Document:

seychell8kx41_12272010.htm

Exhibit 4.1

VOID AFTER 5:00 P.M. December 15, 2020

The Warrant represented by this certificate has not been registered under the Securities Act of 1933, as amended, and may not be sold, offered for sale, assigned, transferred or otherwise disposed of unless registered pursuant to the provisions of that Act or an opinion of counsel to the Company is obtained stating that such disposition is in compliance with an available exemption from such registration and the provisions of this Warrant are complied with.

 DATE: 12-15-10:

Warrants

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

 COMMON STOCK PURCHASE WARRANTS

(Void after 5:00 p.m. California time, December 15, 2020)

Certificate Evidencing  _____ Warrants

(One Warrant is required for the purchase of one share of Common Stock,

subject to adjustment as provided below)

 

This is to certify that, for value received and subject to the conditions herein set forth, ____________________ (“the Warrantholder") is entitled to purchase, at any time after 9:00 a.m. California time on December 15, 2015 and in any event no later than 5:00 p.m. California time on December 15, 2020 (the "Expiration Date"), such number of shares of Common Stock, $0.001 par value, of Seychelle Environmental Technologies, Inc., a Nevada corporation (the "Company"), as shall equal the number of Warrants evidenced by this Certificate (such shares purchasable upon exercise of the Warrants are herein called the "Warrant Stock"), at $0.21 per share. The amount per share specified above, as adjusted from time to time pursuant to the provisions hereinafter set forth, is herein called the "Purchase Price." In the alternative, the Holder may exercise its right to receive Warrant Stock on a net basis, such that without the exchange of any funds, the Holder receives that number of Warrant Stock otherwise issuable upon exercise of its Warrants less that number of Warrant Stock having a fair market value equal to the Purchase Price that would otherwise have been paid by the Holder for the Warrant Stock being issued pursuant to such exercise.  Subject to the acceleration provisions set forth below, 20% shall vest and become exercisable on the first anniversary date of this Warrant ("Vesting Commencement Date") and an additional 20% shall vest and become exercisable on each succeeding anniversary date of the Vesting Commencement Date until all Warrant Stock subject to this vesting requirement has become vested.

 

  

 

  

 

 

1.  (a) If the Company shall, prior to the exercise of these Warrants, divide its outstanding shares of Common Stock by recapitalization, reclassification or split-up thereof, or if the Company shall declare a stock dividend or distribute shares of Common Stock to its stockholders, the number of shares of Common Stock purchasable upon exercise of these Warrants immediately prior to such subdivision shall be proportionately increased, and if the Company shall at any time combine the outstanding shares of Common Stock by recapitalization, reclassification or combination thereof, the number of shares of Common Stock purchasable upon exercise of these Warrants immediately prior to such combination shall be proportionately decreased.  Any such adjustment to the number of shares shall be effective at the close of business on the effective date of such subdivision or combination or if any adjustment is the result of a stock dividend or distribution then the effective date for such adjustment based thereon shall be the record date therefore.

 

(b) Whenever the number of shares of Common Stock purchasable upon the exercise of these Warrants is required to be adjusted as provided in this Section 1, the Purchase Price shall be adjusted (to the nearest cent) by multiplying such Purchase Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of these Warrants immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter.

 

(c) In case of any reclassification of the outstanding shares of Common Stock, other than a change covered by paragraph 1(a) hereof or which solely affects the par value of such shares of Common Stock, or in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification or capital reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation of ten percent or greater of the property of the Company, the holder of these Warrants shall have the right thereafter (until the expiration of the right of exercise of these Warrants) to receive upon the exercise thereof, for the same aggregate Purchase Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property receivable upon such reclassification, capital reorganization,  merger or consolidation, or upon the dissolution following any sale or other transfer, which a holder of the number of shares of Common Stock of the Company would obtain upon exercise of these Warrants immediately prior to such event; and if any reclassification also results in a change in shares of Common Stock covered by paragraph 1(a), then such adjustment shall be made pursuant to both paragraph 1(a) and this paragraph 1(c). The provisions of this paragraph 1(c) shall similarly apply to successive reclassifications, or capital reorganization, mergers or consolidations, sales or other transfers. In the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification or capital reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation of ten percent or greater of the property of the Company, all Warrant Stock subject to this Warrant shall become immediately and fully vested and exercisable.

 

  

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(d) When any adjustment is required to be made pursuant to this Section 1, the Company, upon the subsequent written request of any holder of the Warrants, shall promptly mail to said holder a certificate setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.  Such certificate shall also set forth, if applicable, the kind and amount of stock or other securities or property into which the Warrants shall be exercisable following the occurrence of any of the events specified.

 

(e) The Company shall not be required upon the exercise of any of the Warrants evidenced hereby to issue any fraction of shares, but shall make any adjustment therefore in cash on the basis of the fair market value of any such fractional interest as it shall appear on the public market for such shares, or, if there is no public market for such shares, then as shall be reasonably determined by the Company.

 

(f) The Company may at any time in its sole discretion, which shall be conclusive, make any change in the form of Warrant Certificate that the Company may deem appropriate and that does not affect the substance thereof; and any Warrant Certificate thereafter issued or signed, whether in exchange or substitution for an outstanding Warrant Certificate or otherwise, may be in the form as changed.

 

2.  The Company agrees that (i) a number of shares of Common Stock sufficient to provide for the exercise of all outstanding Warrants upon the basis hereinbefore set forth shall at all times during the term of said Warrants be reserved for the exercise thereof, (ii) it shall from time to time, in accordance with the laws of the State of Nevada, increase the authorized number of shares of its Common Stock if at any time the number of shares of Common Stock remaining unissued and available for issuance shall not be sufficient to permit exercise of these Warrants.

