EXHIBIT 99.4
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FORM OF CONVERTIBLE NOTE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE COMPANY THAT
SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. IN ADDITION, A SECURITIES PURCHASE AGREEMENT, DATED AS OF THE
DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTIES,
INCLUDING, WITHOUT LIMITATION, PROVISIONS WHICH (A) LIMIT THE CONVERSION RIGHTS
OF THE HOLDER, (B) SPECIFY VOLUNTARY AND MANDATORY REPAYMENT, PREPAYMENT AND
REDEMPTION RIGHTS AND OBLIGATIONS AND (C) SPECIFY EVENTS OF DEFAULT FOLLOWING
WHICH THE REMAINING BALANCE DUE AND OWING HEREUNDER MAY BE ACCELERATED.
No. 1 $1,500,000
CONVERTIBLE NOTE
of
Donini, Inc., a New Jersey corporation (together with its successors,
the "Company"), for value received hereby promises to pay to:
Global Capital Funding Group, L.P.
(the "Holder") and registered assigns, the principal sum of One Million Five
Hundred Thousand ($1,500,000) or, if less, the principal amount of this Note
then outstanding, on the Maturity Date by wire transfer of immediately available
funds to the Holder in such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts. The Maturity Date is June 7, 2007.
Upon an Event of Default, and until such Default has been cured,
interest shall accrue at a rate of 18% per annum ("Default Interest"). All
payments of principal and interest hereunder shall be made for the benefit of
the Holder pursuant to the terms of the Agreement (hereafter defined).
This Convertible Note (this "Convertible Note") is one of a duly
authorized issuance of $1,500,000 aggregate principal amount Convertible Note
made by the Company referred to in that certain Securities Purchase Agreement
dated as of the date hereof between the Company and the Purchaser named therein
(the "Agreement"). The Agreement contains certain additional agreements among
the parties with respect to the terms of this Convertible Note, including,
without limitation, provisions which (A) limit the conversion rights of the
Holder, (B) specify voluntary and mandatory redemption rights and obligations
and (C) specify Events of Default following which the remaining balance due and
owing hereunder may be accelerated. All such provisions are an integral part of
this Convertible Note and are incorporated herein by reference. This Convertible
Note is transferable and assignable to one or more Persons, in accordance with
the limitations set forth in the Agreement.
The Company shall keep a register (the "Register") in which shall be
entered the names and addresses of the registered holder of this Convertible
Note and particulars of this Convertible Note held by such holder and of all
transfers of this Convertible Note. References to the Holder or "Holders" shall
mean the Person listed in the Register as registered holder of such Convertible
Notes. The ownership of this Convertible Note shall be proven by the Register.
1. Certain Terms Defined. All terms defined in the Agreement and
not otherwise defined herein shall have for purposes hereof the meanings
provided for in the Agreement.
2. Covenants. The Company covenants and agrees to observe and
perform each of its covenants, obligations and undertakings contained in the
Agreement, which obligations and undertakings are expressly assumed herein by
the Company and made for the benefit of the holder hereof.
3. Payment of Principal.
3.1 Prepayment of Note. For so long as no Event of Default shall
have occurred and is continuing and the Company is not in
receipt of a Notice of Conversion from the Holder of the Note,
the Company may, at its option, prepay, in whole or in part,
this Convertible Note for a pre-payment price (the "Prepayment
Price") equal to (i)$1,392,000 until the first anniversary of
the date of this Convertible Note and (ii) the outstanding
principal amount of the Note, plus all accrued and unpaid
interest on any day following the first anniversary of this
Convertible Note. Any partial prepayment of the Convertible
Note, at any time after issuance, shall be credited to the
principal amount of the Convertible Note equal to such partial
prepayment amount. The Company shall not be entitled to send
any notice of prepayment and begin the prepayment procedure
unless it has (i) the appropriate Prepayment Price, in cash,
available in a demand or other immediately available account
in a bank or similar financial institution or (ii) immediately
available credit facilities, in the amount of the appropriate
Prepayment Price, with a bank or similar financial institution
on the date the prepayment notice is sent to the Holders of
this Convertible Note. Provided, however, the Company will
process any Notice of Conversion received prior to the
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issuance of a notice of prepayment; and further provided that,
after a notice of prepayment has been issued, the Holder may
issue a Notice of Conversion which will not be honored unless
the Company fails to make the prepayment payment when due. In
the event of such failure, the Notice of Conversion will be
honored as of the date of the Notice of Conversion
3.2 Payment on Maturity Date. The Company shall repay the
remaining unpaid balance of this Convertible Note on the
Maturity Date.
