FinancialWeb.com Inc. Contracts
Sample Business Contracts
Convertible Note - FinancialWeb.com Inc. and Bluewater Consulting Inc.
Consulting Forms
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY NOT BE SOLD, OFFERED
FOR SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS THEY ARE SO REGISTERED OR
AN EXEMPTIONdogrossoFinancial Printing GroupTHESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
OR BLUE SKY LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED,
OR HYPOTHECATED UNLESS THEY ARE SO REGISTERED OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
FINANCIALWEB.COM, INC.
CONVERTIBLE NOTE DUE March 30, 2000
Principal Amount: $250,000.
FINANCIALWEB.COM, INC. a Nevada corporation (the "Company"), for value received,
hereby promises to pay BLUEWATER CONSULTING INC. (the "Holder)", or registered
assigns, on March 30, 2000 the principal amount of TWO HUNDRED FIFTY THOUSAND
DOLLARS ($250,000) (or so much thereof as shall not have been prepaid or
surrendered for conversion) 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, at the offices of the Holder located at 2883 BORMAN
COURT, DAYTONA BEACH, FL. 32124 together with simple interest of 9.75% on the
unpaid portion of the principal amount thereof, calculated at the rate of .8125%
monthly.
Section 1. THE NOTES.
Section 1.01. Registration, Transfer and Exchange of Convertible Notes.
The Company shall keep at its principal office a register in which the Company
will provide for registration, transfer and exchange of Convertible Notes.
Subject to compliance with applicable securities laws, the Holder (as defined
below) of any Convertible Note may, at its option and either in person or by
duly authorized attorney, surrender the same at said office for registration of
transfer or exchange, accompanied, if surrendered for transfer, by a written
instrument of transfer duly executed by said Holder or attorney. If any Holder
shall so request transfer or exchange of a Convertible Note held by it, the
Company shall, within a reasonable time thereafter, without expense to such
Holder (other than transfer taxes, if any) deliver to or upon its order one or
more Convertible Notes in the same unpaid aggregate principal amount as the
Convertible Note so surrendered, each dated the date to which interest has been
paid on the Convertible Note so surrendered, in the principal amount of $5,000
or any multiple thereof, and registered in such name or names, or payable to
such Person or Persons, or order, as shall be specified by the Holder making
such request. The Company may deem and treat the Holder of any Convertible Note
as the absolute owner of such Convertible Note for the purpose of receiving
payment of or on account of the principal and interest on such Convertible Note
and for the purposes of any notices, waivers or consent thereunder, and payment
of any Convertible Note shall be made only to or upon the order in writing of
such Holder.
Section 1.02. Loss, Theft, Destruction or Convertible Notes. Upon receipt
of evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Convertible Note and, in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the Company,
or in the case of any such mutilation, upon surrender and cancellation of this
Convertible Note, the Company will make and deliver, in lieu of such lost,
stolen, destroyed or mutilated Convertible Note, a new Convertible Note of like
tenor and unpaid principal amount and dated as of the date from which unpaid
interest has then accrued on the Convertible Note so lost, stolen, destroyed or
mutilated.
Section 2. DEFINITIONS.
Section 2.01. Terms Defined. The terms defined in this Section 2.01
(except as herein otherwise expressly provided or unless the context otherwise
requires for all purposes of this Convertible Note shall have the respective
meanings specified in this Section 2.01.
Common Stock: The term "Common Stock" means shares of the Company's
Common Stock, par value $.001 per share.
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Company: The term "Company" means FINANCIALWEB. COM, INC. a Nevada
corporation, and any successor corporation to the Company (including the
corporation surviving any subsequent merger).
Convertible Notes: The term "Convertible Notes" means this note and
any one or more notes created by transfer, succession, partial conversion or
partial prepayment as contemplated by this note.
Current Conversion Price: The term "Current Conversion Price" means
the Conversion Price as most recently adjusted pursuant to Section 6.06.
Default: The term "Default" means an event which with notice or upon
the lapse of time or both would become an Event of Default.
Event of Default: The term "Event of Default" means any event
specified in Section 5.01, continued for the period of time, if any, and after
the giving of notice, if any, therein designated.
Holder: The term "Holder" means the Person in whose name such
Convertible Note is registered in the register maintained by the Company
pursuant to Section 1.01.
Maturity: The term "Maturity" when used with respect to any
Convertible Note means the date of which the principal (and interest,) of such
Convertible Note becomes due and payable as herein provided, whether at February
11, 2000, (b) declaration of acceleration or (c) otherwise.
Section 3. CERTAIN COVENANTS.
Section 3.01. Authority; Payment of Convertible Notes. The Company is
dully authorized to issue this Convertible Note and enter into the provisions
contained herein and the Convertible Note and its provisions constitute binding
valid and enforceable obligations of the Company. The Company will duly and
punctually pay or cause to be paid in cash the principal and the interest on
each of the Convertible Notes at the time and place and in the manner provided
herein.
