Document:

Unassociated Document

    
      Name of
Investor:                                           

      

      January  20
, 2009

      

      Element
21 Golf Company

      200
Queens Quay E Unit  #1

      Toronto,
Ontario, Canada  M5A 4K9

       

      ELEMENT  21

      BRIDGE  LOAN  TERMS

      CONVERTIBLE
NOTE

      

      $   300,000
US

      

      FOR VALUE RECEIVED, the
undersigned, ELEMENT 21 GOLF
COMPANY, a Delaware corporation (the “Borrower”), hereby promises
to pay to the order of  , (the “Lender”), the principal
amount of Three Hundred
Thousand Dollars ($ 300,000).

      

      Section 1.  The
Note. The $ 300,000 loan shall take the
form of a 7% Convertible
Promissory Note which shall be repaid in a period of not more than 6 months from
the date of origination.

      

      Section 2.  Interest. All indebtedness outstanding
under this Note shall bear interest (computed on the basis of a 360-day year) at
the rate of seven percent (7%) per annum commencing from the date of this
Note.  Interest shall be payable on the Maturity Date.

      

      Section 3.  Prepayment. This Note or any part of the
principal amount hereof (in denominations of ten thousand dollars ($10,000) or
multiples thereof) may be prepaid by the Borrower without penalty, premium or
prior notice, however, the right of conversion remains with the lender for the
full period of six months one.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Section 4.  Conversion.

      

      
        	
                 
      

              	
                (a)

              	
                The
      outstanding principal, at the option of the Lender, can be converted
      anytime during the six months, on terms and conditions applicable thereto
      at a conversion price equal to 45 cents per
      share.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                If
      the Lender desires to exercise its conversion rights during 6 months
      period, the Lender shall surrender his Note, duly endorsed, at the
      principal office of the Company and shall give written notice to the
      Borrower of his election to convert the outstanding principal hereon into
      Equity Securities. The notice shall state the name(s) of the nominee(s) of
      the Lender in which any Equity Securities are to be issued. The Company
      shall, as soon as practicable thereafter, issue and deliver at such office
      to the Lender or such nominee(s), a certificate or certificates for the
      number of Equity Shares to which the Lender or such nominee(s) is
      entitled.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                No
      fractional shares shall be issued upon conversion of this Note. Instead of
      issuing any fractional shares that would otherwise be issuable upon
      conversion of this Note (or any portion hereof), the Borrower shall round
      up to the nearest whole number of shares and pay to the Lender cash in an
      amount equal to the amount of such fractional
  interest.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                In
      addition under the choice of conversion, Lender again retains the right to
      convert at the price per share of 45
  cents.

              

      

      

      
        	
                 
      

              	
                (e)

              	
                In
      addition to the terms above, the Lender shall have the option to purchase
      additional shares at 35
      cents for maximum amount of the original investment ($300,000).
      This exercise of this option can be made anytime during the twelve (12)
      months from the date of
origination.

              

      

      

      
        	
                 
      

              	
                (f)

              	
                In
      such case, the Lender may choose to exercise all options during or at the
      termination of twelve (12) months by converting the Bridge Loan and by
      purchasing 1 x (one times) the number of original shares converted at the
      termination of 12 months at the price of conversion of 35
      cents.  All future options would then be
      extinguished.

              

      

      

      
        	
                 
      

              	
                (g)

              	
                If
      the Lender does not choose to exercise his option to purchase
      at  the conversion date, that option would expire worthless, and
      would not be available again.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
Section 5.  Special
Circumstances.
Element 21 agrees to honor and uphold the specific tenants of this
agreement which shall remain in effect withstanding any future changes to the
subscription agreement which may be made by Borrower’s legal
counsel.

      

      Section 6.  Payment
in U.S. Funds.
Unless this Note is converted into Equity Securities in accordance with
Section 4 hereof, payments of both principal and interest on this Note are to be
made in lawful money of the United States payable by check payable to the Lender
and mailed to the address of the Lender as set forth in the first paragraph of
this Note or such other place as the holder hereof shall designate to the
Borrower in writing.

