CONVERTIBLE PROMISSORY NOTE

Exhibit 4.1

 

 

THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR APPLICABLE EXEMPTION OR SAFE HARBOR PROVISION.

 

FOR VALUE RECEIVED, Forex International Trading Corp. (“Borrower,” or “Obligor”), hereby promises to pay to the Lender on the Maturity Date, as defined below, the Principal Sum, as defined below, along with the Interest Rate, as defined below, according to the terms herein.

 

The “Effective Date” shall be:		July 8, 2010
The “Lender” or the “Holder” shall be:		A.T. Limited
The “Principal Sum” shall be:		$500,000
The “Consideration” shall be:		$400,000 in the form of the Secured and Collateralized Promissory Note (the “Secured Note”) (including the related Security and Collateral Agreement)(the “Security Agreement”)) payable by the Lender to the Borrower date as of the date hereof.
The “Interest Rate” shall be:		10% per annum.  No interest or principal payments are required until the Maturity Date, but both principal and interest may be included in conversion prior to maturity date.
The “Conversion Price” shall be:		$0.2 (Twenty cents) subject to adjustment as set forth below.
The “Maturity Date” is the date upon which the Principal Sum of this Note, as well as any unpaid interest shall be due and payable, and that date shall be:		July 8, 2012
The “Prepayment Terms” shall be:		See Section 1.2

 

 

 

1.2. Prepayment Terms. Prepayment is permitted; provided, however, the prepayment amount shall equal all amounts due and owing under this note multiplied by 1.30.

 

(a) Prepayment By Cash or Other Negotiated Form. Prepayment is permitted at any time by payment in the form of either (1) cash, or (2) other negotiated form of payment mutually agreed to in writing.

 

(b) Prepayment By Surrender of the Secured Note. Prepayment is permitted by surrender of the Secured  Note.

 

 

The Holder will have the right to convert the Principal Sum and accrued interest under this Note into shares of the Borrower’s Common Stock as set forth below.

 

2.1 Conversion Rights.  Subject to the terms set forth in Section 2.7, the Holder will have the right at its election from and after the Effective Date, and then at any time, to convert all or part of the outstanding and unpaid Principal Sum and accrued interest into shares of fully paid and nonassessable shares of Common Stock of the Obligor (as such stock exists on the date of issuance of this Note, or any shares of capital stock of the Obligor into which such stock is hereafter changed or reclassified, (the “Common Stock”) as per the Conversion Formula set forth in Section 2.2. Any such conversion shall be cashless, and shall not require further payment from Holder. Unless otherwise agreed in writing by both the Borrower and the Holder, at no time will the Holder convert any amount of the Note into common stock that would result in the Holder owning more than 4.99% of the common stock outstanding of the Obligor.  The shares of Common Stock from any such conversion will be delivered to Holder within two business days of conversion notice delivery via 10:30am priority overnight delivery service.

 

2.2. Conversion Formula. The number of shares issued through conversion is the conversion amount divided by the conversion price.

 

# Shares = Conversion Amount

 

Conversion Price

 

On the 21st trading day following each conversion, the number of shares of Common Stock issuable to the Holder pursuant to this Note shall be adjusted such that the aggregate number of shares of Common Stock issuable to the Holder is equal to (a) the Conversion Amount, divided by (b) 75% of the average of the three (3) lowest closing bid prices during the 20 trading days following delivery of the shares of Common Stock.  If this adjustment requires the issuance of additional shares of Common Stock to the Holder (i.e. if a total issuance of more than the original amount of shares of Common Stock is required), such additional shares of Common Stock shall be issued to the Holde r or its designee within three business days.  If this adjustment requires the return of original amount of shares of Common Stock to the Company (i.e. if an aggregate issuance of less than the original amount shares of Common Stock is required), such shares of Common Stock shall be returned to the Company within three business days.

 

2.3 Intentionally left blank.

 

2.4. Intentionally Left Blank

 

2.5 Reservation of Shares. As of the issuance date of this Note and for the remaining period during which the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the full conversion of this Note. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable.  The Borrower agrees that its issuance of this Note constitutes full authority to its officers, agents and transfer agents who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the conversion of this Note.

 

 

 

 

2.6. Delivery of Conversion Shares. Shares from any such conversion will be delivered to Holder within 2 (two) business days of conversion notice delivery (see 3.1) via 10:30am priority overnight delivery service (see “Share Delivery” attachment). If those shares are not delivered in accordance with this timeframe stated in this Section 2.6, at any time for any reason prior to offering those shares for sale in a private transaction or in the public market through its broker, Holder may rescind that particular conversion to have the conversion amount returned to the note balance with the conversion shares returned to the Borrower.

 

2.7. Discharge By Payment. Conversions under this Convertible Promissory Note  are available only after the Conversion Amount described herein is discharged by payment of a pro rata value from the Secured Note by either, at the Obligor’s choice, cash payment, or surrender of security/collateral, or other negotiated form of payment mutually agreed to in writing.

 

 

3.1. Notices. Any notice required or permitted hereunder must be in writing and either personally served, sent by facsimile or email transmission, or sent by overnight courier. Notices will be deemed effectively delivered at the time of transmission if by facsimile or email, and if by overnight courier the business day after such notice is deposited with the courier service for delivery.

 

3.2. Amendment Provision. The term “Note” and all reference thereto, as used throughout this instrument, means this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

3.3. Assignability. This Note will be binding upon the Borrower and its successors and permitted assigns, and will inure to the benefit of the Holder and its successors and permitted assigns, and may be assigned by the Holder.

 

3.4. Governing Law. This Note will be governed by, and construed and enforced in accordance, with the laws of the State of California, without regard to the conflict of laws principles thereof.

 

3.5. Maximum Payments. Nothing contained herein may be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum will be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

 

3.6. Attorney Fees. In the event any attorney is employed by either party to this Note with regard to any legal or equitable action, arbitration or other proceeding brought by such party for the enforcement of this Note or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Note, the prevailing party in such proceeding will be entitled to recover from the other party reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which the prevailing party may be entitled.

 

3.7. No Public Announcement. Except as required by applicable securities law, no public announcement may be made regarding this Note, payments, or conversions without written permission by both Borrower and Holder.

 

3.8. Opinion of Counsel. In the event that an opinion of counsel is needed for any matter related to this Note, Holder has the right to have any such opinion provided by its counsel. Holder also has the right to have any such opinion provided by Borrower’s counsel.

 

3.9. Director’s Resolution. Once effective, Borrower will execute and deliver to Holder a copy of a Board of Director’s resolution resolving that this note is validly issued, paid, and effective.

 

 

 

 

 

3.10 Holder’s Representation.  The Holder hereby represents that it is an accredited investor as such term is defined under Regulation D as promulgated under the Securities Act of 1933, as amended.