Section 3.02. General Covenants. The Company will:
(a) promptly pay and discharge or cause to be paid and discharged all
lawful taxes, assessments, and governmental charges or levies imposed
upon the Company upon the income of profits of the Company or upon any
property, real, personal or mixed, belonging to the Company or upon
any part thereof, before the same shall become in default, as well as
all lawful claims for labor, material and supplies which, if unpaid,
might become a lien or charge upon such properties or any part
thereof, except that the Company shall not be required to pay and
discharge or to cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as the validity thereof
shall be contested in good faith by appropriate proceedings and the
Company as the case may be, shall set aside on its books such
reserves, if any, as shall be deemed by it adequate with respect to
any such tax, assessment, charge, levy or claim so contested.
(b) do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence, rights and franchises,
and comply with all laws applicable to the Company as its counsel may
advise; except that nothing in this subsection (b) shall prevent a
liquidation or dissolution of, or a sale, transfer or disposition of
the property and assets of, or a merger or consolidation of, the
Company or any Affiliate not prohibited by the provisions of
Section 3.04; and
(c) at all times maintain, preserve, protect and keep, or cause to be
maintained, preserved, protected and kept, its property used or useful
in the conduct of the business of the Company in good repair, working
order and condition, and from time to time make, or cause to be made,
all necessary and proper repairs, renewals, replacements betterment
and improvements thereto, so that the business carried on in
connection therewith may be properly and advantageously conducted at
all times.
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Section 3.03. Notice of Defaults. In the event that any Event of
Default shall have occurred, the Company will promptly give written notice
thereof to each Holder of a Convertible Notes, which in no case will be given
later than 10 calendar days after the Event of Default occurs.
Section 3.04. Mergers, etc. Subject to Section 3.02, the Company may
not consolidate with or merge into, or transfer all or substantially all its
assets to, another corporation unless (a) the resulting, surviving or
transferee corporation assumes in writing all the obligations of the Company
under the Convertible Notes and (b) no Event of Default shall have occurred
and be continuing. Upon any consolidation or merger, or any transfer of all
or substantially all the assets of the Company in accordance with this
Section 3.04, the successor corporation formed by such consolidation or with or
into which the Company is merged or to which such transfer is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under the Convertible Note with the same effect as if such successor
corporation has been named as the Company herein.
Section 3.05. Notice of Certain Actions. In case at any time:
(a) the Company shall declare any dividend upon its shares of capital
stock payable in securities or make any special dividend or other
distribution (other than a cash dividend to the holders of such
shares);
(b) the Company shall offer for subscription pro rata to the holders of
its shares of capital stock for any additional securities of any class
or other rights;
(c) there shall be any capital reorganization, or reclassification of the
capital stock of the Company, or consolidation or merger of the
Company with, or sale of all or substantially all its assets to,
another corporation or other entity;
(d) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or
(e) the Company shall enter into an agreement or adopt a plan for the
purpose of effecting a consolidation, merger, or sale of all or
substantially all of its assets: then, in any one or more of said
cases, the Company shall give written notice pursuant to the notice
provisions contained in Section [9.05] hereof, to the registered
holder hereof, 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 date as of which the holders of shares of record of capital stock
shall participate in such dividend, distribution or subscription
rights, or shall be entitles to exchange their shares for securities
or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such written notice
shall be given at least 30 days prior to the action in question and
not less than 30 days prior to the record date or the date on which
the Company's transfer books are closed in respect thereto.
Section 4. OPTIONAL PREPAYMENTS.
Section 4.01. Optional Prepayments. The Company shall have the privilege,
at any time and from time to time prior to Maturity of prepaying the outstanding
Convertible Notes, either in whole or in part by payment of the principal amount
of each Convertible Note, or portion thereof to be prepaid, and accrued interest
thereon to the date of such prepayment, without premium or penalty.
Section 4.02. Notice of Prepayments. The Company will give notice of any
prepayment of the Convertible Notes pursuant to Section 4.01 to each holder
thereof not less than 30 days nor more than 60 days before the date fixed for
such optional prepayment ("Prepayment Date") specifying (I) the Prepayment Date,
(ii) the principal amount of the Holder's Convertible Notes to be prepaid on the
Prepayment Date and (iii) the accrued interest applicable to the prepayment.
Notice of prepayment having been so given, the aggregate principal amount of the
Convertible Notes specified in such notice, together
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with the premium, if any, and accrued interest thereon shall become due and
payable on the Prepayment Date.
Section 4.03 Allocation of Prepayments. All partial prepayments pursuant
to Section 4.01 shall be applied on all outstanding Convertible Notes ratably in
accordance with the unpaid principal amounts thereof.
Section 5. REMEDIES.