3.   Exercise may be made of all or any part of the Warrants evidenced by this Certificate by surrendering it, with the purchase form provided for herein duly executed by the registered owner hereof, at the office of the Company, currently located at 32963 Calle Perfecto, San Juan Capistrano, California 92675, or at such other office or agency as the Company may designate, accompanied by payment in full, of the Purchase Price payable in respect of the Warrants being exercised by payment in cash or by certified or official bank check.

 

4.   By acceptance of this Warrant Certificate the Warrantholder hereby represents, warrants and acknowledges to the Company as follows:

 

(a) The Warrantholder acknowledges that the purchase, if made, of the Warrant Stock involves a high degree of risk and further acknowledges that he can bear the economic risk of the acquisition of the Warrant Stock, including the total loss of his investment.

 

(b) By reason of his business and financial experience, the Warrantholder has the capacity to protect his own interests in this transaction and is acquiring (and will acquire) the Warrant Stock for his own account and not with a view to distribution.

 

(c) The Warrantholder understands that no federal or state agency has passed on or made any recommendation or endorsement of the Warrants and/or the Warrant Stock.

 

  

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5.           (a)  The exercise of the Warrants and the issuance of Warrant Stock upon such exercise shall be subject to compliance by the Company and the Warrantholder with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange on which shares of the Company's Common Stock may be listed at the time of such exercise and issuance.

 

 

(b) In connection with and as a condition to the exercise of the Warrants, the Warrantholder shall execute and deliver to the Company such representations in writing as may be requested by the Company in order for it to comply with the applicable requirements of federal and state securities laws.

 

6.   All shares of Common Stock or other securities delivered upon the exercise or conversion of the Warrants evidenced hereby shall be validly issued, fully paid and nonassessable.

 

7.    (a)                       Securities-Laws.  Neither this Warrant nor the Warrant Stock issuable upon the exercise hereof has been registered under tmhe Securities Act of 1933, as amended (the "Securities Act"), or under any state securities laws and unless so registered may not be transferred, sold, pledged, hypothecated or otherwise disposed of unless an exemption from such registration is available. In the event Holder desires to transfer this Warrant or any of the Warrant Stock issued, the Holder must first give the Company prior written notice of such proposed transfer including the name and address of the proposed transferee. Such transfer may be made only either (i) upon registration of the Warrants pursuant to the Securities Act of 1933 and applicable state securities laws; or (ii) upon publication by the Securities and Exchange Commission (the "Commission") of a ruling, interpretation, opinion or "no action letter" based upon facts presented to said Commission, or (iii) upon receipt by the Company of an opinion of counsel to the Company, in either case to the effect that the proposed transfer will not violate the provisions of the Securities Act, the Securities Exchange Act of 1934, as amended, or the rules and regulations promulgated under either such act.

(b)  Conditions to Transfer.  Prior to any such proposed transfer, and as a condition thereto, if such transfer is not made pursuant to an effective registration statement under the Securities Act, the Holder will, if requested by the Company, deliver to the Company (i) an investment covenant signed by the proposed transferee, (ii) an agreement by such transferee to the impression of the restrictive investment legend set forth herein on the certificate or certificates representing the securities acquired by such transferee, (iii) an agreement by such transferee that the Company may place a "stop transfer order" with its transfer agent or registrar, and (iv) an agreement by the transferee to indemnify the Company to the same extent as set forth in the next succeeding paragraph.

  

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(c)   Indemnity. The Holder acknowledges that the Holder understands the meaning and legal consequences of this Section 4, and the Holder hereby agrees to indemnify and hold harmless the Company, its representatives and each officer and director thereof from and against any and all loss, damage or liability (including all attorney's fees and costs incurred in enforcing this indemnity provision) due to or arising out of (a) the inaccuracy of any representation or the breach of any warranty of the Holder contained in, or any other breach of, this Warrant, (b) any transfer of any of this Warrant or the Warrant Stock in violation of the Securities Act, the Securities Exchange Act of 1934, as amended, or the rules and regulations promulgated under either of such acts, (c) any transfer of this Warrant or any of the Warrant Stock not in accordance with this Warrant or (d) any untrue statement or omission to state any material fact in connection with the investment representations or with respect to the facts and representations supplied by the Holder to counsel to the Company upon which its opinion as to a proposed transfer shall have been based.

 (d)  Transfer.  Except as restricted hereby, this Warrant and the Warrant Stock issued may be transferred by the Holder in whole or in part at any time or from time to time. Upon surrender of this Warrant certificate 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, and upon compliance with the foregoing provisions, the Company shall, without charge, execute and deliver a new Warrant certificate in the name of the assignee named in such instrument of assignment, and this Warrant certificate shall promptly be cancelled.  Any assignment, transfer, pledge, hypothecation or other disposition of this Warrant attempted contrary to the provisions of this Warrant, or any levy of execution, attachment or other process attempted upon this Warrant, shall be null and void and without effect.

 

8.   The Warrantholder shall not, by virtue of ownership of Warrants, be entitled to any rights whatsoever of a shareholder of the Company.

 

9.   This Certificate and these Warrants shall be governed by and construed and interpreted in accordance with the internal laws of the State of Nevada.  All disputes arising hereunder shall be tried in federal or state court located in Carson County, Nevada (the parties hereby submitting to the exclusive personal jurisdiction of and exclusive venue in such courts) and the parties agree that their remedies at law hereunder are adequate and exclusive.