4. Conversion.
4.1 Conversion of Convertible Note. Subject to Section 5 hereof,
the Holder shall have the right, at its option, to convert the entire
principal amount at any time from and after 90 days following the date
of this Convertible Note. This Convertible Note shall be convertible
into that number of fully paid and nonassessable shares of Common Stock
(as such shares shall then be constituted) determined pursuant to this
Section 4.1. The number of shares of Common Stock to be issued upon
each conversion of this Convertible Note shall be determined by
dividing the Conversion Amount (as defined below) by the Conversion
Price in effect on the date (the "Conversion Date") a Notice of
Conversion is delivered to the Company, as applicable, by the Holder by
facsimile or other reasonable means of communication dispatched prior
to 5:00 p.m., E.S.T. The term "Conversion Amount" means, with respect
to any conversion of this Convertible Note, the sum of (1) the
principal amount of this Convertible Note to be converted in such
conversion plus (2) accrued and unpaid interest, if any, on such
principal amount at the interest rates provided in this Convertible
Note to the Conversion Date plus (3) Default Interest, if any, on the
interest referred to in the immediately preceding clause (2) plus (4)
at the Holder's option, any amounts owed to the Holder pursuant to
Section 4.3 hereof, Section 10.1 of the Agreement or Section 10.4 of
the Agreement.
4.2 Conversion Price. At the option of the Holder, any portion or
all of the outstanding principal amount of this Convertible Note shall
be converted into a number of shares of Common Stock at the conversion
price (the "Conversion Price") equal to 100% of the average price of
the three (3) lowest bid prices, as reported on Bloomberg, L.P., for
the twenty (20) trading days immediately prior to the date of the
related notice of conversion.
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4.3 Authorized Shares.
(1) Consistent with Section 7.11 of the Agreement, the
Company (i) shall promptly irrevocably instruct the Company's transfer
agent to issue certificates for the Common Stock issuable upon
conversion of this Convertible Note and (ii) agrees that its issuance
of this Convertible Note shall constitute full authority to its
officers and agents who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares
of Common Stock in accordance with the terms and conditions of this
Convertible Note.
(2) If at any time the Holder submits a Notice of
Conversion and (x) the Company does not have sufficient authorized but
unissued shares of Common stock available to effect such conversion in
full in accordance with Article 4 or (y) the Company is prohibited by
the Nasdaq Small Cap Market of the National Market on which the Common
Shares are listed and traded at that time to effect such conversion in
full, without shareholder approval, the Company shall issue to the
Holder all of the shares of Common Stock which are then available to
effect such conversion. The portion of this Convertible Note which the
Holder included in its Conversion Notice and which exceeds the amount
which is then convertible into available shares of Common Stock (the
"Excess Amount") shall, notwithstanding anything to the contrary
contained herein, not be convertible into Common Stock until the date
additional shares of Common Stock are authorized by the Company, or its
shareholders, as applicable. The Company shall use its best efforts to
authorize, or cause its shareholders to authorize within 40 days of the
submission of the Conversion Notice, a sufficient number of shares of
Common Stock to effect the full conversion set forth in the Conversion
Notice.
In no event shall the Company issue upon conversion of this
Convertible Note more than the maximum number of shares allowable
without shareholder approval under the applicable rules of the National
Market on which the Common Shares are listed and traded unless the
Company shall have obtained approval by the shareholders of the Company
or a waiver of such requirement. Once the maximum number of shares has
been issued (the date of which is hereinafter referred to as the
"Maximum Conversion Date"), unless the Company shall have obtained
shareholder approval or a waiver of such requirement within 40 days of
the Maximum Conversion Date, the Company shall pay to the Fund the
Redemption Price.