       

      Section 7.  Events of
Default. The
following events are Events of Default:

       

      (i) the Borrower fails to pay to the
holder of this Note any monetary obligation due under this Note after having
received fourteen (14) business days prior written notice that such obligation
has become due;

       

      (ii) the Borrower fails, for fourteen
(14) business days after written notice, to comply with any other material term,
condition, covenant, or agreement in this Note;

       

      (iii) the Borrower becomes insolvent,
makes an assignment for the benefit of creditors, calls a meeting of its
creditors to obtain any general financial accommodation or suspends business;
or

       

      (iv) a case under the Bankruptcy Code
is commenced by or against the Borrower or a liquidator, trustee, custodian or
similar officer is appointed for all or a material portion of the Borrower's
assets, and such case is not dismissed or such appointment is not rescinded
within thirty (30) days  thereafter.

       

      Section 8. Remedies
Upon Default.
Upon the occurrence of any Event of Default, the principal amount of and
accrued and unpaid interest on this Note may be declared by the Lender (by
giving written notice to the Borrower) to be immediately due and payable by the
Borrower.  Thereafter, the Lender shall be entitled to all rights and
remedies provided by applicable law.

       

      The Borrower shall pay the costs and
expenses of collection, including, without limitation, reasonable attorneys'
fees and disbursements if any action, suit or proceeding is brought by the
holder hereof to collect this Note.

       

      Section 9. Amendments
and Assignment.
This Note may be amended by one or more written instruments signed by the
Borrower and by the Lender.  Without the Borrower’s prior written
consent, this Note may not be assigned or negotiated by the Lender.

       

      Section 10. Non-Recourse. No officer, director,
shareholder, agent or employee of the Borrower shall be personally liable for
any of the indebtedness of the Borrower represented by this Note or
otherwise.

       

      CHOICE OF LAWS AND
JURISDICTION. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS
RULES PERTAINING TO CONFLICTS OF LAWS.

      

      
        
          
            
              
                
                  
                    
                      	 
      	
                              ELEMENT
      21 GOLF COMPANY

                            	 
	 
      	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
      	 
	 
      	
                              By:

                            	                
      	 
	 
      	 
      	
                              Name:

                            	
                              Nataliya
      Hearn

                            	 
	 
      	 
      	
                              Title:

                            	
                              Chief
      Executive OfficerUnassociated Document

    NEITHER
THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER THIS
WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE APPLICABLE,
THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.

    

    Void
after 5:00 P.M. Eastern Standard Time on the last day of the Termination Date,
as defined in the Warrant

    

    COMMON
STOCK PURCHASE WARRANT

    OF

    ELEMENT
21 GOLF COMPANY

    

    This is
to certify that, FOR VALUE RECEIVED,            ,
or his/her/its assigns (“Holder”), is entitled to purchase, subject to
the provisions of this Warrant, from Element 21 Golf Company, a Delaware
corporation (the “Company”), at an exercise price per share equal to the Per
Share Price (as defined below) subject to adjustment as provided in this Warrant
(such price as adjusted from time to time in accordance herewith, the “Exercise
Price”), such number of shares of the Company’s Common Stock, par value $0.01
per share (“Common Stock”) as shall be equal to the Warrant Exercise Number (as
defined below).  The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as “Warrant Shares”. The term “Per Share Price” shall mean 35 CENTS . The term “Warrant
Exercise Number” shall mean as of any determination date $ 300,000 [AMOUNT EQUAL
TO 100% OF NOTE INVESTMENT AMOUNT] divided by the Per Share
Price.

     

    1. DEFINED
TERMS.  Capitalized terms not otherwise defined in this Warrant
shall have meaning ascribed to such term in that certain Subscription Agreement
dated as of the date hereof between the Company and the Holder.