Section 5.01 Events of Default. An "Event of Default" occurs if one
or more of the following shall happen (for any reason whatsoever and whether
such happening shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) if default be made in the punctual payment of the principal on any of
the Convertible Notes when and as the same shall become due and
payable, whether at the fixed maturity of said Convertible Notes or
otherwise; or
(b) if default be made in the payment of any installment of interest on
any of the Convertible Notes and such default shall continue for a
period of 30 days after notice; or
(c) if default be made in the due observance or performance of any
covenant, condition or agreement contained in Section 3.02 to 3.05,
both inclusive, and such default shall have continued for a period of
30 days after the Holders of a majority of the principal amount of the
Convertible Notes then outstanding shall have given notice to the
Company (which notice shall specify the default, demand that it be
remedied and state that the notice is a "Notice of Default"); or
(d) the Company pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case, (ii) consents to the entry of an order
for relief against it in any involuntary case, (iii) consents to the
appointment of a Custodian of it or for any substantial part of its
property, (iv) makes a general assignment for the benefit of its
creditors; or
(e) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that: (i) is for relief against the Company in an
involuntary case, (ii) appoints a Custodian of the Company or for any
substantial part of its property, (iii) orders the liquidation of the
Company; and the order or decree remains unstayed and in effect for
30 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator or similar official under
any Bankruptcy Law.
Section 5.02. Acceleration. If an Event of Default (other than an Event
of Default specified in Section 5.01 (d) or (e)) occurs and is continuing then,
at the option of the Holder of this Convertible Note, exercised by written
notice to the Company, the principal of this Convertible Note shall forthwith
become due and payable, together with the interest accrued hereon. If an Event
of Default specified in Section 5.01 (d) or (e) occurs at any time, such an
amount shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Holder of this Convertible Note.
The provisions of this Section 5.02 are subject, however, to the condition
that if, at any time after any Convertible Note shall have so become due and
payable, the Company shall pay all arrears of interest on the Convertible Notes
and all payments on account of the principal (and accrued interest on
Convertible Notes due and payable by virtue of acceleration) shall be remedied
or waived pursuant to Section 9.04, then, and in every such case, subject to
Section 9.04 (b), the Holder or Holders of at least 66-2/3% in aggregate
principal amount of the Convertible Notes at the time outstanding, by written
notice to the company, may rescind and annul such acceleration and its
consequences; but no such action shall affect any subsequent Default or Event of
Default or impair any right consequent thereon.
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Section 5.03. Other Remedies. Subject to the provisions of Section 5.02,
in case any one or more of the Events of Default specified in Section 5.01 shall
have occurred and be continuing, the Holder of this Convertible Note may proceed
to protect and enforce its rights by suit in equity, action at law or by other
appropriate proceedings or both, whether for the specific performance of any
covenant or agreement contained in this Convertible Note or in aid of the
exercise of any power granted in this Convertible Note, or may proceed to
enforce the payment of this Convertible Note or to enforce any other legal or
equitable right of the Holder of this Convertible Note.
The remedies of the holder provided herein shall be cumulative and
concurrent, and may be pursued singly, successively, or together at the sole
discretion of the holder, and may be exercised as often as occasion therefor
shall occur; and the failure to exercise any such right or remedy shall in no
event be construed as a waiver or release thereof.
The Company hereby waives and releases all errors, defects and
imperfections in any proceedings instituted by the holder under the terms of
this Convertible Note, as well as all benefit that might accrue to the Company
by virtue of any present or future laws exempting any property, real or
personal, or any part of the proceeds arising from any sale of any such
property, from attachment, levy, or sale under execution, or providing for any
stay of execution, exemption form civil process or extension of time for
payment; and the Company agrees that any real estate that may be levied upon
pursuant to a judgment obtained by virtue hereof, or any writ of execution
issued thereon, may be sold upon any such writ in whole or in part in any
ordered desired by the holder.
The holder shall not be deemed, by any act of omission or commission, to
have waived any of its rights or remedies hereunder unless such waiver is in
writing and signed by the holder, and then only to the extent specifically set
forth in writing. A waiver of one event shall not be construed as continuing or
as a bar to or waiver of any right or remedy to a subsequent event.
Section 5.04. Notice by the Company of Acceleration or Other Action by
Convertible Noteholders or Holders of Other Indebtedness. If any Holder of a
Convertible Note shall give any notice to the Company with respect to any Event
of Default (or with respect to any event which with notice or the lapse of time,
or both, would be an Event of Default), or accelerate the maturity thereof or
take any other action in respect of an Event of Default or such event, or if the
holder of any bond, debenture, note or other similar evidence of indebtedness
(other than the Convertible Notes) of, or secured or guaranteed by, the Holder
shall give any notice to the Company in respect of any default thereunder or
under any agreement pursuant to which such bond, debenture, note or other
evidence or indebtedness is issued, the Company shall forthwith give written
notice to all Holders of Convertible Notes, specifying such action and the
nature and status of the Event of Default or event or other default.