 

10.  Notice pursuant to these Warrants shall be sufficiently given, if sent by first-class mail, postage pre-paid, addressed, if to the Warrantholder, to such holder at his last known address as it shall appear in the records of the Company, and if to the Company, at 32963 Calle Perfecto, San Juan Capistrano, California 92675, Attn.: Treasurer.  The parties may alter the addresses to which communications are to be sent hereunder by giving notice of such change of address to the other party in conformity with the provisions of this Section for the giving of notice.

 

11.   Subject to the restrictions on transfer contained in Section 7 hereof, all the terms and provisions of these Warrants shall be binding upon and inure to the benefit of and be enforceable by the successors and assigns of the parties hereto.

 

  

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12.  No amendment, modification, or supplement of this Certificate shall be binding unless executed in writing and signed by the Company and the Warrantholder.

 

 

Executed as of December 15, 2010 in San Juan Capistrano, California.

 

	  	  	  
	  	
SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

	  	  	  
	  	  	  
	  	
By:    

	
 

	
 

	  	
Carl Palmer

	
 

	  	
Chief Executive Officer

 

  

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SEYCHELLE  ENVIRONMENTAL  TECHNOLOGIES, INC.

SUBSCRIPTION FORM

To be Executed by the Warrantholder In Order to Exercise Warrants

 

	
o

	
I hereby deliver $ ______ and irrevocably elect to exercise _______ Common Stock Purchase Warrants represented by this Warrant Certificate, and to purchase the securities issuable upon the exercise of such Common Stock Purchase Warrants.

 

	o	
I hereby deliver $ ______ and a promissory note, the terms of which have been approved by the Board of Directors of the Company, in the principal amount of  $_________ and irrevocably elect to exercise _________  Common Stock Purchase Warrants represented by this Warrant Certificate, and to purchase the securities issuable upon the exercise of such Common Stock Purchase Warrants.

 

The certificates for the securities to be acquired shall be issued (bearing the appropriate legends) in the name of:

(Please Insert Name and Social Security or Other Identifying Number)

 

and be delivered to

and if such number of Common Stock Purchase Warrants shall not be all of the Common Stock Purchase Warrants held by the Warrantholder, that a new Warrant Certificate for the balance of such Common Stock Purchase Warrants be registered in the name of, and delivered to, the Warrantholder at the address stated below.

	
Date:   ______________________                                                   

	  
	  	  
	  	
Name (printed)

	  	  
	  	  
	  	
Signature

	  	  
	  	  
	  	
Address

	  	  
	  	  
	  	
Social Security No.

 

 

 

 

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Exhibit 4.1

NEITHER  THE  ISSUANCE  AND SALE OF THE SECURITIES EVIDENCED BY THIS CONVERTIBLE
PROMISSORY  NOTE  NOR  THE  ISSUANCE AND SALE OF THE SECURITIES INTO WHICH THESE
SECURITIES  ARE  CONVERTIBLE  HAVE  BEEN  REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED  FOR  SALE,  SOLD,  TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE  REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933,  AS  AMENDED,  OR  (B)  AN  OPINION  OF COUNSEL, IN A CUSTOMARY FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE
144  OR  RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY  BE  PLEDGED  IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

ANY PURCHASER OR HOLDER OF THIS NOTE IS AWARE THAT THIS NOTE MAY BE CONVERTED IN
PART  BY  THE  INITIAL  HOLDER OR ANY SUBSEQUENT HOLDER WITHOUT SURRENDER TO THE
BORROWER  OR  NOTATION  OF  SUCH  CONVERSION ON THIS NOTE. ANY SUCH PURCHASER OR
SUBSEQUENT  HOLDER  OF THIS NOTE TAKES THIS NOTE SUBJECT TO ANY PRIOR CONVERSION
OR OTHER SATISFACTION OF THIS NOTE. ANY SUCH PURCHASER OR HOLDER OF THIS NOTE OR
ANY  INTEREST HEREIN SHOULD CONFIRM WITH THE BORROWER THE OUTSTANDING AMOUNT DUE
UNDER  THIS NOTE OR AMOUNTS CONVERTED HEREUNDER PRIOR TO COMPLETING ANY PURCHASE
OF  THE  SECURITIES  OR  INDEBTEDNESS  EVIDENCED  BY THIS NOTE, THIS NOTE OR ANY
INTEREST THEREIN OR HEREIN.

Principal Amount: $30,000                           Issue Date: October 25, 2010
Purchase Price: Par

                          CONVERTIBLE PROMISSORY NOTE
                          ---------------------------

      FOR  VALUE  RECEIVED,  Legacy  Athletic  Apparel,  LLC, a Virginia limited
liability company (hereinafter called "Borrower"), hereby promises to pay to the
order of Rodney Henry (the "Holder"), without demand, the sum of Thirty Thousand
Dollars  ($30,000)  ("Principal  Amount"),  with  interest  accruing thereon, on
December 31, 2016 (the "Maturity Date"), if not sooner paid or converted.

      The following terms shall apply to this Note:

                                   ARTICLE I

                               GENERAL PROVISIONS

      1.1  Interest  Rate.  Interest  payable  on  this Note shall accrue at the
annual rate of eight tenths of one percent (0.8%) and be payable on the Maturity
Date,  accelerated  or  otherwise,  when the principal and remaining accrued but
unpaid  interest  shall be due and payable, or sooner as described below. In the
event  of  a  conversion  of this note, any accrued and unpaid interest shall be
paid to Borrower as a conversion fee.