     

    2. EXERCISE
OF WARRANT.

     

    (a)  This
Warrant may be exercised in whole or in part at any time or from time to time
from the date of origination of the Convertible Note and prior to the
Termination Date by presentation and surrender hereof to the Company at its
principal office, or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of shares of Common Stock specified in such
form.  If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the rights of the Holder hereof to purchase the balance
of the shares of Common Stock purchasable hereunder.  Upon receipt by
the Company of this Warrant at its office, or by the stock transfer agent of the
Company at its office, in proper form for exercise, the Holder shall be deemed
to be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such shares of Common Stock
shall not then be actually delivered to the Holder.  As used herein,
the term “Initial Exercise Date” shall mean the date upon which this warrant was
first issued by the Company to the Holder and the term “Termination Date” shall
mean the twelve (12) months anniversary of the Initial Exercise
Date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3. EXCHANGE,
TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.  This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder.  Subject to the provisions of Section 8
of this Warrant, upon surrender of this Warrant to the Company or at the office
of its stock transfer agent, if any, with the Assignment Form annexed hereto
duly executed and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant in the name of the assignee
named in such instrument of assignment and this Warrant shall promptly be
canceled.  This Warrant may be divided or combined with other Warrants
which carry the same rights upon presentation hereof at the office of the
Company or at the office of its stock transfer agent, if any, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued and signed by the Holder hereof.  The term “Warrant” as
used herein includes any Warrants into which this Warrant may be divided or
exchanged.  Upon receipt by the Company of evidence satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor.  Any such new Warrant
executed and delivered shall constitute an additional contractual obligation on
the part of the Company, whether or not this Warrant so lost, stolen, destroyed,
or mutilated shall be at any time enforceable by anyone.

     

    4. RIGHTS OF
THE HOLDER.  The Holder shall not, by virtue of this Warrant,
be entitled to any rights of a stockholder in the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in the
Warrant and are not enforceable against the Company except to the extent set
forth herein.

     

    5. ANTI-DILUTION
PROVISIONS.  The Exercise Price in effect at any time and the
number and kind of securities purchasable upon exercise of each Warrant shall be
subject to adjustment as follows:

     

    (a) In case the Company shall (1) pay a
dividend or make a distribution on its shares of Common Stock in shares of
Common Stock (2) subdivide or reclassify its outstanding Common Stock into a
greater number of shares, or (3) combine or reclassify its outstanding Common
Stock into a smaller number of shares or otherwise effect a reverse split, the
Exercise Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the Holder of this
Warrant exercised after such date shall be entitled to receive the aggregate
number and kind of shares which, if this Warrant had been exercised immediately
prior to such time, he would have owned upon such exercise and been entitled to
receive upon such dividend, subdivision, combination or
reclassification.  Such adjustment shall be made successively whenever
any event listed in this Section 5(a) shall occur.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b) In
case the Company shall distribute to all holders of Common Stock evidences of
its indebtedness or assets (excluding cash dividends or distributions paid out
of current earnings and dividends or distributions referred to in Section 7(a)
of this Warrant or subscription rights or warrants), then in each such case the
Exercise Price in effect thereafter shall be determined by multiplying the
Exercise Price in effect immediately prior thereto by a fraction, of which the
numerator shall be the total number of shares of Common Stock outstanding
multiplied by the Fair Market Value per share of Common Stock, less the fair
market value (as determined by the Company's Board of Directors) of said assets
or evidences of indebtedness so distributed or of such rights or warrants, and
of which the denominator shall be the total number of shares of Common Stock
outstanding multiplied by the Fair Market Value per share of Common
Stock.  Such adjustment shall be made successively whenever such a
record date is fixed.  Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution.  For purposes of the foregoing, “Fair Market Value” of a
share of Common Stock as of a particular date (the “Determination Date”) shall
mean:

    

    (i)  If shares of Common
Stock are traded on an exchange or are quoted on the Nasdaq National Market or
the Nasdaq SmallCap Market (“Nasdaq”), then the average of the closing or last
sale price, respectively, reported for the five trading days immediately
preceding the Determination Date.