(d) The Maximum Number of Shares shall be subject to
adjustment from time to time for stock splits, stock dividends,
combinations, capital reorganizations and similar events relating to
the Common Stock occurring after the date hereof as contemplated by
Article XI of the Agreement. In the event that the Company obtains
Stockholder Approval, approval of the Nasdaq Small Cap Market or the
National Market on which the Common Shares are listed and traded at
that time, or otherwise is able to increase the number of shares to be
issued above the Maximum Number of Shares (such increased number being
the "New Maximum Number of Shares"), the references to Maximum Number
of Shares above shall be deemed to be, instead, references to the New
Maximum Number of Shares.
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4.4 Method of Conversion.
(a) Notwithstanding anything to the contrary set forth
herein, upon conversion of this Convertible Note in accordance with the
terms hereof, the Holder shall not be required to physically surrender
this Convertible Note to the Company unless the entire unpaid principal
amount of this Convertible Note is so converted. Rather, records
showing the principal amount converted (or otherwise repaid) and the
date of such conversion or repayment shall be maintained on a ledger
substantially in the form of Annex A attached hereto (a copy of which
shall be delivered to the Company or transfer agent with each Notice of
Conversion). It is specifically contemplated that the Holder hereof
shall act as the calculation agent for conversions and repayments. In
the event of any dispute or discrepancies, such records maintained by
the Holder shall be controlling and determinative in the absence of
manifest error or failure of Holder to record the principal amount
converted (or otherwise repaid) from time to time, in which events the
record of the Company shall be controlling and determinative. The
Holder and any assignee, by acceptance of this Convertible Note,
acknowledge and agree that, by reason of the provisions of this
paragraph, following a conversion of a portion of this Convertible
Note, the principal amount represented by this Convertible Note will be
the amount indicated on Annex A attached hereto (which may be less than
the amount stated on the face hereof).
(b) The Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock or other securities or
property on conversion of this Convertible Note in a name other than
that of the Holder (or in street name), and the Company shall not be
required to issue or deliver any such shares or other securities or
property unless and until the person or persons (other than the Holder
or the custodian in whose street name such shares are to be held for
the Holder's account) requesting the issuance thereof shall have paid
to the Company the amount of any such tax or shall have established to
the satisfaction of the Company that such tax has been paid.
(c) Subject to Section 5 hereof, upon receipt by the
Company of a Notice of Conversion, the Holder shall be deemed to be the
holder of record of the Common Stock issuable upon such conversion, the
outstanding principal amount and the amount of accrued and unpaid
interest on this Convertible Note shall be deemed reduced to reflect
such conversion, and, unless the Company defaults on its obligations
under this Article 4, all rights with respect to the portion of this
Convertible Note being so converted shall forthwith terminate except
the right to receive the Common Stock or other securities, cash or
other assets, as herein provided, on such conversion. Subject to
Section 5 hereof, if the Holder shall have given a Notice of Conversion
as provided herein, the Company's obligation to issue and deliver the
certificates for shares of Common Stock shall be absolute and
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unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any
provisions thereof, the recovery of any judgment against any person or
any action by the Holder to enforce the same, any failure or delay in
the enforcement of any other obligation of the Company to the Holder of
record, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder of any
obligation to the Company, and subject to Section 4.4(a) irrespective
of any other circumstance which might otherwise limit such obligation
of the Company to the Holder in connection with such conversion. The
date of receipt (including receipt via telecopy) of such Notice of
Conversion shall be the Conversion Date so long as it is received
before 5:00 p.m., E.S.T., on such date.
(d) Notwithstanding the foregoing, if a Holder has not
received certificates for all shares of Common Stock prior to the
expiration of the Deadline with respect to a conversion of any portion
of this Convertible Note for any reason, then (unless the Holder
otherwise elects to retain its status as a holder of Common Stock by so
notifying the Company), the Holder shall regain the rights of a Holder
of this Convertible Note with respect to such unconverted portions of
this Convertible Note and the Company shall, as soon as practicable,
return such unconverted Convertible Note to the holder or, if the
Convertible Note has not been surrendered, adjust its records to
reflect that such portion of this Convertible Note not been converted.
In all cases, the Holder shall retain all of its rights and remedies
including, without limitation, the right to receive Conversion Default
Payments to the extent required thereby for such Conversion Default and
any subsequent Conversion Default.
