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CONVERTIBLE PROMISSORY NOTE
June 23, 2000
FOR VALUE RECEIVED, the undersigned CAPITA RESEARCH GROUP, INC.,
a Nevada corporation (the "Borrower"), hereby promises to pay to Jim Salim (the
"Lender"), or order, on the date which is 120 days after each Loan Disbursement
Date (at which time the amount of the loan made on such Loan Disbursement Date
shall be due), the principal sum of Six Hundred Thousand Dollars ($600,000) or,
if less, the aggregate amount of all loans made by Lender to Borrower on or
prior to the Commitment Expiration Date pursuant to Section 1.03 of the Loan
Agreement dated as of the date hereof between Borrower and Lender (as the same
may be amended, modified or supplemented from time to time, the "Loan
Agreement"), less any principal amount hereof converted into common stock, $.001
par value ("Common Stock"), of Borrower pursuant to the provisions hereof.
Borrower also promises to pay interest on the unpaid principal amount hereof
from time to time outstanding from the date hereof until payment in full at the
prime or reference rate published from time to time by Citibank, N.A., New York,
New York. Interest hereon for any period other than a full quarter shall be
computed on the basis of a 360-day year of twelve 30-day months. All capitalized
terms used herein shall, unless otherwise defined herein, have the meanings for
purposes hereof assigned to such terms in the Loan Agreement.
At any time that any principal or interest payment on this Note
is past due for any reason, the rate of interest on such past due principal or
interest shall be the prime or reference rate published from time to time by
Citibank, N.A., New York, New York, plus three percent (3%) per annum, until
such past due principal or interest has been paid in full, to the extent
permitted by applicable law.
All accrued and unpaid interest hereon will be due and payable
within 10 days after demand therefor, which demand may not be made until at
least two months after the first Loan Disbursement Date. In addition, all
accrued and unpaid interest hereon will be due and payable upon the payment in
full of the outstanding principal amount of this Note and at the maturity
hereof.
Subject to the provisions of the Loan Agreement, payments of both
principal and interest shall be made to Lender at 3510 Turtle Creek Boulevard,
#2D, Dallas, Texas 75219 (or at any other payment office in the United States of
America previously designated to Borrower by Lender), in writing, in lawful
money of the United States of America. Notwithstanding the foregoing, in lieu of
cash, Lender may elect to receive all (but not less than all) of an interest
payment in shares of Common Stock, valued at the then current Conversion Price
(as hereinafter defined, with the date such interest payment is due being
substituted for the Conversion Date in the formula for the determination
thereof) by so indicating in the demand for interest.
Subject to and upon compliance with the provisions hereof, Lender
shall have the right, at Lender's option, at any time or from time to time on or
after 30 days after the first Loan Disbursement Date to convert all or any part
of the unpaid principal amount hereof into shares (the "Shares") of Common Stock
at a price of $.60 per Share (such price being referred to herein as the
"Conversion Price"), as appropriately adjusted for any stock dividend, stock
split, or reverse stock split occurring subsequent to the first Loan
Disbursement Date. Such right to convert shall be subject to the following
further terms and conditions:
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(a) Upon the surrender hereof, accompanied by Lender's written
notice to Borrower that Lender elects to convert this Note, or, if less than the
entire unpaid principal amount hereof is to be converted, the portion hereof to
be converted, Borrower shall issue and deliver to Lender as promptly as
possible, certificates evidencing the Shares as hereinafter set forth. All
Shares of Common Stock issued upon conversion shall be deemed issued as of the
close of business on the Conversion Date. No adjustment shall be made for any
interest accrued hereon or for any dividends on any Shares issued upon
conversion of this Note. Upon conversion of only a part of the unpaid principal
amount of this Note, Borrower shall execute and deliver to or on the order of
Lender, at the expense of Borrower, a new Note in principal amount equal to the
unconverted portion of such unpaid principal amount, which new Note shall be
dated and bear interest from the date to which interest shall have been paid on
such unconverted portion.