    

    (ii)  If shares of Common
Stock are not traded on an exchange or on Nasdaq but are traded in the
over-the-counter market or other similar organization (including the OTC
Bulletin Board), then the average of the closing bid and ask prices reported for
the five trading days immediately preceding the Determination Date.

    

    (iii)  If shares of Common
Stock are not traded as provided above, then the price determined in good faith
by the Board of Directors of the Company.

    

    (iv)  If the Determination
Date is the date of a liquidation, dissolution or winding up, or any event
deemed to be a liquidation, dissolution or winding up pursuant to the Company's
certificate of incorporation, then all amounts to be payable per share to
holders of the Company’s Common Stock pursuant to the Company’s certificate of
incorporation in the event of such liquidation, dissolution or winding up, plus
all other amounts to be payable per share in respect of shares of the Company’s
Common Stock in liquidation under the certificate of incorporation, assuming for
the purposes of this clause (iv) that all shares of Common Stock issuable upon
exercise of any then outstanding options, warrants or securities convertible
into shares of Common Stock are outstanding at the Determination
Date.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (c) Whenever the Exercise Price payable
upon exercise of each Warrant is adjusted pursuant to Section 5(a) or 5(b) of
this Warrant, the number of shares of Common Stock purchasable upon exercise of
each Warrant shall simultaneously be adjusted by multiplying the number of
shares of Common Stock issuable upon exercise of each Warrant in effect on the
date thereof prior to giving effect to any adjustment by the Exercise Price in
effect on the date thereof prior to giving effect to any adjustment and dividing
the product so obtained by the Exercise Price, as adjusted.  In no
event shall the Exercise Price per share be less than the par value per share,
and, if any adjustment made pursuant to Section 5(a) or 5(b) would result in an
exercise price of less than the par value per share, then, in such event, the
Exercise Price per share shall be the par value per share.

    

    (d) No adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or decrease
of at least two cents ($0.02) in such price; provided, however, that any
adjustments which by reason of this Section 5(d) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this Section 5 shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may
be.  Anything in this Section 5(d) to the contrary notwithstanding,
the Company shall be entitled, but shall not be required, to make such changes
in the Exercise Price, in addition to those required by this Section 5(d), as it
in its discretion shall determine to be advisable in order that any dividend or
distribution in shares of Common Stock, subdivision, reclassification or
combination of Common Stock, issuance of warrants to purchase Common Stock or
distribution of evidences of indebtedness or other assets (excluding cash
dividends) referred to hereinabove in this Section 5 (d) hereafter made by the
Company to the holders of its Common Stock shall not result in any tax to the
holders of its Common Stock or securities convertible into Common
Stock.

    

    (e) The Company may retain a firm of
independent public accountants of recognized standing selected by the Board of
Directors (who may be the regular accountants employed by the Company) to make
any computation required by this Section 5, and a certificate signed by such
firm shall be conclusive evidence of the correctness of such
adjustment.

    

    (f) In the event that at any time, as a
result of an adjustment made pursuant to Section 5 of this Warrant, the Holder
of any Warrant thereafter shall become entitled to receive any shares of the
Company, other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections 5(a) to 5(e),
inclusive, of this Warrant.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    (g) Irrespective of any adjustments in
the Exercise Price or the number or kind of shares purchasable upon exercise of
Warrants, Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in this and similar
Warrants initially issued by the Company.

    

    6. OFFICER'S
CERTIFICATE.  Whenever the Exercise Price shall be adjusted as
required by the provisions of Section 5 of this Warrant, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price and the adjusted number of
shares of Common Stock issuable upon exercise of each Warrant, determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of additional shares of Common
Stock, if any, and such other facts as shall be necessary to show the reason for
and the manner of computing such adjustment.  Each such officer's
certificate shall be made available at all reasonable times for inspection by
the Holder or any holder of a Warrant.

