Attached files
Exhibit
10.1
THIS
PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933
(“THE ACT”), NOR UNDER APPLICABLE STATE SECURITIES LAWS. THIS NOTE
MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND STATE LAWS, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
ISSUE
DATE: __________, 2009
LENDER: ______________________________
PRINCIPAL
SUM: $_____________
ACCREDITED
MEMBERS, INC.
10.0
% CONVERTIBLE PROMISSORY NOTE
1.
PROMISE
TO PAY
1.1 Promise to Pay - FOR
VALUE RECEIVED, ACCREDITED
MEMBERS, INC., a Colorado corporation (the “Company”), promises to pay to
the order of the Lender on the Maturity Date the Principal Sum set forth
above. Interest at the rate of 10.0% per annum on the Principal Sum
will be compounded monthly and payable on the 15th day
of each month following the month of accrual. This 10.0% Convertible
Promissory Note (the “Note”) is one in a series of Notes being issued in the
same offering, and is issued pursuant to that certain Subscription Agreement
dated _________, 2009 between the Company and Lender (the “Subscription
Agreement”).
1.2 Maturity Date - The
Maturity Date of this Note is five years from the Issue Date. The Company shall pay
the Principal Sum outstanding to the Lender in lawful money of the United States
of America on the Maturity Date at the address of the Lender set forth
below or such other address as the Lender designates by written
notice to the Company prior to the payment being made. Accrued
interest shall be paid monthly in arrears, by the 15th day
of the following calendar month.
1.3 Prepayment. This
Note may be pre-paid in whole or in part without penalty at any time after the
Company’s common stock trades at or above (or has a reported bid price at or
above) $0.60 per share for more than 20 consecutive trading days, with a
cumulative trading volume of at least 500,000 shares traded during such 20-day
period; provided, however, that the Company must provide at least 14 days’
written notice to Lender of the Company’s intent to prepay.
1.4 Events of Default -
The whole of the Principal Sum or the balance remaining unpaid, together with
any accrued and unpaid interest may, at the option of the Lender, become
immediately due and payable upon the occurrence of any of the following events
(each event being called an “event of default”):
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(a)
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the
Company defaults in payment of the Principal Sum on the Maturity Date and
the default continues for 30 days after written notice of the default to
the Company by the Lender;
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(b)
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the
Company defaults in payment of accrued interest for 90 days and the
default continues for 60 days after written notice of the default to the
Company by Lender;
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(c)
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the
Company defaults in the performance or observance of any other covenant or
condition of the Note and the default continues for 90 days after written
notice of the default to the Company by the
Lender;
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(d)
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an
order is made for the winding-up of the Company; a petition is filed by or
against the Company; an assignment for the benefit of creditors is made by
the Company; a receiver or agent is appointed in respect of the Company
under any bankruptcy or insolvency legislation, or by or on behalf of a
secured creditor of the Company; or an application is made under the
United States Bankruptcy Code or any successor or similar
legislation;
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(e)
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the
Company ceases to carry on its business or disposes of substantially all
of its assets; or
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(f)
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the
Company takes any corporate proceedings for its dissolution or
liquidation.
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2.
CONVERSION
BY LENDER
2.1 Conversion by Lender
- The Principal Sum of this Note, together with any unpaid interest thereon,
will be convertible by the Lender, upon notice being given by the Lender to the
Company in the manner specified in subsection 2.2 below, into fully paid,
non-assessable shares of the Company's common stock at a price (the “Conversion
Price”) of: (i) $0.30 per share if the notice of conversion is
received prior
to the close of the third consecutive calendar month in which the Company is
cash flow positive; (ii) $0.60 per share if the notice of conversion is received
after the close
of the third consecutive calendar month in which the Company is cash flow
positive. The Conversion Price is subject to adjustment under section
4 below. The
shares of common stock issued upon conversion will be recorded on the books of
the Company as of the Conversion Date in the name of the Lender or its nominee,
and will rank pari passu with the issued and fully paid shares of the Company of
the same class outstanding on the Conversion Date, and the Lender will
accordingly be entitled to any dividends or other distributions declared, made,
or paid on or after such Conversion Date. If the number of shares to
be issued to the Lender on conversion of this Note is not a whole number, then
the number of the shares shall be rounded down to the nearest whole
number.
2.2 Conversion
Procedures. The Lender may exercise its right of conversion
by:
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(a)
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delivering
by hand or by registered mail to the principal office of the Company as
set out on page 1 hereof, or to such other address as the Company may from
time to time in writing advise, a Notice of Conversion in the form
attached as “Schedule A” hereto, such Notice to be received by the Company
on or before the Maturity Date and prior to repayment by the
Company. The date on which the Notice is received by the
Company is herein called the “Conversion Date”;
and
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(b)
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surrendering
this Note to the Company in exchange for a certificate for the appropriate
number of shares. Surrender of the Note by the Lender to the
Company shall be a good and sufficient discharge to the Company, subject
to the delivery of a share certificate for the appropriate number of
Shares, of the debt evidenced by this Note or of any lesser amount
converted and, if less than the full amount of debt represented by the
Note is converted, the Company shall deliver to the Lender a replacement
Note representing the balance of the debt which remains
outstanding; and
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(c)
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delivering
to the Company an investment representation letter sufficient to permit
the Company to issue the shares deliverable upon conversion in a manner
believed to be exempt from registration under the
Act.