      1.2  Payment Grace Period. The Borrower shall not have any grace period to
pay any monetary amounts due under this Note.

      1.3  Conversion  Privileges. The Conversion Rights set forth in Article II
shall remain in full force and effect immediately from the date hereof and until
the  Note  is  paid in full regardless of the occurrence of an Event of Default.
This  Note  shall  be  payable  in  full on the Maturity Date, unless previously
converted into Common Membership Interest in accordance with Article II hereof.

<PAGE>

      1.4 Prepayment. This Note includes a valuable conversion right in favor of
the Holder and, subject to Section 2.1(g), may not be prepaid by the Borrower in
whole or in part, at any time.

                                   ARTICLE II

                               CONVERSION RIGHTS

      The  Holder  shall  have the right to convert the principal due under this
Note  into  units of common membership interests in Borrower ("Common Membership
Interest") as set forth below.

      2.1. Conversion into Borrower's Common Membership Interests.

      (a)  The Holder shall have the right from January 1, 2013 (or such earlier
date  as  may  be provided in Section 2.1(d)(i)), at any time until this Note is
fully paid, to convert any outstanding and unpaid principal portion of this Note
at  the  election of the Holder (the date of giving of such notice of conversion
(a "Conversion Notice") being an "Optional Conversion Date") into fully paid and
non-assessable  units  of  Common  Membership Interest as such Common Membership
Interest  exists  on  the  date  of issuance of this Note (the total of which is
100),  or  any  shares  of  capital  stock  of  Borrower  into which such Common
Membership   Interest  shall  hereafter  be  changed  or  reclassified,  at  the
conversion  price  as  defined  in Section 2.1(c) hereof, determined as provided
herein.  Upon  delivery to the Borrower of a completed Conversion Notice, a form
of which is annexed hereto as Exhibit A, Borrower shall issue and deliver to the
Holder  within three (3) business days after the Conversion Date (such third day
being  the  "Delivery  Date") that number of units of Common Membership Interest
for  the  portion  of  the  Note converted in accordance with the foregoing. The
Holder will deliver any accrued but unpaid interest on the Note, if any, through
the  Conversion  Date  directly  to Borrower on or before the Delivery Date as a
conversion  fee.  The number of units of Common Membership Interest to be issued
upon  each  conversion of this Note shall be determined by dividing that portion
of the principal of the Note and interest, if any, to be converted, by the Fixed
Conversion Price.

      (b)  If  this  Note  shall  remain unpaid and outstanding on the Automatic
Conversion  Date  (as defined below), then, the outstanding and unpaid principal
portion  of this Note shall be converted contemporaneously with the event giving
rise  to  the Automatic Conversion Date into fully paid and non-assessable units
of  Common  Membership Interest as such Common Membership Interest exists on the
date  of  issuance of this Note, or any shares of capital stock of Borrower into
which   such   Common   Membership   Interest  shall  hereafter  be  changed  or
reclassified, at the Fixed Conversion Price as defined in Section 2.1(c) hereof,
determined  as  provided herein as same may be adjusted. As used in this Section
2.1(b),  "Automatic  Conversion Date" means the first to occur of (1) subject to
any  contrary  provision  in  a  Reorganization Agreement (as defined in Section
2.1(d)),  a  merger  or consolidation of Borrower in which the holders of Common
Membership  Interests  prior to the transaction hold less than fifty-one percent
(51%)  of  the common equity of the surviving or successor entity; (2) a sale of
all  of  the  Common  Membership  Interests  or  (3)  the  effective  date  of a
registration  statement  under  the  Securities  Act  of  1933,  as amended (the
"Securities  Act")  relating  to  a  Qualified  Offering  of  Borrower's  Common
Membership Interests. A "Qualified Offering" for purposes of this Section 2.1(b)
means  an offering of Common Membership Interests at a price of $5.00 or greater
per  share  in  which not less than $10 million in gross proceeds to Borrower is
raised  and  in which the value of all of Borrower's Common Membership Interests
is  $25 million or greater. If Borrower shall have issued a Mandatory Redemption
Notice  pursuant  to  Section  2.1(g)  below, the Holder shall have the right to
covert  the  Note called for redemption pursuant to Section 2.1(g), in whole but
not  in  part, into Common Membership Interest at the Fixed Conversion Price. To
exercise  this  conversion  right,  the Holder shall give a Conversion Notice to
Borrower  stating that the Holder elects to convert the Note and shall state the
principal  amount of the Note to be converted and the name or names in which the
Holder wishes the certificate or certificates for Common Membership Interests to
be  issued;  provided,  however, that the Conversion Notice must be delivered to
Borrower  no  later  than  fifteen  (15)  business  days  after  the date of the
Mandatory Redemption Notice. The date of delivery of the Conversion Notice shall
be  the  Optional  Conversion Date with respect to the Note for purposes of this
Section  2.1  and  the  provisions  of this Section 2.1 applicable to conversion
procedures  shall be applicable to this conversion. The Optional Conversion Date
and  the  Automatic Conversion Date are collectively referred to herein and each
is deemed, as applicable, as a "Conversion Date."

                                       2
<PAGE>

      (c)  Subject to adjustment as provided in Section 2.1(d) hereof, the fixed
conversion  price  per  unit  shall  be  equal  to  $637.4841 ("Fixed Conversion
Price").