(e) In lieu of delivering physical certificates
representing the Common Stock issuable upon conversion, provided the
Company's transfer agent is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer program, upon
request of the Holder and its compliance with the provisions contained
in Section 4.1 and in this Section 4.4, the Company shall use its best
efforts to cause its transfer agent to electronically transmit the
Common Stock issuable upon conversion to the Holder by crediting the
account of Holder's Prime Broker with DTC through its Deposit
Withdrawal Agent Commission System.
5. Redemption by Company.
5.1 Mandatory Redemption. In accordance with the provisions of the
Purchase Agreement, the Company may be required under certain
circumstances, to redeem in whole or in part, the remaining unpaid
principal amount of this Convertible Note, for cash at a redemption
price (the "Redemption Price") equal to the greater of (A) the
applicable Prepayment Price and (B) (x) the number of shares of Common
Stock into which this Convertible Note is then convertible, times (y)
the average Closing Bid Price of Common Stock for the five (5) Trading
Days as reported by Bloomberg L.P. immediately preceding the date that
this Convertible Note is called for redemption, plus accrued and unpaid
Default Interest.
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5.2 Mechanics of Redemption. The Company shall effect each such
redemption within seven business days of receiving a notice to redeem
by facsimile with a copy by either overnight or 2-day courier from the
Holder of this Convertible Note. Such redemption notice shall indicate
whether the Company is required to redeem all or part of such portion
of the Convertible Note and the applicable Redemption Price.
5.3 Payment of Redemption Price. The Redemption Price shall be
paid to the Holder of this Convertible Note within seven business days
of the delivery of the notice of such redemption to such Holder.
6. Miscellaneous. This Convertible Note shall be deemed to be a
contract made under the laws of the State of New Jersey, and for all
purposes shall be governed by and construed in accordance with the laws
of said State. The parties hereto, including all guarantors or
endorsers, hereby waive presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Convertible Note, except as
specifically provided herein, and asset to extensions of the time of
payment, or forbearance or other indulgence without notice. The Company
hereby submits to the exclusive jurisdiction of the United States
District Court for the State of New Jersey and any state court sitting
in New Jersey for purposes of all legal proceedings arising out of or
relating to this Convertible Note. The Company irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought
in such a court has been brought in an inconvenient forum. The Company
hereby irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or relating to this Convertible Note.
The Holder of this Convertible Note by acceptance of this Convertible
Note agrees to be bound by the provisions of this Convertible Note which are
expressly binding on such Holder.
Signature Page Follows
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: June 7, 2004
DONINI, INC.
By: /s/ XXXXX XXXXX
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Name: Xxxxx Xxxxx
Title: President
Convertible Note
ANNEX A
CONVERSION AND REPAYMENT LEDGER
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Interest Principal Converted New Principal Issuer Holder
Date Principal Balance Converted or Paid or Paid Balance Initials Initials
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FULL NAME AND ADDRESS OF SUBSCRIBER FOR REGISTRATION PURPOSES:
NAME:
ADDRESS:
TEL NO:
FAX NO:
CONTACT
NAME:
DELIVERY INSTRUCTIONS (IF DIFFERENT FROM REGISTRATION NAME):
NAME:
ADDRESS:
TEL NO:
FAX NO:
CONTACT
NAME:
SPECIAL INSTRUCTIONS:
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NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Convertible Note)
The undersigned hereby irrevocably elects to convert $________
of the principal balance of the Convertible Note into shares of Common Stock,
____ par value per share (the "Common Stock"), of Donini, Inc. (the "Company")
according to the conditions hereof, as of the date written below. No fee will be
charged to the Holder for any conversion, except for transfer taxes, if any. The
undersigned, as contemplated by Section 5.1 of the Securities Purchase Agreement
pursuant to which the Convertible Note was issued, hereby states that the
representations and warranties of the undersigned set forth therein are true and
correct in all material respects as of the date hereof (provided, the
undersigned makes no representations concerning its investment intent with
respect to the Common Stock received upon this conversion).
Conversion calculations:
Date of Conversion
Applicable Conversion Price
Number of Shares
Name/Signature
Address:
