ROLLTECH, INC.
10% SUBORDINATED CONVERTIBLE NOTE DUE OCTOBER 1ST, 2005
This 10% Convertible Note (called this "Convertible Note") is dated October 1st,
2003.
Borrower: Victoria Industries, Inc.
Address: 000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
The word "Borrower" means the original Borrower and anyone else who merges with
the Borrower or assumes the Borrower's obligations under this Convertible Note.
However, the assumption of the Borrower's obligations under this Note shall not
release the Borrower from such obligations.
Lender: Xxxxxxxxx Corp.
Address: 000 Xxxx Xxx., Xxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxx
The Lender may transfer all or any part of this Convertible Note with written
notice to the Borrower of the transfer, including the name, address of the
transferee and the amount of the Convertible Note transferred. The Borrower may
treat the Lender as the owner of this Convertible Note until it received written
notice of a transfer of all or part of this Convertible Note to another Lender.
The word "Lender" means the original Lender and anyone else to whom this
Convertible Note is transferred.
1. PROMISE TO PAY. In return for a loan that is received from the original
Lender, the Borrower promises to pay to the Lender $175,000 (called
"principal"), plus interest at a rate of 10% per annum. The Borrower will repay
the entire principal 2 years from date, unless the Lender demands earlier
payment under "Xxxxxx's Right of Acceleration" below or the parties agree to
extend the due date. The Borrower may make earlier principal payments.
2. INTEREST PAYMENTS. The Borrower will make quarterly interest payments to
the Lender in the amount of $4,375, each payable on March 31, June 30, September
30 and December 31 beginning on March 31, 2004. The first payment shall also
include interest from this day through March 31, 2004, if any. However, if an
interest payment is due on a Saturday, Sunday or legal holiday, then the
Borrower will make the interest payment the next day.
3. XXXXXX'S RIGHT OF ACCELERATION. The Lender has the right, called
acceleration, to declare the entire unpaid principal and interest under this
Convertible Note due immediately for any of the following causes:
(a) If the Borrower fails to make any payment or principal or interest
within fifteen days after its due date.
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(b) If the Borrower fails to keep any other promise made in this
Convertible Note within thirty days after written notice from the
Lender.
(c) If one or more judgments is entered against the Borrower which exceed,
in the aggregate, $100,000 if the Borrower does not pay such judgments
or arrange for their enforcement to be postponed no later than within
thirty days after the judgments have been entered.
(d) If bankruptcy, receivership, or insolvency proceedings are started by
or against the Borrower, or if the Borrower dissolves, liquidates or
otherwise winds up its business.
4. AGREEMENT OF SUBORDINATION. The Lender's rights to receive payments of
principal, interest and fees under this Convertible Note is subordinated to the
prior payment of all loans or other extensions of credit made to the Borrower by
any bank, savings and loan association, finance company, insurance company or
any similar financial institution (such loans and extensions of credit, together
with any interest or fees payable on or in connection with such loans and
extensions of credit, are from now on called "Senior Indebtedness") on the
following types:
(a) The Lender shall not be entitled to receive any principal, interest or
fee payments, and the Borrower shall not make such payments, unless,
at the time of such payment (i) the Borrower shall have had all
amounts due at such time under any Senior Indebtedness, and (ii) the
Borrower shall not be in default under the terms of any Senior
Indebtedness and payment of the amount due under this Note would not
result in a default under any Senior Indebtedness. The word "default"
includes defaults declared by holders of any Senior Indebtedness and
any conditions, event or act, which, with notice or the passage of
time, would result in a default under any Senior Indebtedness.
(b) If bankruptcy, receivership, or insolvency proceedings by or against
the Borrower or its property occurs, or if the Borrower dissolves,
liquidates its assets or otherwise winds up its business, the Borrower
shall pay all outstanding Senior Indebtedness before making any
payment of principal, interest or fees due under this Convertible
Note. Any payments or distributions (including distributions of the
Borrower's non-cash assets or securities that would otherwise be made
to the Lender will first be paid on account of all outstanding Senior
Indebtedness.
(c) If the Lender demands early payment of this Convertible Note for any
reason, the Borrower shall first pay all outstanding Senior
Indebtedness before making any payments under this Convertible Note.
(d) If the Lender receives any payment, which is not entitled under this
Note, the Lender shall hold such payment for the benefit of the holder
of Senior Indebtedness and deliver such payment or distribution to the
holders of Senior Indebtedness or their representatives for payment on
account of all outstanding Senior Indebtedness.
(e) After the Senior Indebtedness has been paid in full, the Lender shall
be entitled to the rights of Senior Indebtedness to receive payments
until all amounts due under this Note are paid in full
5. NOTICES. All notices under this Note must be in writing. They may be given
by (a) personal delivery, or (b) certified mail, return receipt requested. Each
Party mush accept and
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claim the notices given by the other. Notices shall be addressed to the other
party at the address written at the beginning of this Note, or, if the notice is
to a Lender to whom this Note was transferred, the address stated in the notice
to the Borrower of such transfer. Either party may notify the other of a change
of address.
6. CONVERSION OF CONVERTIBLE NOTES.
6.1. RIGHT TO CONVERT. Subject to and upon compliance with the provisions of
this Section 6, at the option of the holder of any Convertible Notes, such
Convertible Notes, or any portion of the principal amount thereof, may at
any time at or before the close of business on the maturity date of such
Convertible Notes be converted at 100% or so much of the principal amount
of such Convertible Notes as are so converted into Common Stock at the
Conversion Price, determined as hereinafter provided, in effect at the date
of the conversion.