      (d)  The  Fixed  Conversion  Price  and  number and kind of units or other
securities to be issued upon conversion determined pursuant to Section 2.1(a) or
Section  2.1(b),  shall  be  subject  to  adjustment  from time to time upon the
happening  of certain events while this conversion right remains outstanding, as
follows:

            (i)  Merger,  Sale  of  Assets, etc. If (A) the Borrower effects any
      merger  or  consolidation of the Borrower with or into another entity, (B)
      the Borrower effects any sale of all or substantially all of its assets in
      one  or a series of related transactions, (C) any tender offer or exchange
      offer (whether by the Borrower or another entity) is completed pursuant to
      which  holders  of  Common  Membership Interest are permitted to tender or
      exchange  their  units  for  other  securities,  cash or property, (D) the
      Borrower   consummates  a  stock  purchase  agreement  or  other  business
      combination    (including,    without    limitation,   a   reorganization,
      recapitalization,  spin-off  or  scheme  of  arrangement) with one or more
      persons  or  entities  ("Persons") whereby such other Persons acquire more
      than  the  50% of the outstanding units of Common Membership Interest (not
      including  any  units  of  Common  Membership  Interest held by such other
      Persons  making  or  party  to, or associated or affiliated with the other
      Persons  making  or  party  to,  such  stock  purchase  agreement or other
      business  combination),  (E)  any  "person" or "group" (as these terms are
      used  for  purposes of Sections 13(d) and 14(d) of the Exchange Act) is or
      shall  become  the  "beneficial owner" (as defined in Rule 13d-3 under the
      Exchange  Act),  directly  or  indirectly,  of 50% of the aggregate Common
      Membership  Interest  of  the  Borrower,  or  (F) the Borrower effects any
      reclassification of the Common Membership Interest or any compulsory share
      exchange  pursuant  to which the Common Membership Interest is effectively
      converted into or exchanged for other securities, cash or property (in any
      such  case,  a  "Fundamental  Transaction"),  this  Note, as to the unpaid
      principal  portion  thereof and accrued interest thereon, shall thereafter
      be  deemed  to  evidence the right to convert into such number and kind of
      units  or  other  securities  and  property as would have been issuable or
      distributable  on  account  of  such Fundamental Transaction, upon or with
      respect  to  the  securities  subject  to the conversion right immediately
      prior  to  such  Fundamental  Transaction.  In  the event of a Fundamental
      Transaction,  an  appropriate  adjustment shall be made in accordance with
      the  applicable  reorganization agreement (the "Reorganization Agreement")
      to  the  other  terms  of  the Note, provided, however, that no adjustment
      shall  give  the  Holder any additional benefits hereunder, and, provided,
      further,  that  Borrower  shall  provide the Holder with at least 20 days'
      advance  written  notice of the triggering event. If no provision shall be
      made  in  a Reorganization Agreement to the contrary and the provisions of
      Section 3(b) would otherwise apply to the transaction, then the provisions
      of  this  Section  2.1(d)  shall  apply  to the transaction. The foregoing
      provisions shall similarly apply to successive Fundamental Transactions of
      a  similar nature by any such successor or purchaser. Without limiting the
      generality  of the foregoing, the anti-dilution provisions of this Section
      shall  apply  to  such securities of such successor or purchaser after any
      such  Fundamental  Transaction. In the event of a Fundamental Transaction,
      this  Note  shall  become  immediately  convertible  at  the option of the
      Holder.

                                       3
<PAGE>

            (ii)  Reclassification,  etc.  If the Borrower at any time shall, by
      reclassification  or otherwise, change the Common Membership Interest into
      the  same or a different number of securities of any class or classes that
      may  be  issued  or  outstanding,  this  Note,  as to the unpaid principal
      portion  thereof  and accrued interest thereon, shall thereafter be deemed
      to  evidence  the  right to purchase an adjusted number of such securities
      and  kind  of securities as would have been issuable as the result of such
      change with respect to the Common Membership Interest immediately prior to
      such reclassification or other change.

            (iii)  Stock  Splits,  Combinations  and  Dividends. If the units of
      Common  Membership  Interest  are subdivided or combined into a greater or
      smaller number of units of Common Membership Interest, or if a dividend is
      paid  on  the  Common  Membership  Interest  in units of Common Membership
      Interest, the Conversion Price shall be proportionately reduced in case of
      subdivision   of  units,  shares  or  stock  dividend  or  proportionately
      increased in the case of combination of units or shares, in each such case
      by the ratio which the total number of units of Common Membership Interest
      outstanding  immediately  after  such  event  bears to the total number of
      units  of Common Membership Interest outstanding immediately prior to such
      event.

      (e)  Whenever  the Conversion Price is adjusted pursuant to Section 2.1(d)
above, the Borrower shall promptly mail to the Holder a notice setting forth the
Conversion  Price  after  such  adjustment  and setting forth a statement of the
facts requiring such adjustment.

      (f)  During  the period the conversion right exists, Borrower will reserve
from  its  authorized  and  unissued Common Membership Interest not less than an
amount  of  Common  Membership  Interest equal to 150% of the amount of units of
Common  Membership  Interest  issuable  upon  the  full conversion of this Note.
Borrower  represents  that  upon  issuance,  such units will be duly and validly
issued, fully paid and non-assessable. Borrower agrees that its issuance of this
Note  shall  constitute  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 units of Common Membership
Interest upon the conversion of this Note.