(b) If any capital reorganization or reclassification of the
capital stock of Borrower, or consolidation or merger of Borrower with another
corporation, or the sale, transfer or other disposition of all or substantially
all of its properties to another corporation, shall be effected, then, as a
condition of such reorganization, reclassification, consolidation, merger, sale,
transfer or other disposition, lawful and adequate provision shall be made
whereby Lender shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Shares of the Common Stock of Borrower immediately theretofore issuable upon
conversion of this Note, such shares of stock, securities or properties as may
be issuable or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
Common Stock immediately theretofore issuable upon conversion of this Note had
such reorganization, reclassification, consolidation, merger, sale, transfer or
other disposition not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of Lender to the end that
the provisions hereof (including without limitation provisions for adjustment of
the Conversion Price) shall thereafter be applicable, as nearly equivalent as
may be practicable in relation to any shares of stock, securities or properties
thereafter deliverable upon the conversion hereof. Borrower shall not effect any
such consolidation, merger, sale, transfer or other disposition, unless prior to
or simultaneously with the consummation thereof the successor corporation (if
other than Borrower) resulting from such consolidation or merger or the
corporation purchasing or otherwise acquiring such properties shall assume, by
written instrument executed and mailed or delivered to Lender at his last
address appearing on the books of Borrower, the obligation to deliver to Lender
such shares of stock, securities or properties as, in accordance with the
foregoing provisions, Lender may be entitled to acquire. The above provisions of
this subparagraph shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers, or other
dispositions.
(c) No certificates for fractional shares of Common Stock shall
be issued upon conversion of this Note. If the conversion of this Note, or any
portion hereof, results in a fraction of a share, Borrower shall pay, out of
funds legally available therefor, a cash adjustment in respect of such
fractional share in an amount equal to the fair market value thereof.
(d) Borrower agrees that its issuance of this Note shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the Shares upon the conversion of this Note. During the period within which this
Note may be converted into Shares of Common Stock, Borrower shall at all times
have authorized and reserved a sufficient
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number of Shares to provide for the conversion of this Note in accordance with
the terms hereof. Borrower agrees that all Shares which shall be issued upon
conversion of this Note shall, when so issued, be free of pre-emptive rights,
duly and validly issued and fully paid and nonassessable.
(e) Lender shall be responsible for payment of any transfer or
issuance tax in respect of the issue of any stock upon conversion of this Note.
Borrower shall not be required to issue or deliver any such stock unless and
until the person or persons requesting the issuance thereof shall have paid to
Borrower the amount of such tax or shall have established to the satisfaction of
Borrower that such tax has been paid.
This Note is the Note referred to in, and is entitled to the
benefits of, the Loan Agreement.
The date and amount of each Loan by Lender to Borrower under the
Loan Agreement, the amount of any prepayment or payment of the principal amount
hereof and the amount of the unpaid balance hereof shall be noted by Lender on
the Schedule annexed hereto and made a part hereof, or on a continuation of such
Schedule attached hereto and made a part hereof which notations shall be prima
facie evidence of the information set forth therein; provided, however, that the
failure of the holder to make or any error in making any such notation shall not
limit or otherwise affect the obligations of Borrower hereunder or under the
Loan Agreement.
Except as otherwise expressly provided in the Loan Agreement,
Borrower waives presentment, demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Note and the Loan Agreement.
This Note shall be binding upon Borrower and its successors and
shall inure to the benefit of Lender and his heirs, representatives, successors
and assigns.
This Note shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania applicable to agreements made and
to be performed entirely within such Commonwealth.
BORROWER:
CAPITA RESEARCH GROUP, INC.
By
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Title:
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Schedule of Loans
and Principal Payments
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<TABLE>
<CAPTION>
Unpaid
Amount Amount of Principal Name and Signature of
Date Of Loan Principal Paid Balance Person Making Notation
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<S> <C> <C> <C> <C>
</TABLE>