    

    7. NOTICES
TO WARRANT HOLDERS.  So long as this Warrant shall be
outstanding, (1) if the Company shall pay any dividend or make any distribution
upon Common Stock (other than a regular cash dividend payable out of retained
earnings) or (2) if the Company shall offer to the holders of Common Stock for
subscription or purchase by them any share of any class or any other rights or
(3) if any capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or transfer of all or substantially all of
the property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then in any such case, the Company shall cause to be mailed by
certified mail to the Holder, at least ten days prior to the date specified in
clauses (i) and (ii), as the case may be, of this Section 7 a notice containing
a brief description of the proposed action and stating the date on which (i) a
record is to be taken for the purpose of such dividend, distribution or rights,
or (ii) such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation or winding up is to take place and
the date, if any is to be fixed, as of which the holders of Common Stock or
other securities shall receive cash or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.

    

    8. TRANSFER
TO COMPLY WITH THE SECURITIES ACT OF 1933.  This Warrant or the
Warrant Shares or any other security issued or issuable upon exercise of this
Warrant may not be sold or otherwise disposed of except as follows:

    

    (1) To a person who, in the opinion of
counsel for the Company, is a person to whom this Warrant or Warrant Shares may
legally be transferred without registration and without the delivery of a
current prospectus under the Act with respect thereto and then only against
receipt of an agreement of such person to comply with the provisions of this
Section 8 with respect to any resale or other disposition of such securities
which agreement shall be satisfactory in form and substance to the Company and
its counsel; or

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (2) to
any person upon delivery of a prospectus then meeting the requirements of the
Act relating to such securities and the offering thereof for such sale or
disposition.

    

    9. GOVERNING
LAW. This Warrant shall be
governed by and construed in accordance with the laws of the State of Delaware
without giving effect to the principles of conflicts of law
thereof.

    

    Dated as
of January 16, 2009

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      	
                                  ELEMENT
      21 GOLF COMPANY

                                	 
	 
      	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
      	 
	 
      	
                                  By:

                                		 
	 
      	 
      	
                                  Name:

                                	
                                  Nataliya
      Hearn

                                	 
	 
      	 
      	
                                  Title:

                                	
                                  President

                                	 

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    PURCHASE
FORM

    

    Dated:
________, 20__

     

    The undersigned hereby irrevocably
elects to exercise the within Warrant to the extent of purchasing  shares of
Common Stock and hereby makes payment of $  in payment of
the actual exercise price thereof.

     

    
      
        

      

INSTRUCTIONS
FOR REGISTRATION OF STOCK

    

    
      
        
          	
                  Name

                	                 
      	 
      
	 
      	
                  (Please
      typewrite or print in block letters)

                	 
      

        

      

    

    

    
      
        
          
            
              	
                      Signature

                    	                            
      	 
      

            

          

        

      

    

     

    
      
        
          
            	
                    Social
      Security or Employer Identification No.

                  	                   
      	 
      

          

        

      

    

    

    ASSIGNMENT
FORM

    

    
      
        
          	
                  FOR
      VALUE RECEIVED,

                	    
      	 
      

        

      

    

    hereby
sells, assigns and transfer unto

     

    
      
        
          	
                  Name

                	           
          	 
      
	 
      	
                  (Please
      typewrite or print in block letters)

                	
                

        

      

    

    

    
      
        
          	
                  Address

                	                       
      	 
      

        

      

    

    

    
      
      

    

    
      	
              Social
      Security or Employer Identification No.

            	             
              	 
      

    

    

    The right
to purchase Common Stock represented by this Warrant to the extent of _______
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint   attorney to
transfer the same on the books of the Company with full power of
substitution.

     

    Dated: ________, 20__

     

    
      
      

    

    
      	
              Signature

            	                            
      	 
      

    

     

    
      
        
        

      

      
        7

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