      (g)  Subject to prior conversion pursuant to this Section 2.1, at any time
on  or  after January 1, 2013, if the Trading Condition (as defined below) shall
on  the  date  of  giving  a  Mandatory  Redemption Notice (as defined below) be
satisfied, Borrower shall have the right (the "Mandatory Redemption Right"), but
not  the  obligation,  to  redeem this Note (or any part hereof) at a price (the
"Redemption  Price") equal to the Six Hundred Thousand Dollars ($600,000) plus a
yield  of  six  percent  (6%) per annum thereon accruing from the original issue
date  to the Redemption Date (as defined below). The "Trading Condition" will be
satisfied  if  the  Common  Membership Interests have traded for at least twenty
(20)  consecutive trading days at a volume weighted average price of Two Dollars
($2.00)  per  unit  and  with  daily trading volume of not less than One Hundred
Thousand  (100,000)  units  on each such trading day (with such price and volume
subject  to  equitable  adjustment). To exercise the Mandatory Redemption Right,
Borrower  shall  deliver  written  notice (the "Mandatory Redemption Notice") to
Holder,  specifying  the  redemption  date ("Redemption Date") and the principal
amount  of  the  Note  to  be redeemed at the Redemption Price (which may be pro
rata,  by  lot, or by any other method as Borrower may determine in its sole and
absolute discretion if more than one Note is outstanding) (the "Redeemed Note");
provided,  however,  that (1) the Redemption Date shall not occur until at least
twenty (20) business days' following the date of the Mandatory Redemption Notice
and  (2)  Holder  may  convert  any  or all of the principal amount of this Note
pursuant  to  this  Section  2.1  from  and  after  (A)  receiving the Mandatory
Redemption  Notice  under  this  Section  2.1(g)  until (B) the fifteenth (15th)
business  day  thereafter.  On  the  Redemption  Date, Borrower shall redeem the
principal  amount  of this Note called for redemption at the Redemption Price as
provided  in  this  Section  2.1(g).  On  the Redemption Date, the rights of the
Holder as a holder of the portion of the Note called for redemption shall cease,
and  the Person or Persons entitled to receive the Redemption Price payable upon
redemption  shall  solely  be  entitled  to  payment  of the Redemption Price as
provided  in  this  Section  2.1(g).  As promptly as practicable on or after the
Redemption  Date  and  surrender  of  this  Note, duly endorsed for cancelation,
Borrower  shall  pay  to the Holder Note surrendered, at the office of Borrower,
the Redemption Price for the Note redeemed, together with a replacement Note for
any  unredeemed  portion  of  the  Note.  There  shall  be  no other optional or
mandatory prepayment right or redemption with respect to the Note.

                                       4
<PAGE>

      2.2  Method  of  Conversion.  This  Note may be converted by the Holder in
whole  or  in  part as described in Section 2.1(a) hereof and shall be converted
automatically  as  provided  in  Section 2.1(b). Upon partial conversion of this
Note,  a new Note containing the same date and provisions of this Note shall, at
the  request  of  the  Holder,  be  issued by the Borrower to the Holder for the
principal  balance of this Note and interest which shall not have been converted
or paid.

      2.3  Effect  of  Conversion. At the time of conversion as provided in this
Section 2, the rights of the Holder as holders the principal amount and interest
accrued  on  this  Note  so  converted  shall  cease,  and the Person or Persons
entitled  to  receive  the  Common  Membership Interest issuable upon conversion
shall be treated for all purposes as the record holder or holders of such Common
Membership  Interest  at such time. Unless otherwise specified by the Holder, if
Common  Membership  Interest  to be issued upon conversion of this Note is to be
registered  in  a  name other than that of the Holder, such transaction shall be
deemed a transfer, prior to the conversion of this Note, of that portion of this
Note  to  be  so  converted  or  issued  to the Person in whose name such Common
Membership  Interest  is  to  be  registered.  The Holder shall within three (3)
business days after the Note has been fully converted or paid and all conversion
units  have  been received by the Holder, surrender this Note, duly endorsed for
cancelation,  to  the  Borrower.  Notwithstanding  any  delay or failure in such
surrender,  upon the Conversion Date, no Person shall have any rights in respect
of  the  converted  portion  of  this Note, except the right to receive units of
Common Membership Interest on conversion thereof as provided in this Section 2.

      2.4 Fractional Units. If more than one Note shall be converted at one time
by  the Holder, the number of full units which shall be issuable upon conversion
thereof  shall  be  computed  on  the basis of the aggregate principal amount of
Notes  so  converted.  Borrower  may  issue  fractional  units  or scrip for any
fractional Common Membership Interest which would be issuable upon conversion of
any  convertible  note, or alternatively, at the Borrower's option, Borrower may
round up the conversion transaction to the next higher whole unit.

      2.5  Taxes  on  Conversions.  Except as provided in the next sentence, the
Borrower  will  pay  any  and all transfer, stamp, documentary and other similar
taxes  and  duties  that  may  be payable in respect of the issue or delivery of
Common  Membership  Interest  on  conversion  of  this Note pursuant hereto. The
Holder  will  be required to pay any tax or duty which may be payable in respect
of any transfer involved in the issue and delivery of Common Membership Interest
in  a name other than that of the Holder, and no such issue or delivery shall be
made  unless and until the Person requesting such issue has paid to the Borrower
the amount of any such tax or duty or has established to the satisfaction of the
Borrower that such tax or duty has been paid.

                                  ARTICLE III

                                EVENT OF DEFAULT

      The  occurrence  of  any  of  the  following  events of default ("Event of
Default")  shall, at the option of the Holder hereof, make all sums of principal
and  interest  then  remaining  unpaid  hereon  and  all  other  amounts payable
hereunder  immediately  due  and  payable,  upon demand, without presentment, or
grace  period,  all  of  which  hereby are expressly waived, except as set forth
below:

      3.1  Failure  to  Pay Principal or Interest. The Borrower fails to pay any
installment of principal, interest or other sum due under this Note when due.

                                       5
<PAGE>

      3.2  Breach  of  Covenant.  The Borrower breaches any material covenant or
other term or condition of this Note in any material respect and such breach, if
subject  to cure, continues for a period of five (5) business days after written
notice to the Borrower from the Holder.