Section 5.05. Remedies Cumulative. No remedy herein conferred upon the
Holder of this Convertible Note is intended to be exclusive of any other remedy
and each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
Section 5.06. Enforcement. If there shall be any Default under this
Convertible Note and this Convertible Note shall be placed in the hands of an
attorney for collection, or shall be collected through any court, including any
bankruptcy court, the Company promises to pay to the order of the Holder hereof
such Holder's reasonable attorneys' fees and court costs incurred in collecting
or attempting to collect or securing or attempting to secure this Convertible
Note or enforcing the Holder's rights with respect to any collateral securing
this Convertible Note, to the extent allowed by the laws of the State of Florida
or any state in which any collateral for this Note shall be situated.
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Section 6. CONVERSION.
Section 6.01. Right of Conversion, Conversion Price. Subject to and upon
compliance with the provisions of this Section 6, the Holder shall have the
right, at his option, at any time during usual business hours (including the
period between the date on which the Company gives notice of prepayment and the
Prepayment Date) to convert the principal and accrued interest of any
Convertible Note owned by such Holder into fully paid and in nonassessable
shares of Common Stock at the rate of $4.00 for each share of common Stock (the
"Conversion Price") which price per share shall be payable by surrender of such
Convertible Note.
(a) As of the date hereof, the authorized and outstanding capital stock of
the Company is 4,973,000 (four million nine hundred seventy three
thousand) shares.
Section 6.02. Manner of Exercise.
(a) In order to exercise the conversion right, the Holder of any
Convertible Note to be converted shall surrender such Convertible Note
at the office of the Company, accompanied by written notice to the
Company stating (i) that the Holder elects to convert such Convertible
Note or, if less than the entire principal amount of a Convertible
Note is to be converted, the portion thereof (a multiple of $1,000) to
be converted, and (ii) the name or names (with addresses) in which the
certificate or certificates for shares of Common Stock issuable on
such conversion shall be issued. Convertible Notes surrendered for
conversion shall be accompanied by proper assignment thereof to the
Company or in blank for transfer if the shares are to be issued in a
name other than that of the Holder.
(b) In the case of any Convertible Note which is converted in part only,
upon such conversion the Company shall execute and deliver to the
Holder thereof, at the expense of the Company, a new Convertible Note
or Convertible Notes of authorized denominations in principal amount
equal to the unconverted portions of such Convertible Note.
Section 6.03. Issuance of Shares of Common Stock on Conversion.
(a) As promptly as practicable after the receipt of such notice and the
surrender of such convertible Note as aforesaid, the Company shall
issue, at its expense, and shall deliver to such Holder, or on his
written order, at the aforesaid office of the Company (i) a
certificate or certificates for the number of full shares of Common
Stock issuable upon the conversion of such Convertible Note (or
specified portion thereof), and (ii) a certificate or certificates for
any fractional shares of Common Stock issuable upon conversion of such
Convertible Note (or specified portion thereof) or, at the Company's
option, cash in lieu of script for any fraction of a share to which
such Holder is entitled upon conversion as provided in Section 6.05.
(b) Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date ("Conversion Date") on
which the Company shall have received both such notice and the
surrendered Convertible Note as aforesaid, and at such time the rights
of the Holder of such Convertible Note shall cease 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.
Section 6.04 No Adjustments for Interest or Dividends. No payment or
adjustment shall be made by or on behalf of the Company on account of any
interest accrued on any Convertible Notes surrendered for conversion or on
account of any dividends on the shares of Common Stock issued upon such
conversion which were declared for payment to holders of shares of Common Stock
or record as of a date prior to the Conversion Date. All payments of accrued
interest on any Convertible Note shall be made in cash or additional stock at
the Conversion Price, at Company's option.
Section 6.05. Fractional Shares. The Company, at its option, may issue
fractional shares of common Stock upon any conversion of Convertible Notes or,
in lieu of any fraction of a share of Common
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Stock to which any Holder would otherwise be entitled upon conversion of any
Convertible Notes (or specified portions thereof), the Company may pay a cash
adjustment for such fraction in an amount equal to same fraction of the
conversion price per share.
Section 6.06 Adjustment of Conversion Price. The Conversion Price shall
be adjusted as set forth in this section.
(a) In the event that the Company shall make any distribution of its
assets upon or with respect to its shares of Common Stock, as a
liquidating or partial liquidating dividend, or other than as a
dividend payable out of earnings or any surplus legally available for
dividends under the laws of the state of incorporation of the Company,
each Holder of any Convertible Note then outstanding shall, upon the
exercise of his right to convert after the record date for such
distribution or, in the absence of a record date, after the date of
such distribution receive, in addition to the shares subscribed for,
the amount of such assets (or, at the option of the Company, a sum
equal to the value thereof at the time of distribution as determined
by the Board of Directors in its sole discretion) which would have
been distributed to such Holder if he had exercised his right to
convert immediately prior to the record date for such distribution or,
in the absence of a record date, immediately prior to the date of such
distribution.
(b) In case at any time the Company shall subdivide its outstanding shares
of Common Stock into a greater number of shares, the current
Conversion Price in effect immediately prior to such subdivision shall
be proportionately reduced and conversely, in case the outstanding
shares of Common Stock of the Company shall be combined into a smaller
number of shares, the Current Conversion Price in effect immediately
prior to such combination shall be proportionately increased.
(c) If any capital reorganization or reclassification of the capital stock
of the Company, or consolidation or merger of the company with another
corporation, or the sale transfer or lease of all or substantially all
of its assets to another corporation, shall be effected in such a way
that holders of shares of Common Stock shall be entitled to receive
shares, securities or assets with respect to or in exchange for shares
of Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, the Company or such
successor or purchasing corporation, as the case may be, shall execute
an amendment to the Convertible Notes providing that the Holder of
each Convertible Note then outstanding shall have the right thereafter
and until the expiration of the period of convertibility to convert
such Convertible Note into the kind and amount of shares, securities
or assets receivable upon such reorganization, reclassification,
consolidation, merger or sale by a holder of the number of shares of
Common Stock into which such Convertible Note might have been
converted immediately prior to such reorganization, reclassification,
consolidation, merger or sale, subject to adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided
for in this Section 6.
(d) Upon such adjustment of the Conversion Price pursuant to the
provisions of this Section 6.06, the number of shares issuable upon
conversion of this Note shall be adjusted to the nearest full amount
by multiplying a number equal to the Conversion Price in effect
immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of this Note immediately prior to such
adjustment and dividing the product so obtained by the adjusted
Conversion Price.
Section 6.07 Adjustment of Conversion Price Share Issuances. If and
whenever on or after the date hereof the Company shall issue any shares of
Common Stock for a consideration per share less than the Conversion Price
(whether pursuant to a direct issuance or any option or warrant to acquire
shares) or issue any security convertible into shares of Common Stock at a
conversion value of less than the Conversion Price, then, forthwith upon such
issue or sale, the Conversion Price shall be reduced as follows:
(a) If the shares issued at such lower price shall have been issued in a
transaction or series of transactions occurring within any 18 month
period and shall have constituted 5% or more of the Company's then
outstanding shares (determined as set forth in (iv below), the
Conversion Price shall be reduced to (i) the lowest prices at which
such shares were offered in any one transaction constituting 5% or
more; or (ii) to the lowest weighted average price per share in any
series of transactions constituting 5% or more in which no one
transaction by itself constituted 5%; or
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(b) If the shares issued at such lower price shall have been issued
otherwise than for 5% or more of the Company's then outstanding shares
as stated in subsection (a) above, the Conversion Price shall be
reduced to a number determined by multiplying then Conversion Price in
effect immediately prior to such issuance by the following fraction:
B
A+ -
C
---------
A+D
wherein:
A = the number of outstanding shares of Common Stock immediately
prior to the subject issuance;
B = the aggregate consideration for the shares then being
issued;
C = the then Conversion Price; and
D = the number of shares then being issued.
The Conversion Price shall be further reduced from time to time thereafter
whenever any Shares are so issued or converted for a lower price than the then
Conversion Price, as adjusted prior to that date. However, no adjustment of the
conversion price shall be made in an amount less than $.02 share, but any such
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which together with any adjustments
so carried forward shall amount to $.02 per share or more.
For the purposes of this Section 6.07, the following provisions (i) through
(iii) shall also be applicable:
(i) in case any shares shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount
received by the Company therefor, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid
or allowed by the Company in connection therewith. In case any shares
shall be issued for a consideration other than cash, the amount of
the consideration other than cash received by the Company shall be
deemed to be the fair value of such consideration as determined by
the Board of Directors of the Company, without deduction of any
expenses incurred or any underwriting commissions or concessions paid
or allowed by the Company in connection therewith.
(ii) At no time shall the Conversion Price increase.
(iii) As used in this Section 6.07, the number of outstanding shares at any
given time shall be deemed to be the aggregate of the Company's then
issued and outstanding Shares, plus all shares into which the Holder
of this Convertible Note may then convert this Convertible Note
pursuant to the terms hereof, plus all Shares which the holders of
any then outstanding options, warrants, convertible preferred stock
or other convertible securities and then or will be entitled to
acquire pursuant to their rights under those instruments (assuming
the Conversion Prices and ratios applicable to them at that time,
irrespective of whether such holders have rights to acquire such
shares thereunder immediately or at a later date, and without taking
into consideration any change in the Conversion Price relative to
this Convertible Note or any other instrument which could result from
the subject issuance of Shares), but not including the new shares
then being issued by the Company pursuant to which the aforesaid 5%
test shall relate.
Section 6.08. Covenant to Reserve Shares for Conversion. The Company
convenants that it will at all times reserve and keep available out of its
authorized shares of Common Stock, such number of shares of Common Stock as
shall then be deliverable upon the conversion of all outstanding Convertible
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Notes. All shares of Common Stock, which shall be deliverable, shall be duly
and validly issued and fully paid and nonassessable.
Section 6.09. Notice of Change of Conversion Price. Whenever the
Conversion Price is adjusted, as herein provided, the Company shall promptly
send to each Holder a certificate of a firm of independent public accountants
(who may be the accountants regularly employed by the Company) selected by the
Board of Directors setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
certificate shall be conclusive evidence of the correctness of such adjustment.
Section 7. REGISTRATION RIGHTS.
Section 7.01. Piggy-Back. If the Company proposes to file, on its behalf
and/or on behalf of any of its securities holders, a Registration Statement
under the Securities Act of 1933, as amended (the "Securities Act") other than
in connection with a dividend reinvestment, employee stock purchase, option or
similar plan or in connection with a merger, consolidation or reorganization,
the Company shall give written notice to each Holder at least 30 days before the
filing with the Securities and Exchange Commission ("SEC") of such Registration
Statement. Each Holder who desires to include any of its shares of Common Stock
into which the Convertible Notes are convertible, whether or not already
converted, (the "Registrable Securities") in such Registration Statement shall
give written notice to the Company within 20 days after the date of receipt of
written notice from the Company. The Company shall thereupon include in such
filing the shares of Common Stock designated by such Holder and, subject to its
right to withdraw such filing, shall use its best efforts to effect registration
under the Securities Act of such shares of Common Stock.
Section 7.02. Conditions. The right of the Holders to have shares included
in any registration Statement in accordance with the provision of this Section 7
shall be subject to the following conditions:
(a) The Company shall have the right to require that the Holders
participating in such Registration Statement agree to refrain from
offering or selling (other than in a private sale) any shares of
Common Stock that they own which are not included in any such
Registration Statement in accordance with this Section 7 for any time
period specified in writing by any managing underwriter of the
offering to which such Registration Statement relates;
(b) If any managing underwriter of the offering to which the Registration
Statement relates informs the Company in writing that the total number
of shares of Common Stock requested by the Holders to be included in
the Registration Statement is sufficiently large to affect the success
of such offering adversely, then the Company will include only the
number of shares, if any, in the Registration Statement that such
managing underwriter shall advise the Company will not so affect the
offering, and reductions in the number of shares of Common Stock owned
by the Holders and other persons who have elected to have shares of
Common Stock included in such Registration Statement will be made
proportionately to their respective percentages of ownership of shares
to be included in the Registration Statement; and
(c) The Company shall furnish Holders who have shares included in a
Registration Statement pursuant to this Section 7 with such number of
copies of the prospectus relating to the offering (the "Prospectus")
(including any preliminary prospectus or supplemental or amended
prospectus) as such Holder may reasonably request in order to
facilitate the sale and distribution of its shares.
Section 7.03. Registration Covenants of Company. The Company shall use
its best efforts to prepare and file the Registration Statement or proceed with
the Offering as to which the notice specified herein is given.
(a) The Company shall use its best efforts to file a registration
statement within forty-five (45) days of receipt of any demand
therefor, shall use its best efforts to have any registration
statement declared effective at the earliest possible time, and shall
furnish each Holder desiring to sell Registrable Securities such
number of prospectuses as shall reasonably be requested.
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(b) As expeditiously as possible prepare and file with the Commission any
amendments and supplements to the registration statement and the
prospectus included therein. as may be necessary to keep the
registration statement effective until the later of (i) the date when
all Registrable Securities registered have been sold, or (ii) two
years from the effective date of the registration statement.
(c) The Company shall pay all costs (excluding any underwriting or selling
commissions or other charges of any broker-dealer acting on behalf of
Holder(s), fees and expenses in connection with all registration
statements filed pursuant to Section 7 hereof including, without
limitation, the Company's legal and accounting fees. If the Company
shall fail to comply with the provisions of Section 7.03(a) or (b),
the Company shall, in addition to any other equitable or other relief
available to the Holder(s), be liable for any or all damages due to
loss of profit sustained by the Holder(s) requesting registration of
their Registrable Securities.
(d) The Company shall take all necessary action which may be required in
qualifying or registering the Registrable Securities included in the
registration statement for offering and sale under the securities or
blue sky laws of such states as reasonably as requested by the
Holder(s), provided that the Company shall not be obligated to execute
or file any general consent to service of process or to qualify as a
foreign corporation to do business under the laws of any such
jurisdiction.
(e) The Company shall indemnify the Holder(s) of the Registrable
Securities to be sold pursuant to any registration statement and each
person, if any, who controls such Holders within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against
all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may be subject.
(f) The Holder(s) of the Registrable Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and
directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against all loss, claim, damage or expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which they may become subject under
the Act, the Exchange Act or otherwise, arising from written
information furnished by or on behalf of such Holders, or their
successors or assigns, for specific inclusion in such a registration
statement.
(g) Nothing contained in this Agreement shall be construed as requiring
the Holder(s) to convert their Notes prior to the initial filing of
any registration statement or the effectiveness thereof.
