EXHIBIT 4.5
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO COMMERCIAL CONSOLIDATORS CORP. THAT SUCH REGISTRATION IS NOT
REQUIRED.
SECURED CONVERTIBLE NOTE
FOR VALUE RECEIVED, COMMERCIAL CONSOLIDATORS CORP., an Alberta,
Canada corporation (hereinafter called "Borrower"), hereby promises to pay to
ALPHA CAPITAL XXXXXXXXXXXXXXXXXX, Xxxxxxxxx 0, 0000 Xxxxxxxxxxx, Xxxxx,
Xxxxxxxxxxxx, Xxx: 000-00-00000000 (the "Holder") or order, without demand, the
sum of One Million Dollars ($1,000,000.00), with simple interest accruing at the
annual rate of 8%, on March 15, 2003 (the "Maturity Date").
This Note has been entered into pursuant to the terms of a
subscription agreement between the Borrower and the Holder, dated of even date
herewith (the "Subscription Agreement"), and shall be governed by the terms of
such Subscription Agreement. Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as is set forth
in the Subscription Agreement. The following terms shall apply to this Note:
ARTICLE I
GENERAL PROVISIONS
1.1 Payment Grace Period. The Borrower shall have a ten (10) day
grace period to pay any monetary amounts due under this Note, after which grace
period a default interest rate of fifteen percent (15%) per annum shall apply to
the amounts owed hereunder.
1.2 Conversion Privileges. The Conversion Privileges set forth in
Article II shall remain in full force and effect immediately from the date
hereof and until the Note is paid in full. Except as set forth in Section 9.7 of
the Subscription Agreement, the Borrower may not prepay the Note at any time. To
the extent prepayment is permitted under Section 9.7 of the Subscription
Agreement, the Borrower shall not pay any penalty or premium, except as set
forth in the Subscription Agreement. The Note shall be payable in full on the
Maturity Date, unless previously converted into Common Stock in accordance with
Article II hereof; provided, that if the Borrower violates or breaches in any
material respect any of its covenants or agreements to register the Registrable
Securities pursuant to Section 10 of the Subscription Agreement, the Borrower
may not pay this Note after the Maturity Date, without the consent of the
Holder.
1.3 Interest Rate. Interest payable on this Note shall accrue at the
annual rate of eight percent (8%) and be payable on each annual anniversary of
this Note or sooner, upon each Conversion, and on the Maturity Date, accelerated
or otherwise, when the principal and remaining accrued but unpaid interest shall
be due and payable, or sooner as described below.
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ARTICLE II
CONVERSION RIGHTS
The Holder shall have the right to convert the principal due
under this Note into Shares of the Borrower's Common Stock, no par value per
share ("Common Stock") as set forth below.
2.1. Conversion into the Borrower's Common Stock.
(a) The Holder shall have the right from and after the issuance of
this Note and then at any time until this Note is fully paid, to convert any
outstanding and unpaid principal portion of this Note, and accrued interest, at
the election of the Holder (the date of giving of such notice of conversion
being a "Conversion Date") into fully paid and nonassessable shares of common
stock of Borrower as such stock exists on the date of issuance of this Note, or
any shares of capital stock of Borrower into which such stock shall hereafter be
changed or reclassified (the "Common Stock") at the conversion price as defined
in Section 2.1(b) hereof (the "Conversion Price"), determined as provided
herein. Upon delivery to the Borrower of a Notice of Conversion as described in
Section 9 of the Subscription Agreement of the Holder's written request for
conversion, Borrower shall issue and deliver to the Holder within five business
days from the Conversion Date that number of shares of Common Stock for the
portion of the Note converted in accordance with the foregoing. At the election
of the Holder, the Borrower will deliver accrued but unpaid interest on the Note
in the manner provided in Section 1.3 through the Conversion Date directly to
the Holder on or before the Delivery Date (as defined in the Subscription
Agreement). The number of shares of Common Stock to be issued upon each
conversion of this Note shall be determined by dividing that portion of the
principal of the Note and interest to be converted, by the Conversion Price.
(b) Subject to adjustment as provided in Section 2.1(c) hereof, the
Conversion Price per share shall be the lower of (i) One Dollar and Ninety Cents
($1.90) ("Maximum Base Price") or (ii) eighty percent (80%) of the three lowest
closing prices for the Common Stock on the OTC Pink Sheets, NASD OTC Bulletin
Board, NASDAQ SmallCap Market, NASDAQ National Market System, American Stock
Exchange, or New York Stock Exchange, as applicable, or if not then trading on
any of the foregoing, such other principal market or exchange where the Common
Stock is listed or traded (whichever of the foregoing is at the time the
principal trading exchange or market for the Common Stock, the "Principal
Market") for the fifteen (15) trading days prior to but not including the
Conversion Date; provided, however, that in no event shall the Conversion Price
be less than $1.50 (the "Floor Price") unless a condition described in Section
9.9 of the Subscription Agreement shall have occurred. For purposes of the NASD
OTC Bulletin Board, closing bid price shall mean the last closing bid price as
reported by Bloomberg Financial.
(c) The Maximum Base Price described in Section 2.1(b)(i) and the
Floor Price described in Section 2.1(b)(ii) above and number and kind of shares
or other securities to be issued upon conversion determined pursuant to Section
2.1(a) and 2.1(b), shall be subject to adjustment from time to time upon the
happening of certain events while this conversion right remains outstanding, as
follows:
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X. Xxxxxx, Sale of Assets, etc. If the Borrower at any time
shall consolidate with or merge into or sell or convey all or substantially all
its assets to any other corporation, this Note, as to the unpaid principal
portion thereof and accrued interest thereon, shall thereafter be deemed to
evidence the right to purchase such number and kind of shares or other
securities and property as would have been issuable or distributable on account
of such consolidation, merger, sale or conveyance, upon or with respect to the
securities subject to the conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance. The foregoing provision shall
similarly apply to successive transactions of a similar nature by any such
successor or purchaser. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or conveyance.
B. Reclassification, etc. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid principal portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase an adjusted number of such
securities and kind of securities as would have been issuable as the result of
such change with respect to the Common Stock immediately prior to such
reclassification or other change.
C. Stock Splits, Combinations and Dividends. If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Conversion Price shall be proportionately reduced in case
of subdivision of shares or stock dividend or proportionately increased in the
case of combination of shares, in each such case by the ratio which the total
number of shares of Common Stock outstanding immediately after such event bears
to the total number of shares of Common Stock outstanding immediately prior to
such event.
(d) During the period the conversion right exists, Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. Borrower represents that upon issuance, such shares will be duly and
validly issued, fully paid and non-assessable. Xxxxxxxx agrees that its issuance
of this Note shall constitute full authority to its officers, agents, and
transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note.
2.2 Method of Conversion. This Note may be converted by the Holder
in whole or in part as described in Section 2.1(a) hereof and the Subscription
Agreement. Upon partial conversion of this Note, a new Note containing the same
date and provisions of this Note shall, at the request of the Holder, be issued
by the Borrower to the Holder for the principal balance of this Note and
interest which shall not have been converted or paid.
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ARTICLE III
EVENT OF DEFAULT
The occurrence of any of the following events of default ("Event of
Default") shall, at the option of the Holder hereof, make all sums of principal
and interest then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable, upon demand, without presentment, or
grace period, all of which hereby are expressly waived, except as set forth
below:
3.1 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 ten (10) days after the due date. The ten (10) day
period described in this Section 3.1 is the same ten (10) day period described
in Section 1.1 hereof.
3.2 Breach of Covenant. The Borrower breaches any material covenant
or other term or condition of this Note in any material respect and such breach,
if subject to cure, continues for a period of twenty (20) days after written
notice to the Borrower from the Holder.
3.3 Breach of Representations and Warranties. Any material
representation or warranty of the Borrower made herein, in the Subscription
Agreement entered into by the Holder and Borrower in connection with this Note,
or in any agreement, statement or certificate given in writing pursuant hereto
or in connection therewith shall be false or misleading in any material respect
as of the date made and the Closing Date (as defined in the Subscription
Agreement).
3.4 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.
3.5 Judgments. Any money judgment, writ or similar final process
shall be entered or filed against Borrower or any of its property or other
assets for more than $100,000, and shall remain unvacated, unbonded or unstayed
for a period of forty-five (45) days.
3.6 Bankruptcy. Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings or relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Borrower and if instituted against Borrower are not dismissed within 45 days of
initiation.
3.7 Delisting. Delisting of the Common Stock from the American Stock
Exchange or such other principal exchange on which the Common Stock is listed
for trading; failure to comply with the requirements for continued listing on
the American Stock Exchange for a period of three consecutive trading days; or
notification from the American Stock Exchange or any Principal Market that the
Borrower is not in compliance with the conditions for such continued listing on
the American Stock Exchange or other Principal Market and the Common Stock does
not at the time of such notification comply with the initial listing
requirements of the American Stock Exchange.
3.8 Concession. A concession by the Borrower, after applicable
notice and cure periods, under any one or more obligations in an aggregate
monetary amount in excess of $100,000.