      3.3  Breach of Representations and Warranties. Any material representation
or  warranty  of  the  Borrower  made  herein  or in any agreement, statement or
certificate  given in writing pursuant hereto or in connection herewith shall be
false or misleading in any material respect as of the date made and the Offering
Closing date.

      3.4 Liquidation. Any dissolution, liquidation or winding up of Borrower or
any substantial portion of its business.

      3.5  Cessation  of  Operations. Any cessation of operations by Borrower or
Borrower  admits it is otherwise generally unable to pay its debts as such debts
become due.

      3.6  Maintenance  of  Assets.  The  failure  by  Borrower  to maintain any
material  intellectual  property rights, personal, real property or other assets
which are necessary to conduct its business (whether now or in the future).

      3.7  Receiver  or  Trustee.  The  Borrower  or  any material subsidiary of
Borrower  shall make an assignment for the benefit of creditors, or apply for or
consent  to the appointment of a receiver or trustee for it or for a substantial
part  of its property or business; or such a receiver or trustee shall otherwise
be appointed.

      3.8  Judgments. Any money judgment, writ or similar final process shall be
entered  or  filed  against  Borrower or any of its property or other assets for
more than $100,000, unless stayed vacated or satisfied within thirty (30) days.

      3.9  Bankruptcy.  Bankruptcy,  insolvency,  reorganization  or liquidation
proceedings  or other proceedings or relief under any bankruptcy law or any law,
or  the  issuance  of  any  notice  in relation to such event, for the relief of
debtors  shall  be  instituted  by  or against the Borrower or any Subsidiary of
Borrower.

      3.10  Non-Payment.  A  default  by  the  Borrower  under  any  one or more
obligations  in an aggregate monetary amount in excess of $250,000 for more than
twenty  (20)  days  after  the  due  date, unless the Borrower is contesting the
validity of such obligation in good faith.

      3.11  Failure  to  Deliver Common Membership Interest or Replacement Note.
Borrower's  failures  to timely deliver Common Membership Interest to the Holder
pursuant  to  and  in  the  form  required  by  this  Note,  or,  if required, a
replacement Note.

      3.12  Reservation  Default.  Failure  by the Borrower to have reserved for
issuance  upon  conversion of the Note, the number of units of Common Membership
Interest as required in this Note.

      3.13  Executive  Officers  Breach  of  Duties.  Any  of  Borrower's  named
executive  officers or directors is convicted of a violation of securities laws,
or a settlement in excess of $250,000 is reached by any such officer or director
relating  to  a  violation  of  securities  laws,  breach of fiduciary duties or
self-dealing.

                                   ARTICLE IV

                               CERTAIN COVENANTS

      4.1  Corporate Existence. From the Issue Date and for so long as this Note
is  outstanding,  the  Borrower  shall,  and  shall  cause  each of its material
subsidiaries  to  (i)  conduct its operations in the ordinary course of business
consistent  with  past practice, (ii) maintain its corporate existence and (iii)
maintain  and  protect all material intellectual property used and useful in the
business of the Borrower and its material subsidiaries.

                                       6
<PAGE>

      4.2  Participating  Payments. For each of Borrower's fiscal years (or part
thereof  in  the  case  of  the  initial fiscal year in which this Note is first
issued),  participating  payments shall accrue to Holder at a rate equal to Five
Percent  (5%) of Net Profit (as defined below) of Borrower for such fiscal year.
Such  participating  payments shall be payable prior to the payment of dividends
to  the  Common  Membership  Interest  or  to any preferred membership interest.
Borrower  shall calculate Net Profit for each fiscal year within sixty (60) days
of  the end of such fiscal year and the Holder shall be entitled to receive such
participating  payments  within ninety (90) days of the end of such fiscal year.
"Net  Profit" shall be net profit of Borrower for such fiscal year as calculated
in accordance with generally accepted accounting principles.

      4.3  Voting. In addition to any other voting rights required by applicable
law, the Holder shall have the following voting rights:

      (a)  The  Holders of all Notes (if this Note is divided into more than one
Note)  are entitled to vote on all matters submitted to a vote of the holders of
Common Membership Interests. The Holder shall be entitled to the number of votes
equal  to  the  product of (i) the number of units of Common Membership Interest
issuable upon conversion of the Note and (ii) 2.5.

      (b)  The  Holders of all Notes (if this Note is divided into more than one
Note) shall vote separately as a class on any matter relating to a change in the
rights  of  the Holder. Any matter on which the Holders of Notes vote as a class
must  be  approved  or  consented  to  by Holders of a majority of the principal
amount  of  all  Notes to be approved. The Holders of all Notes (if this Note is
divided  into  more  than  one  Note)  shall vote separately on other matters as
required by applicable law.

      (c) Except as otherwise provided in this Section 4.3 or by applicable law,
the Holders of all Notes (if this Note is divided into more than one Note) shall
vote  with  the  common  stock  as  a single class, shall have no special voting
rights  and the consent of the Holders of Notes shall not be required (except to
the  extent  otherwise  provided  in  this Note) for the taking of any corporate
action.

      4.4  Reports.  So  long  as  the  any principal amount of the Note remains
outstanding, Borrower shall cause its annual reports to members, if any, and any
quarterly or other financial reports and information, if any, furnished by it to
holders  of  Common  Membership  Interests, to be mailed to the Holder (no later
than the date materials are mailed or required to be mailed to holders of Common
Membership  Interests)  at  their respective addresses appearing on the books of
Borrower.

