 2005
FOR VALUE RECEIVED, UltraStrip Systems, Inc. (the "Company"), a Florida
corporation, hereby promises to pay to the order of _______________ (the
"Holder"), at , or at such other office as Holder designates in writing to the
Company, the principal sum of ___________________ and No/100 Dollars
($_________) together with interest thereon computed at the annual rate of five
percent (5%). Principal and interest shall be due and payable 12 months from the
date of this Note unless this Note has been prepaid by the Company or converted
as provided below. While in default, this Note shall bear interest at the rate
of 18% per annual or such maximum rate of interest allowable under the laws of
the State of Florida. Payments shall be made in lawful money of the United
States.
1. Conversion to Common Stock. The Holder shall have the right to
convert this Note into shares of common stock of the Company at the rate of
$1.00 per share as adjusted (the "Conversion Price") at any time beginning after
one year from the above date.
2. Anti-Dilution Protection.
(a) In the event, prior to the payment of this Note, the Company
shall issue any of its shares of common stock as a stock dividend or shall
subdivide the number of outstanding shares of common stock into a greater number
of shares, then, in either of such events, the shares obtainable pursuant to
conversion of this Note shall be increased proportionately; and, conversely, in
the event that the Company shall reduce the number of outstanding shares of
common stock by combining such shares into a smaller number of shares, then, in
such event, the number of shares of common stock obtainable pursuant to the
conversion of this Note shall be decreased proportionately. Any dividend paid or
distributed upon the common stock in shares of any other class of capital stock
of the Company or securities convertible into shares of common stock shall be
treated as a dividend paid in common stock to the extent that the shares of
common stock are issuable upon the conversion of the Note. In the event that the
Company shall pay a dividend consisting of the securities of any other entity or
in cash or other property, upon conversion of this Note, the Holder shall
receive the securities, cash, or property which the Holder would have been
entitled to if the Holder had converted this Note immediately prior to the
record date of such dividend.
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(b) In the event, prior to the payment of this Note, the Company
shall be recapitalized by reclassifying its outstanding common stock (other than
into shares of common stock with a different par value, or by changing its
outstanding shares of common stock to shares without par value), or in the event
the Company or a successor corporation, partnership, limited liability company
or other entity (any of which is defined as a "Corporation") shall consolidate
or merge with or convey all or substantially all of its, or of any successor
Corporation's property and assets to any other Corporation or Corporations (any
such other Corporation being included within the meaning of the term "successor
Corporation" used in the context of any consolidation or merger of any other
Corporation with, or the sale of all or substantially all of the property of any
such other Corporation to, another Corporation or Corporations), or in the event
of any other material change in the capital structure of the Company or of any
successor Corporation by reason of any reclassification, reorganization,
recapitalization, consolidation, merger, conveyance or otherwise, then, as a
condition of any such reclassification, reorganization, recapitalization,
consolidation, merger or conveyance, a prompt, proportionate, equitable, lawful
and adequate provision shall be made whereby the Holder of this Note shall
thereafter have the right to purchase, upon the basis and the terms and
conditions specified in this Note, in lieu of the securities of the Company
theretofore purchasable upon the conversion of this Note, such shares,
securities or assets as may be issued or payable with respect to or in exchange
for the number of securities of the Company theretofore obtainable upon
conversion of this Note as provided above had such reclassification,
reorganization, recapitalization, consolidation, merger or conveyance not taken
place; and in any such event, the rights of the Holder of this Note to any
adjustment in the number of shares of common stock obtainable upon conversion of
this Note, as provided, shall continue and be preserved in respect of any
shares, securities or assets which the Holder becomes entitled to obtain.
Notwithstanding anything herein to the contrary, this paragraph 2 shall not
apply to a merger with a subsidiary provided the Company is the continuing
Corporation and provided further such merger does not result in any
reclassification, capital reorganization or other change of the securities
issuable under this Note. The foregoing provisions of this paragraph 2(b) shall
apply to successive reclassification, capital reorganizations and changes of
securities and to successive consolidation, mergers, sales or conveyances.
(c) In the event the Company, at any time while this Note shall
remain outstanding, shall sell all or substantially all of its assets, or
dissolves, liquidates, or winds up its affairs, prompt, proportionate,
equitable, lawful and adequate provision shall be made as part of the terms of
any such sale, dissolution, liquidation, or winding up such that the Holder of
this Note may thereafter receive, upon exercise hereof, in lieu of the
securities of the Company which it would have been entitled to receive, the same
kind and amount of any shares, securities or assets as may be issuable,
distributable or payable upon any such sale, dissolution, liquidation or winding
up with respect to each common share of the Company; provided, however, that in
the event of any such sale, dissolution, liquidation or winding up, the right to
convert this Note shall terminate on a date fixed by the Company, such date so
fixed to be not earlier than 6:00 p.m., New York time, on the 30th day after the
date on which notice of such termination of the right to convert this Note has
been given by mail to the Holder of this Note at such Xxxxxx's address as it
appears on the books of the Company.
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3. Event of Default. In the event the Company shall commence any case,
proceeding or other action under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to its debts, or seeking appointment of
a receiver, custodian, trustee or other similar official for it or for all or
any substantial part of its assets; or there shall be commenced against the
Company, any case, proceeding or other action which results in the entry of an
order for relief or any such adjudication or appointment remains undismissed,
undischarged or unbonded for a period of 30 days; or there shall be commenced
against the Company, any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, restraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 10 days from the entry thereof; or the Company
shall make an assignment for the benefit of creditors; or the Company shall be
unable to, or shall admit in writing the inability to, pay its debts as they
become due; or the Company shall take any action indicating its consent to,
approval of, or acquiescence in, or in furtherance of, any of the foregoing;
then, or any time thereafter during the continuance of any of such events, the
entire unpaid balance of this Note then outstanding, together with accrued
interest thereon, if any, shall be and become immediately due and payable
without notice of demand by Xxxxxx.
4. Prepayment. The Notes together with any accrued but unpaid
interest may be prepaid at any time for cash on 30 days' prior written notice,
subject to the right of holders of the Notes to convert into shares of common
stock of the Company prior to any optional repayment. The Notes are also
mandatorily prepayable by the company upon the occurrence of a Liquidity Event
as described in the Amended Term Sheet dated March 17, 2005.
6. Miscellaneous.
(a) All makers and endorsers now or hereafter becoming parties
hereto jointly and severally waive demand, presentment, notice of non-payment
and protest.
(b) This Note may not be changed or terminated orally, but only with
an agreement in writing, signed by the parties against whom enforcement of any
waiver, change, modification, or discharge is sought with such agreement being
effective and binding only upon attachment hereto.
(c) This Note and the rights and obligations of the Holder and of
the undersigned shall be governed and construed in accordance with the laws of
the State of Florida.
IN WITNESS WHEREOF, the Company has caused this Note to be executed as
of the date aforesaid.
By: _____________________________
President
