Exhibit 4.2
This Note and the securities issuable upon conversion of the Note have not been
registered under the UNITED STATES Securities Act of 1933, as amended (the "1933
Act"), or under the provisions of any applicable state securities laws, but has
been and will be acquired by the registered holder hereof for purposes of
investment and in reliance on statutory exemptions under the 1933 Act, and under
any applicable state securities laws. This Note and such securities may not be
sold, pledged, transferred or assigned except in a transaction which is exempt
under provisions of the 1933 Act and any applicable state securities laws or
pursuant to an effective registration statement; and in the case of an
exemption, only if the Company has received an opinion of counsel satisfactory
to the Company that such transaction does not require registration.
INTEREST BEARING
CONVERTIBLE PROMISSORY NOTE
$250,000 November 16, 2002
FOR VALUE RECEIVED, the undersigned, SiriComm, Inc., a Missouri corporation,
including for all purposes hereof all successors in interest to SiriComm, Inc.
(collectively, the "Maker") promises to pay to the order of Quest Capital
Alliance, L.L.C., or its successors or assigns (the "Holder"), the principal sum
of two hundred fifty thousand United States dollars ($250,000), plus interest on
the unpaid balance as provided below.
1. Method and Place of Payment
Payments of principal and interest shall be made in lawful money of the United
States of America at the principal place of business of the Holder as specified
below, or at such other location as Holder may hereafter designate.
2. Payments and Interest
Interest on the principal amount shall accrue at the annual rate of four percent
(4%) per year calculated on the total outstanding balance of principal, payable
on the Maturity date, unless such principal shall have been paid or converted
into equity as described below. Interest hereon shall be computed on the basis
of a 365 day year for the actual number of days in any period for which such
computation is made. Principal shall be payable and due on the Maturity Date.
The "Maturity Date" of this Note, when all amounts hereunder are due, whether of
principal, interest, fees or costs, is March 15, 2002.
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All payments on this Note shall be applied first to accrued interest and then to
principal, except that if any amount expended by the Holder pursuant to the
terms of any instrument or agreement relating to this Note is not repaid, any
monies received, at the option of the Holder, first may be applied to repay such
amount, plus interest thereon, and the balance, if any, shall be applied on
account of any payments of the principal of or interest on this Note then due
upon demand or otherwise.
3. No Prepayment of Outstanding Debt
The Maker shall have no right to prepay any principal amount hereunder before
principal is due according to Section 2 hereof.
4. Option to Convert
Maker and Holder agree that Holder may, at any time prior to payment of
principal by Maker and at Holder's sole discretion, exercise the option to
convert the principal due under this Note into 4.25% of Maker's then outstanding
shares of common stock, on a fully diluted basis.
5. Default
If an Event of Default occurs, then Holder may, if it shall so elect, by notice
to Maker, declare the entire unpaid principal balance of this Note, together
with all accrued interest as well as any other amounts due hereunder, to be
immediately due and payable, without further presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by the Maker,
provided that in the case of an Event of Default under (B) or (C) below, such
amounts shall automatically become due and payable without any notice or other
action by the Holder. Maker agrees to pay all costs of collection, including
reasonable attorney's fees and expenses.
For the purposes of this Note, "Event of Default" shall mean: (A) any failure by
Maker to pay any amount of principal or interest upon demand or when due, which
failure shall continue for a period of ten (10) days after written notice to
Maker; or (B) (1) the Maker voluntarily commences a case or proceeding seeking
liquidation, reorganization, debt readjustment, moratorium or other relief under
any bankruptcy, insolvency or similar law (hereinafter, a "Proceeding"), or (2)
an involuntary Proceeding is commenced against the Maker and such involuntary
Proceeding shall remain undismissed and unstayed for a period of thirty (30)
days, or (C) the appointment of a receiver or trustee to any substantial part of
Maker's assets that is not vacated within thirty (30) days, or (D) the Maker
fails to pay any other indebtedness in excess of $100,000 (on the account of
borrowed money) when due, to the Holder or any other persons, and such failure
continues unremedied for more than five (5) Business Days, or (E1) any
representation or warranty of the Maker made or deemed to be made hereunder, the
Subscription Letter between the Maker and the Holder or in any other writing or
certificate furnished by or on behalf of the Maker to the Holder for the
purposes of or in connection with this Note (this Note and any such document
being a "Facility Document") is or shall be false, misleading or incorrect when
made in any material respect, or (E2) the Maker shall default in the due
performance and observance of any other agreement contained herein or in any
other Facility Document and such default shall continue unremedied for a period
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of thirty (30) days after the Maker has knowledge thereof or notice thereof
shall have been given to the Maker by the Holder, or (F) any Facility Document
shall at any time cease to be in full force and effect or its validity or
enforceability shall be disputed or contested by the Maker, or (G) any lien or
security interest securing this Note, if any, shall cease to create a valid and
perfected first priority lien or security interest in the property purported to
be subject thereto.