                                   ARTICLE V

                                 MISCELLANEOUS

      5.1  Failure  or Indulgence Not Waiver. No failure or delay on the part of
the  Holder  hereof  in  the exercise of any power, right or privilege hereunder
shall  operate  as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of  any  other  right,  power  or  privilege.  All  rights and remedies existing
hereunder  are  cumulative  to,  and  not  exclusive  of, any rights or remedies
otherwise available.

      5.2  Notices.  All  notices,  demands,  requests, consents, approvals, and
other  communications  required  or permitted hereunder shall be in writing and,
unless  otherwise  specified  herein,  shall  be  (i)  personally  served,  (ii)
deposited  in  the  mail,  registered  or  certified,  return receipt requested,
postage  prepaid,  (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as  set  forth below or to such other address as such party shall have specified
most  recently  by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or   delivery   by  facsimile,  with  accurate  confirmation  generated  by  the
transmitting  facsimile  machine,  at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be  received),  or  the first business day following such delivery (if delivered
other  than  on a business day during normal business hours where such notice is
to  be  received) or (b) on the first business day following the date of mailing
by  express  courier  service, fully prepaid, addressed to such address, or upon
actual  receipt  of such mailing, whichever shall first occur. The addresses for
such  communications shall be: (i) if to the Borrower to the principal executive
office  of  Borrower,  Attention:  President,  and (ii) if to the Holder, to the
name, address and facsimile number provided by Holder for such purpose.

                                       7
<PAGE>

      5.3  Amendment  Provision.  The  term "Note" and all reference thereto, as
used  throughout  this  instrument,  shall  mean  this  instrument as originally
executed,   or  if  later  amended  or  supplemented,  then  as  so  amended  or
supplemented.

      5.4  Assignability.  This  Note  shall  be  binding  upon Borrower and its
successors  and  assigns,  and  shall inure to the benefit of the Holder and its
successors and assigns. Borrower may not assign its obligations under this Note.

      5.5  Cost  of  Collection. If default is made in the payment of this Note,
Borrower  shall  pay the Holder hereof reasonable costs of collection, including
reasonable attorneys' fees.

      5.6  Governing  Law.  This  Note  shall  be  governed  by and construed in
accordance  with  the law of the State of California without regard to conflicts
of  laws principles that would result in the application of the substantive laws
of  another  jurisdiction.  Any action brought by either party against the other
concerning  the transactions contemplated by this Agreement must be brought only
in  the  civil or state courts of California or in the federal courts located in
the  Los  Angeles County. Both parties and the individual signing this Agreement
on  behalf  of  the Borrower agree to submit to the jurisdiction of such courts.
The  prevailing  party  shall  be  entitled  to recover from the other party its
reasonable  attorney's  fees  and costs. In the event that any provision of this
Note  is  invalid  or unenforceable under any applicable statute or rule of law,
then  such  provision  shall  be  deemed  inoperative  to the extent that it may
conflict  therewith and shall be deemed modified to conform with such statute or
rule  of  law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or unenforceability of any other provision
of  this  Note.  Nothing contained herein shall be deemed or operate to preclude
the  Holder  from bringing suit or taking other legal action against Borrower in
any  other  jurisdiction  to  collect  on  Borrower's  obligations to Holder, to
realize  on  any  collateral  or  any other security for such obligations, or to
enforce  a  judgment  or other decision in favor of the Holder. Any purchaser or
subsequent  holder of this Note is aware that this Note may be converted in part
by  the initial Holder or any subsequent holder without surrender to Borrower or
notation  of  such  conversion  on  this  Note. Any such purchaser or subsequent
holder  of  this  Note  takes this Note subject to any prior conversion or other
satisfaction  of  this  Note.  Any  such purchaser or holder of this Note or any
interest  herein  should  confirm with Borrower the outstanding amount due under
this Note or amounts converted hereunder prior to completing any purchase of the
securities  or  indebtedness  evidenced  by this Note, this Note or any interest
therein or herein.

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

                                       8
<PAGE>

      5.8 Non-Business Days. Whenever any payment or any action to be made shall
be  due on a Saturday, Sunday or a public holiday under the laws of the State of
California,  such  payment  may  be  due or action shall be required on the next
succeeding business day and, for such payment, such next succeeding day shall be
included  in  the  calculation of the amount of accrued interest payable on such
date.

      5.9  Redemption.  This  Note  may  not  be  redeemed or called without the
consent of the Holder except as described in this Note.

      5.10 Shareholder Status. The Holder shall not have rights as a shareholder
of  the Borrower with respect to unconverted portions of this Note. However, the
Holder will have the rights of a shareholder of the Borrower with respect to the
units  of Common Membership Interest to be received after delivery by the Holder
of a Conversion Notice to the Borrower.

      IN   WITNESS  WHEREOF,  Legacy  Athletic  Apparel,  LLC  has  caused  this
Convertible  Promissory  Note  Note  to  be  signed in its name by an authorized
officer as of the 25th day of October 2010.

                                       Legacy Athletic Apparel, LLC

                                       By: /s/ Rodney Henry
                                           ------------------
                                       Name: Rodney Henry
                                       Title: Managing Member

                                       9
<PAGE>

                              NOTICE OF CONVERSION
                              --------------------

(To be executed by the Holder in order to convert the Note)

The  undersigned  hereby  elects  to  convert  $_________  of  the principal and
$_________  of  the  interest due on the Note issued by Legacy Athletic Apparel,
LLC  on  October  25,  2010  into  units of Common Membership Interest of Legacy
Athletic  Apparel, LLC (the "Borrower") according to the conditions set forth in
such Note, as of the date written below.

Date of Conversion:

Conversion Price:

Units To Be Delivered:

Signature:

Print Name:

Address:

                                       10

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