(h) The Company shall furnish to each Holder participating in an offering
including Registrable Securities, pursuant to Sections 7.01 hereof,
and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the
Company, dated the effective date of such registration statement (and,
if such registration includes an underwritten public offering, an
opinion dated the date of the closing under the underwriting
agreement), and (ii) a "cold comfort" letter dated the effective date
of such registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the closing
under the underwriting agreement) signed by the independent public
accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in underwritten public
offerings of securities.
(i) The Company shall as soon as practicable after the effective date of a
registration statement relating to any Registrable Securities pursuant
to Section 7.01 hereof, and in any event within
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fifteen (15) months thereafter, make "generally available to its
security holders" (within the meaning of Rule 158 under the Act) an
earnings statement (which need not be audited) complying with
Section 11(a) of the Act and covering a period of at least twelve (12)
consecutive months beginning after the effective date of the
registration statement.
(j) The Company shall deliver promptly to each Holder participating
in an offering including any Registrable Securities pursuant to
Sections 7.01 hereof, who so requests, and to the managing
underwriter, copies of all correspondence between the Commission and
the Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the
registration statement and permit each Holder and underwriter to do
such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as
it deems reasonably necessary to comply with applicable securities
laws or rules of the National Association of Securities Dealers, Inc.
("NASD"). Such investigation shall include access to books, records
and properties and opportunities to discuss the business of the
Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any
such Holder shall reasonably request as it deems necessary to comply
with applicable securities laws and NASD rules.
(k) With respect to a registration pursuant to Section 7.01 hereof, if
requested by the Holders holding a Majority of the Registrable
Securities, the Company may enter into an underwriting agreement with
the managing underwriter selected for such underwriting by Holders
holding a Majority of the Registrable Securities requested to be
included in such underwriting. Such managing underwriter(s) shall be
satisfactory to the Company and each Holder and such agreement shall
be satisfactory in form and substance to the Company, each Holder and
such managing underwriters, and shall contain such representations,
warranties and covenants by the Company and such other terms as are
customarily contained in agreements of that type used by the managing
underwriter. The Holders may be parties to any underwriting agreement
relating to an underwritten sale of their Registrable Securities and
may, at their option, require that any or all the representations,
warranties and covenants of the Company to or for the benefit of such
Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders and their
intended methods of distribution.
(l) Subject to the provisions of Section 7.02(a) or (b), upon the written
request therefor by any Holder(s), the Company may include in the
registration statement any other securities of the Company held by
such Holder(s) as of the date of filing of such registration
statement, including without limitation, restricted shares of Common
Stock, options, warrants or any other securities convertible into
shares of Common Stock.
(m) For purposes of this Agreement, the term "Majority" in reference to
the Holders of Warrants or Registrable Securities, shall mean in
excess of fifty percent (50%) of the outstanding Warrants or
Registrable Securities that (i) are not held by the Company, an
affiliate (excluding Katsock), officer, creditor, employee or agent
thereof or any of their respective affiliates, members of their
family, persons acting as nominees or in conjunction therewith or (ii)
have not been resold to the public pursuant to a registration
statement filed with the Commission under the Act.
Section 7.04 "No Action" Letter: Opinion of Counsel. No Holder shall have
registration rights under this Section with respect to any sales proposed by
them of shares as to which sales (i) a "no action" letter is received from the
SEC or its staff confirming the availability of an exemption from the
requirements of the Securities Act or (ii) an unqualified opinion of counsel to
the Company is rendered to the effect that registration of such shares for such
sales is not required; provided that in both cases (i) and (ii) above, the
volume limitations of Rule 144(e) under the Securities Act shall not limit the
amount of shares of Common Stock that the Holders are entitled to offer and sell
without registration under the Securities Act.
Section 7.05. Recall of Prospectuses, etc. With respect to a Registration
Statement or amendment thereto filed pursuant to this Section, if, at any time,
the Company notifies the selling Holder that an amendment or supplement to such
Registration Statement or amendment or the prospectus included
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therein is necessary or appropriate, the selling Holder will forthwith cease
selling and distributing shares thereunder and will forthwith redeliver to the
Company all copies of such Registration Statement and prospectuses then in their
possession or under their control.
Section 7.06. Cooperation of Holders. The Company shall be entitled to
require that each selling Holder cooperate with the Company in connection with a
registration of shares of Common Stock pursuant to this Section and furnish such
information, representations, undertakings and agreements regarding such selling
Holder and the distribution as may be reasonably required by the Company or as
required by law in connection therewith.
Section 7.07. Expenses. The Company will bear all the expenses in
connection with any Registration Statement under this Section 7 (including the
fees and expenses of a single counsel to the Holders) other than transfer taxes
payable on the sale of such shares and fees and commissions of brokers, dealers
and underwriters.
Section 7.08. Indemnification. In the event of the registration of any
securities under the Securities Act pursuant to this Section, the Company and
the Holders shall provide to each other customary indemnification to the extent
of any loss, claim, damage, liability or expense arising out of such
registration.