6. Rights of Payment
No other debt of the Maker shall rank senior to the debt hereunder in rights of
payment; provided, however, that the existence of or the Maker's incurring (i)
secured or unsecured institutional financing, including without limitation,
financing from banks, savings and loans, mortgage companies, insurance
companies, governmental agencies and/or any other institution which is engaged
in whole or in part in making loans in the ordinary course of its business, (ii)
all future purchase money financing which is secured by an encumbrance against
all or any portion of the properties and/or assets of the Maker, and (iii) any
refinancing of the type of indebtedness referred to in Section 6(i) and (ii)
above, which is due at or prior to the Note (whether by maturity or
acceleration) shall not be an Event of Default.
7. Waiver
The Maker and any guarantor, surety or endorser of this Note, as well as any
other person or entity who shall become liable for the payment hereof, each
expressly waives presentment for payment, notice of nonpayment, protest and
notice of protest, and any other notice which might otherwise be required in
connection with the delivery, acceptance, performance, default or enforcement of
the payment of this Note. The Holder shall not be deemed by any act or omission
to have waived any right or remedy hereunder unless and only to the extent
expressed in a written instrument dated subsequent to the date hereof and
executed by the Holder, and any such waiver so expressed with respect to a
particular event shall not be interpreted as having a continuing effect on or as
a waiver of any right or remedy with respect to any subsequent event.
8. Termination of S Corporation Status
On or before the closing of the transaction contemplated hereby, the Maker will
terminate its S corporation status. Following the closing of this transaction we
will not make a distribution to our existing stockholders of their aggregate
federal and state income tax liabilities attributable to our S corporation
pass-through income.
9. Notices
All notices or other communications required or permitted to be given pursuant
to this Note shall be in writing and shall be considered properly given or made
if hand delivered, mailed from within the United States by certified or
registered mail, or sent by prepaid telegram:
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if to the Holder:
Quest Capital Alliance, LLC
0000 X. Xxxxxxxx
Xxxxxxxxxxx, XX 00000
if to the Maker:
SiriComm, Inc.
0000 Xxxxx Xxxx., Xxxxx 000
Xxxxxx, XX 00000
or to such other address as either party shall have furnished to the other in
accordance with the provisions of this Section 9. All notices, except of change
of address, shall be deemed given when mailed and notices of change of address
shall be deemed given when received.
10. Assignment
The Maker shall have no right to assign any of its rights or obligations
hereunder, or any interest herein.
11. Severability
Notwithstanding the invalidity or unenforceability of any provision hereof under
applicable law, if any, the remaining provisions of this Note shall remain valid
and enforceable. All right and remedies of the Holder expressed in this Note
shall remain valid and enforceable, and all rights and remedies of the Holder
expressed in this Note shall be in addition to and not in lieu of all other
rights and remedies available to the Holder by agreement, at law, in equity or
otherwise.
12. Governing Law and Venue
The obligation evidenced by this Note was negotiated, delivered and accepted in
the State of Missouri, the laws of which state shall in all respects be
controlling in the interpretation and validity of this Note and all obligations
evidenced hereby without regard to principles of conflicts of laws. All
proceedings shall be brought and maintained in the Federal and State Courts
located in the State of Missouri. The Maker hereby expressly and irrevocably
submits to the non-exclusive jurisdiction of, and waives any venue objections
against, such courts in respect of all actions arising out of or in connection
with the interpretation or enforcement of this Note, the Subscription Agreement
and any other documents related thereto, and the Maker consents to the personal
jurisdiction of such courts for the purpose of this instrument and related
documents, including entry or enforcement of any arbitration award or judgment.
IN WITNESS WHEREOF, the undersigned Maker has executed this Note as of the date
first above written.
SIRICOMM, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Xxxxx X. Xxxxxxx, CEO
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