6.2. MANNER OF EXERCISE OF CONVERSION PRIVILEGE. In order to exercise the
conversion privilege, the holder shall surrender this Convertible Note to
the Company at any time during usual business hours at its office or agency
in the City of New York, State of New York, accompanied by written notice
to the Company at such office or agency that the holder elects to convert
this Convertible Note or a specified portion thereof and stating the name
or names (with address) in which the certificate or certificates for shares
of Common Stock which shall be issuable on such conversion shall be issued.
All Convertible Notes surrendered for conversion shall (if so required by
the Company) be accompanied by proper assignments thereof to the Company or
be blank. As promptly as practicable after the receipt of such notice and
the surrender of this Convertible Note as aforesaid the Company shall issue
and deliver at such office or agency to the holder, or on his written
order, a certificate or certificates for the number of full shares of
Common Stock issuable on such conversion in accordance with the provision
of this Article and cash, as provided in Subsection 3, in respect of any
fraction of a share of Common Stock otherwise issuable upon such
conversion. Such conversion shall be deemed to have been effected at the
close of business on the Date of Conversion, and the person or persons in
whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become
the holder or holders of record of the shares represented thereby on such
date; provided, however, that any such surrender on any date when the stock
transfer books of the Company shall be closed shall constitute the person
or persons in whose name or names the certificate or certificates for such
shares are to be issued as the record holder or holders thereof for all
purposes at the close of business on the next succeeding day on which such
stock transfer books are open, and the Convertible Note surrendered shall
not be deemed to have been converted until such time for all purposes, but
such conversion shall be at the conversion price in effect at the close of
business on the date of such surrender. Anything contained in this Section
6.2 to the contrary notwithstanding, the Company shall not be obligated to
effect the transfer of any Conversion Shares upon conversion of any portion
of any Convertible Notes or cause any Conversion Shares upon conversion of
any Convertible Notes to be registered in any name or names other than the
name of the holder of the Convertible Notes, converted or to be converted
(or such holder's nominee or nominees) unless such
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xxxxxx delivers to the Company an opinion of counsel reasonably
satisfactory to the Company to the effect that such transfer is in
compliance with applicable securities laws.
In case any Convertible Note shall be surrendered for conversion of only a
portion of the principal amount thereof, the Company shall execute and
deliver to the holder of such Convertible Note, at the expense of the
Company, a new Convertible Note in the denomination or denominations
($1,000 and integral multiples thereof, plus one Convertible Note in a
lesser denomination, if required) as such holder may request in an
aggregate principal amount equal to the unconverted portion of the
Convertible Note so surrendered.
6.3. FRACTIONS OF SHARE. The Company shall not be required to issue fractions of
a share or scrip representing fractional shares of Common Stock upon
conversion of Convertible Note. If any fraction of a share of Common Stock
would, except for the provisions of this Section be issuable on the
conversion of any Convertible Notes (or specified portions thereof), the
Company shall pay a cash adjustment in respect of such fraction, equal to
the value of such fraction based on the then conversion price.
6.4. CONVERSION PRICE.
(i) The price at which shares of Common Stock shall be delivered upon
conversion (herein called the Conversion Price) shall be $0.10 per
share of Common Stock.
(ii) The Conversion Price shall not be subject to adjustment for stock
splits and/or reverse splits that may occur prior to such conversion.
6.5 NOTICE OF DISTRIBUTIONS, RIGHTS OF REORGANIZATION, ETC. In case at any
time:
(1) the Company shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of stock of any class or other
rights;
(2) there shall be any capital reorganization, or reclassification of the
capital stock of the Company, or consolidation or merger of the Company, or
sale of all or substantially all of its assets to, another corporation; or
(3) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then in any one or more of said cases, the Company shall give written
notice, to the holder of this Convertible Note, of the date on which (a)
the books of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights, or (b) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also
specify the dates as of which the holders of Common Stock of record shall
participate in such dividend, distribution or subscription rights, or shall
be entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization,
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reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such written notice shall be given at least
20 days prior to the record date or the date on which the Company's
transfer books are closed in respect thereto.
6.6 TAXES ON CONVERSION. The issue of certificates on conversion of Convertible
notes shall be made without charge to the converting Noteholder for any tax
in respect of the issue thereof. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of stock in any name other than that of
the holder of any Note converted, and the Company shall not be required to
issue or deliver any certificate in respect to such stock unless and until
the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
6.7 COMPANY TO RESERVE STOCK. The Company shall at all times reserve and keep
available out of its authorized but unissued stock, for the purpose of
effecting the conversion of the Convertible Notes, such number of its duly
authorized shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding Convertible Notes. If any
shares of Common Stock, reserved or to be reserved, for such purposes,
required registration under any Federal or state law before such shares may
be validly issued to the holder, the Company covenants that it will in good
faith and as expeditiously as possibly endeavor to secure such registration
or approval, as the case may be.
The Company will not take any action, which would cause the conversion
price to be below the then par value, if any, per share of the Common
Stock, or in the case of no-par stock, below the amount for which such
shares may be issued as fully paid and nonassesable.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Convertible Notes will upon issue be fully paid and
nonassessable and free from all taxes, liens and charges with respect to
the issue thereof.
Dated: September 9th, 2003
Signature: /s/ Xxxxxx Xxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxx
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Title: President
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