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2.3. Payment Obligation
Ceases. The obligation of the Company to repay the Principal
Sum of the Note and pay interest on the Note or any portion thereof, as
applicable, shall cease on the Conversion Date as to the amount of the Principal
Sum and accrued interest which is converted to shares of common stock
pursuant to Section 2.2.
3.
AVAILABLE
AUTHORIZED CAPITAL
3.1 The
Company will, at all times after the Company increases its authorized capital
such that sufficient shares of Common Stock are available for issuance upon
conversion, while this Note is outstanding, keep available shares of
authorized and unissued common stock sufficient to enable the Principal Sum
evidenced by this Note from time to time outstanding and unconverted, to be
converted to shares of common stock in accordance with this Note.
3.2 The
Company represents and warrants that the shares of common stock issuable upon
conversion or in payment of the Note, when issued in compliance with the terms
of this Note, will be validly issued, fully paid and non-assessable shares of
common stock of the Company, and will be free of any liens, charges or
encumbrances.
4.
ADJUSTMENT
OF CONVERSION PRICE AND SHARES
4.1 If
the Company shall at any time subdivide its outstanding common stock by
recapitalization, reclassification or split-up thereof, the number of shares of
common stock subject to this Note immediately prior to such subdivision shall be
proportionately decreased, and if the Company shall at any time combine the
outstanding common stock by recapitalization, reclassification or combination
thereof, the number of shares of common stock underlying this Note immediately
prior to such combination shall be proportionately increased. Any
corresponding adjustment to the Conversion Price shall become effective at the
close of business on the record date for such subdivision or
combination.
4.2 In
the event of a dividend (other than in shares of common stock of the Company),
the proposed dissolution or liquidation of the Company, or any corporate
separation or division, including, but not limited to, a split-up, split-off or
spin-off, or a merger or consolidation of the Company with another corporation,
or the sale of all or substantially all of the assets of the Company, the Board
may provide that the Lender will have the right to convert this Note (at its
then current Conversion Price) solely for the kind and amount of shares of stock
and other securities, property, cash or any combination thereof receivable upon
such dissolution, liquidation, corporate separation or division, or merger or
consolidation by a holder of the number of shares of common stock for which this
Note might have been exercised immediately prior to such dissolution,
liquidation, corporate separation or division, or merger or
consolidation.
4.3 The
preceding paragraph will not apply to a merger or consolidation in which the
Company is the surviving corporation and shares of common stock are not
converted into or exchanged for stock, securities of any other corporation, cash
or any other thing of value. Notwithstanding the preceding sentence,
in case of any consolidation or merger of another corporation into the Company
in which the Company is the surviving corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of common stock (excluding a change in par value,
or from no par value to par value, or any change as a result of a subdivision or
combination, but including any change in such shares into two or more classes or
series of shares), the Board may provide that the Lender will have the right to
convert this Note solely for the kind and amount of shares of stock and other
securities (including those of any new direct or indirect parent of the
Company), property, cash or any combination thereof receivable upon such
reclassification, change, consolidation or merger by the holder of the number of
shares of common stock into which this Note might have been
converted.
4.4 To
the extent that the foregoing adjustments relate to stock or securities of the
Company, such adjustments will be made in good faith by the Board.
4.5 Except
as expressly provided in this Note, the Lender will have no rights by reason of
any subdivision or consolidation of shares of stock of any class, or the payment
of any stock dividend or any other increase or decrease in the number of shares
of stock of any class, or by reason of any dissolution, liquidation, merger, or
consolidation or spin-off of assets or stock of another corporation; and any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, will not affect, and no adjustment will be
made with respect to, the number or price of shares of common stock subject to
this Note. The issuance of this Note will not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structures, or to merge or consolidate, or to
dissolve, liquidate, or sell or transfer all or any part of its business or
assets.
5.
REGISTERS
OF THE COMPANY/MONTHLY FINANCIAL INFORMATION
5.1 Maintenance of
Registers. The Company shall, at all times while this Note is
outstanding, cause to be kept by and at the principal office of the Company,
registers in which will be entered the Lender's name and address and particulars
of this Note held by it. No transfer, exchange or conversion of this
Note will be valid unless made by the Lender or its administrators or other
legal representatives or its attorney duly appointed by an instrument in writing
unless in form and execution satisfactory to the Company acting reasonably upon
compliance with such requirements as are set out in this Note, and such other
requirements as the Company acting reasonably may prescribe, and unless the
transfer has been duly entered on one of the appropriate registers or noted on
this Note by the Company or other registrar.
5.2 Inspection of
Registers. The registers referred to above will at all
reasonable times be open for inspection by the Lender.
5.3 Transfer on
Registers. Subject to restrictions under the Securities Act of
1933 and similar laws,
the Lender may at any time and from time to time have this Note
transferred at any of the places at which a register is kept pursuant to the
provisions of this section, in accordance with such reasonable regulations as
the Company may prescribe.
5.4 Financial Information to be
Provided to Lender. Until the Company becomes subject to the
reporting requirements under the 1934 Act, the Company will provide to Lender by
the 15th of
each calendar month that this Note is outstanding a balance sheet and
profit/loss statement for the preceding calendar month.
6.
GENERAL
6.1 Ownership of Note -
The Company will not be charged with notice of nor be bound to see to the
execution of any trust, whether expressed, implied or constructive, in respect
of this Note and the Company may transfer this Note on the direction of the
Lender whether named as trustee or otherwise, as though that person were the
beneficial owner.
6.2 Notice and Other
Instruments - Any notice, demand or other communication required or
permitted to be given to a party must be in writing and must be sent, if to the
Company, as follows:
c/o
Theresa M. Mehringer, Esq.
Burns,
Figa & Will, P.C.
6400 S.
Fiddlers Green Circle, Suite 1000
Greenwood
Village, Colorado 80111
or if to
Lender, to the address set forth on the Company’s books and
records. The notice must be:
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(a)
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personally
delivered to that party; or
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(b)
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except
during a period of strike, lock-out or other postal disruption, sent by
registered mail, postage prepaid to the address of that party set forth on
the signature page; or
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(c)
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sent
by telegraph, telecopier, telex or facsimile, e-mail, or similar
communication tested prior to sending and confirmed by prepaid registered
or certified mail to the address of that party set forth on the signature
page;
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and will
be deemed to have been received by that party on the earliest of the date of
delivery under paragraph (a), the actual date of receipt where mailed under
paragraph (b) and the day following the date of communication (otherwise than by
U.S Postal Service mail) under paragraph (c). Any party may give
written notice to the other party of a change of address to some other address,
in which event any communication must thereafter be given to that party, at the
last such changed address of which the party communicating has received written
notice.
6.3 Headings - Headings
to the sections, paragraphs, subparagraphs and clauses of this Note have been
inserted for convenience of reference only, and are not to affect its
construction.
6.4 Governing Law - This
Note and the rights, remedies, powers, covenants, duties and obligations of the
parties will be construed in accordance with and governed by the laws of the
State of Colorado and the federal laws of the United States.
6.5 Arbitration - Any
controversy, claim, dispute and matters of difference with respect to this
Agreement and the transactions contemplated by it must be resolved through
submission to arbitration in Denver, Colorado according to the rules and
practices of the American Arbitration Association from time to time in
force.
6.6 Severability - If any
provision of this Note is or becomes invalid, illegal or unenforceable in any
respect, that fact will not affect the validity, legality or enforceability of
the remaining provisions of this Note or any valid, legal or enforceable parts
of the impugned provision.
6.7 Binding on Successors
– This Note will inure to the benefit of and be binding upon each of the parties
and their respective heirs, executors, administrators, successors and permitted
assigns.
6.8 Amendment and Waiver
– This Note may not be amended, waived, discharged or terminated except by a
document executed by the party against whom enforcement of the amendment,
waiver, discharge or termination is sought.
6.9. Compliance with Securities
Laws - The holder of this Note acknowledges that this Note is
being acquired solely for the holder’s own account and not as a nominee for any
other party, and for investment, and that the holder shall not offer, sell or
otherwise dispose of this Note except in accordance with applicable
law. This Note, any Note issued in substitution or replacement
therefore, and any shares of common stock for which this Note is converted shall
be stamped or imprinted with a legend in substantially the following form unless
such shares are registered under the 1933 Act prior to their
issuance:
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The
shares represented by this Certificate have not been registered under the
Securities Act of 1933 (the “1933 Act”), and are “restricted securities”
as that term is defined in Rule 144 under the 1933 Act. The
shares may not be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the 1933 Act or
pursuant to an exemption from registration under the 1933 Act, the
availability of which is to be established to the satisfaction of the
Company.
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6.10 Entire Agreement –
This Note and the related Subscription Agreement between the Company and the
Lender, set forth the entire agreement and understanding of the Company and the
Lender with respect to the loan and supersedes all prior oral and written
agreements, undertakings and understandings.
| ACCREDITED MEMBERS, INC. | |||
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Date
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By:
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| Title: | |||
ACKNOWLEDGED
AND AGREED TO this _____ day of __________________ 2009.
| Lender Signature | |||
| Lender Name: | |||
| Lender Address: | |||
| Email: | |||
“SCHEDULE
A”
10.0%
CONVERTIBLE PROMISSORY NOTE
CONVERSION
NOTICE
The
undersigned holder of an 10.0% Convertible Promissory Note (the “Note”) issued
by Accredited Members, Inc. (the “Company”), hereby exercises its option to
convert $__________________ of the Principal Sum of its Note, into Shares of the
Company’s common stock at the Conversion Price of $_____ per Share (subject to
adjustments as provided in the Note).
DATED the
____ day of _________________ 20___.
| [NAME OF LENDER] |
| By: | ||
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Authorized
Signatory
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