PRISM SOFTWARE CORPORATION
CONVERTIBLE PROMISSORY NOTE
$__________ Lake Forest, California
September ___, 2000
FOR VALUE RECEIVED, the undersigned, Prism Software Corporation, a
Delaware corporation ("Maker"), promises to pay to the order of
____________________ ("Payee"), at such place as Payee may from time to time
designate, the principal sum of ____________________ Dollars ($__________), with
interest on the principal balance from time to time owing at the rate of 8% per
annum, all principal and interest due and payable one year from the date of this
Note.
Interest not paid when due shall thereafter bear like interest as the
principal, but unpaid interest so compounded shall not exceed the maximum rate
permitted by law.
1. PREPAYMENT. Maker may prepay all or any portion of the principal
balance of this Note, plus accrued interest, at any time without premium or
penalty. Any such payment shall be credited first to interest then due and the
remainder to principal.
2. USURY LIMITATION. In no event shall the interest rate payable
pursuant to this Note be higher than permitted by applicable law.
3. DEFAULT AND ACCELERATION. Upon the occurrence of any Event of
Default (as defined below), this Note shall be in default and Payee shall have
the right, at Payee's sole option, to declare all amounts owed under this Note
immediately due and payable. Each of the following is an "Event of Default": (a)
the failure of Maker to pay any portion of principal or interest when due, which
failure is not cured within three calendar days after written notice, (b) the
entry of a decree or order for relief in respect of Maker under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other
applicable Federal or state bankruptcy, insolvency or similar law, or appointing
a receiver, trustee, or custodian of Maker or for any substantial part of
Maker's property, which decree or order is not stayed or set aside within 60
days thereafter, (c) the filing by Maker of a petition, answer or consent
seeking relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or the consent by Maker to the institution of proceedings
thereunder or to the appointment of a receiver, trustee or custodian, or (d) any
breach of, or default under, the Bridge Loan Agreement of even date herewith
between Maker and Payee.
4. CONVERSION RIGHT.
(a) CONVERSION ON DEFAULT. In the event Maker defaults under
this Note, then Payee may thereafter from time to time convert all or any
portion of the unpaid principal balance of this Note, and any accrued interest,
into shares of the Company's common stock ("Common Stock") at a price of $ .05
per share (the "Conversion Price"). The Conversion Price is subject to
adjustment as set forth below.
(b) MECHANICS OF CONVERSION. Conversion shall be effected by
giving the Company written notice at its principal executive office of the
election to convert (the "Conversion Notice") and by delivering this Note to
such office for endorsement by the Company to reflect the principal amount
converted to shares of Common Stock. The Conversion Notice shall state the name
or names of the parties to whom the certificate or certificates for shares of
common stock should be issued and the address to which the certificates are to
be sent. As soon as practicable thereafter, the Company shall issue and deliver
to Payee at the address or addresses designated in the Conversion Notice the
certificate or certificates for the number of shares of common stock to which
such parties are entitled. At its election, the Company may issue fractional
shares or, in lieu thereof, make a cash payment to Payee in an amount equal to
the number of fractional shares to be issued multiplied by the then fair market
value of one share of the Company's Common Stock as determined in good faith by
the Company's Board of Directors. Conversion shall be deemed to have occurred on
the close of business on the date the Conversion Notice and this Note are
received by the Company (the "Conversion Date").
(c) CONVERSION PRICE. In order to prevent dilution of the
conversion rights granted under this Note, the Conversion Price will be subject
to adjustment from time to time as follows:
(i) If the Company at any time subdivides (by any
stock split, stock dividend or otherwise) its outstanding shares of Common Stock
into a greater number of shares, the Conversion Price will be proportionately
reduced, and if the Company at any time combines (by reverse stock split, or
otherwise) its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price will be proportionately increased.
(ii) If any capital reorganization, reclassification,
consolidation or merger or any sale of substantially all of the Company's assets
(collectively, the "Corporate Transactions") is effected in such a way that the
holders of Common Stock become entitled to receive stock, securities or assets
with respect to or in exchange for Common Stock, then, as a condition to such
Corporate Transaction, lawful and adequate provision will be made whereby the
Payee will thereafter have the right to acquire and receive in lieu in shares of
Common Stock, such shares, securities or assets as would have been issuable to
the Payee if it had converted the principal amount of this Note immediately
prior to such Corporate Transaction.
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5. ATTORNEYS' FEES. In the event any judicial proceedings are
instituted to enforce or interpret the rights and obligations of the Company and
the Lender under this Note, the prevailing party in such proceeding shall be
entitled to reasonable attorneys' fees and costs, as well as related costs of
collection and appeal.
6. GOVERNING LAW. This Note and all transactions hereunder and/or
evidenced hereby shall be governed by, construed under, and enforced in
accordance with the laws of the State of California, without regard to any
choice of law or conflict of law provisions thereof.
7. SEVERABILITY. Should any provision of this Note be declared or be
determined by any court to be invalid, illegal or unenforceable, such provision
shall be severable from the remainder of this Note, and the legality, validity
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
8. WAIVER OF PROTEST. Maker hereby waives presentment, demand for
payment, notice of presentment, notice of dishonor, protest and demand.
9. WAIVERS. None of the provisions of this Note and none of Xxxxx's
rights or remedies on account of any past or future defaults shall be deemed to
have been waived by Xxxxx's acceptance of any past due payment or by any other
indulgence granted by Xxxxx to Maker.
Prism Software Corporation
By ____________________
Xxx Xxxxxxx, President/CEO
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