3.9 Stop Trade. An SEC stop trade order or Principal Market trading
suspension that lasts for five or more consecutive trading days.
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3.10 Failure to Deliver Common Stock or Replacement Note. Xxxxxxxx's
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note and Section 9 of the Subscription Agreement, or if
required a replacement Note.
3.11 Non-Registration Event. The occurrence of a Non-Registration
Event as described in Section 10.4 of the Subscription Agreement.
3.12 Cross Default. A default by the Borrower of a material term,
covenant, warranty or undertaking of any other agreement to which the Borrower
and Holder are parties, or the occurrence of a material event of default under
any such other agreement, in each case, which is not cured after any required
notice and/or cure period.
3.13 Guaranteed Return. In the event that by the Anniversary Date,
the Holder shall not have received the minimum Guaranteed Return specified in
Section 4.8 of this Note.
ARTICLE IV
MISCELLANEOUS
4.1 Failure or Indulgence 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 remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
4.2 Notices. Any notice herein required or permitted to be given
shall be in writing and may be personally served or sent by fax transmission
(with copy sent by regular, certified or registered mail or by overnight
courier). For the purposes hereof, the address and fax number of the Holder is
as set forth on the first page hereof. A Conversion Notice shall be deemed
delivered on (i) the business day it is received by facsimile or otherwise by
the Borrower if such notice is received prior to 11:00 A.M. New York time, or
(ii) the immediately succeeding business day if it is received by facsimile or
otherwise after 11:00 A.M. New York time on a business day or at any time on a
day which is not a business day. The address and fax number of the Borrower
shall be Commercial Consolidators Corp., 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxx X0X 0X0, Xxxxxx, attn: Xxxxxxx Xxxxxxxxxx, Chairman, telecopier number:
(000) 000-0000. Both Xxxxxx and Borrower may change the address and fax number
for service by service of notice to the other as herein provided. Notice of
Conversion shall be deemed given when made to the Borrower pursuant to the
Subscription Agreement.
4.3 Amendment Provision. The term "Note" and all reference thereto,
as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented.
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4.4 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, and may be assigned by the Holder.
4.5 Cost of Collection. If default is made in the payment of this
Note, Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.
4.6 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York. Any action brought by either
party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. Both parties and the individual
signing this Agreement on behalf of the Borrower agree to submit to the
jurisdiction of such courts. The prevailing party shall be entitled to recover
from the other party its reasonable attorney's fees and costs.
4.7 Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.
4.8 Guaranteed Minimum Return on Investment. The Holder of this Note
shall have received in cash, by a date which shall be not later than one (1)
year from the date of this Note (the "Anniversary Date"), a cash amount equal to
120% of the principal amount of this Note (the "Guaranteed Return").
Notwithstanding the foregoing, such Guaranteed Return shall, for all purposes of
this Note, the Subscription Agreement, the Pledge Agreement and the Security
Agreement given as collateral to secure the Borrower's obligations under this
Note, be deemed to have been paid to the Holder if, by such Anniversary Date,
the sum of (a) all cash interest payments received under this Note, (b) all
payments of principal and/or Premium on this Note paid in connection with any
Optional Redemption or Mandatory Redemption, (c) an amount equal to the closing
price of the Common Stock on each Conversion Date multiplied by the number of
shares of Common Stock received by Holder in connection with each such
Conversion Date, or (d) any combination of the foregoing, shall equal or exceed
$1,200,000, inclusive. Notwithstanding the foregoing, the Borrower may comply
with the provisions of this Section 4.8 by tendering payment ot the Holder, in
exchange for any then outstanding principal amount of this Note, of an amount
equal to $1,200,000, less all cash previously received by the Holder or
otherwise calculated in accordance with clauses (a), (b) and (c) above. The
tender must be made within five business days of the Anniversary Date. If the
Holder elects not to accept the tender, then the Lender waives the right to
receive the Guaranteed Return.
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IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be signed in
its name by its ___________________ on this 24th day of January, 2002.
COMMERCIAL CONSOLIDATORS CORP.
By:________________________________
Name:
Title:
WITNESS:
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NOTICE OF CONVERSION
(To be executed by the Registered Holder in order to convert the Note)
The undersigned hereby elects to convert $_________ of the principal
and $_________ of the interest due on the Note issued by COMMERCIAL
CONSOLIDATORS CORP. on January ____, 2002 into Shares of Common Stock of
COMMERCIAL CONSOLIDATORS CORP. (the "Company") according to the conditions set
forth in such Note, as of the date written below.
Date of Conversion:
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Conversion Price:
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Shares To Be Delivered:
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Signature:
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Print Name:
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Address:
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