Section 8: Status of the Holder:
Section 8.01. The Holder has such knowledge and experience in financial and
business matters that the Holder is capable of evaluating the merits and risks
of this Convertible Note. The Holder is able to bear the economic risk of this
Note. The Holder has had the opportunity to consult with the Holder's own
attorney, accountant and/or purchaser representative regarding this Note and the
suitability of this transaction, and to the extent necessary, the Holder has
retained, at Holder's own expense, and relied upon, appropriate professional
advice regarding this Note, the investment it represents, tax and legal merits,
risks and consequences of this Note and of purchasing and owning the Shares.
Section 8.02. The Holder represents that the Holder is an "Accredited
Investor", as that term is defined below, and that at least one of the
categories set forth in (a) through (h) below applies to the Holder. The Holder
is one or more of the following:
(a) a natural person whose individual net worth, or joint net worth
with that person's spouse, exceeds $1,000,000;
(b) a natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year.
(c) a bank as defined in Section 3(a)(2) of the Securities Act
or a savings and loan association or other institution as defined in
Section 3(a) (5)(A) of the Securities Act, whether acting in its individual or
fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; an insurance company as defined in Section
2(13) of the Securities Act; an investment company registered under the
Investment Company Act of 1940 (the "1940 Act") or a business development
company as defined in Section 2(a)(48) of the 1940 Act; a Small Business
Investment Company licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; or an
employee benefit plan within the meaning of Title I of the Employee Retirement
Income Security Act of 1974 ("ERISA"), if the investment decision is made by a
plan fiduciary, as defined in Section 3(21) of ERISA, which fiduciary is either
a bank, savings and loan association, insurance company or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or if a self-directed plan, with investment decisions made solely by
persons that are Accredited Investors (as listed in categories (a)-(h) herein);
(d) a private business development company as defined in
Section 202(a)(22) of the 1940 Act;
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(e) an organization described in Section 501(c)(3) of the Internal
Revenue Code, a corporation, Massachusetts or similar business trust or a
partnership, with total assets in excess of $5,000,000, and which was not formed
for the specific purpose of engaging in this transaction;
(f) a trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of engaging in this transaction, which is directed by a
person who has such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of this investment;
(g) a director or executive officer of the Company; or
(h) an entity in which all of the equity owners are Accredited
Investors [as listed in categories (a)-(h)].
Section 9. MISCELLANEOUS
Section 9.01. Governing Law. This Convertible Note shall be construed in
accordance with the laws of the State of Florida applicable to contracts entered
into and to be performed wholly within said State.
Section 9.02. Successors and Assigns. All the covenants, stipulations,
promises and agreements in the Convertible Notes held by or on behalf of the
Company shall bind its successors and assigns, whether so expressed or not.
Section 9.03 Course of Dealing: No Waiver. No course of dealing between
the Company and the Holder hereof shall operate as a waiver of any right of any
holder hereof and no delay on the part of the Holder in exercising any right
hereunder shall so operate.
Section 9.04. Waiver of Compliance.
(a) Any term, covenant, agreement or condition hereof may be amended, or
compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), if the
Company shall have obtained the agreement or consent in writing of the
Holders of at least 51% in aggregate principal amount of all
outstanding Convertible Notes, but no such amendment or waiver shall:
(i) change the amount or maturity of any principal on the
Convertible Notes or change the rate or extend the time of
payment of interest on the Convertible Notes or reduce the
amount of principal thereof or modify any of the provisions of
the Convertible Notes with respect to the payment or prepayment
thereof:
(ii) give to any Convertible Note any preference or priority over any
other Convertible Note; or
(iii) reduce the percentage of Holders of the Convertible Notes
required to approve any such amendment or effectuate any such
waiver.
(b) In determining whether the Holders of the requisite principal amount
of outstanding Convertible Notes have given any authorization, consent
or waiver under this Section 9.04 or under Section 5.02, Convertible
Notes owned by the Company shall be disregarded and deemed not to be
outstanding.
Section 9.05. Manner of giving Notices. Any notice required to be given to
the Holder hereof by the Company hereunder shall be given by overnight delivery
with a reputable established courier service and by certified registered mail to
the Holder at its address designated on the register referred to in Section 1.01
on the date of such notice.
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Section 9.06. Expenses in Preparation. All expenses of the Holder in the
negotiation, preparation, execution and delivery of this Convertible Note,
including attorneys' fees shall be paid by the Company.
Section 9.07. Other Provisions. The Company waives demand, presentment,
protest, notice of dishonor and any other form of notice that may be required to
hold the Company liable on this Note.
IN WITNESS WHEREOF, the undersigned has caused this Convertible Note to be
signed in its corporate name by one of its officers thereunto duly authorized,
and to be dated as of the date first written above.
FINANCIALWEB.COM, INC.
By: ________________________________
James P. Gagel
Title: Executive Vice President
________________________________
Date: March 30, 1999
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