Attached files
Exhibit 10.2
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
ADD-ON EXCHANGE, INC.
CONVERTIBLE SECURED NOTE
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PRINCIPAL AMOUNT: INTEREST RATE: 5%
UP TO $300,000.00
CONVERTIBLE INTO THE MAKER'S COMMON
DUE DATE: OCTOBER 31, 2013 STOCK AT A COMPANY VALUATION OF
$2,000,000
FOR VALUE RECEIVED, the undersigned, Add-on Exchange, Inc. ("Add-on Exchange") a
Delaware corporation, the "Maker," hereby promises to pay to the order of GoIP
Global, Inc., the "Payee" or the "Holder", the principal sum of all amounts
advanced to the Maker by the Payee, plus interest at the rate specified below.
The Payee has agreed to advance to the Maker a minimum of Fifteen Thousand
Dollars ($15,000) during each calendar month for a period of twelve months from
the date hereof, and all such advances are secured by this Convertible Note
which is convertible into the Maker's Common Stock at a company valuation for
the Maker of Two Million Dollars ($2,000,000), and all such advanced are secured
by the assets of the Maker as provided herein and in accompanying documentation.
The unpaid principal balance outstanding from time to time shall bear interest
prior to maturity at an annual rate of interest equal to 5% and all interest
accrued on the outstanding principal balance of this Convertible Note shall be
due and payable as provided below.
The Maker hereby agrees to pay the entire amount due hereunder, including
principal and interest, on or before October 31, 2013 ("Maturity Date"), on
which date all unpaid principal and interest due hereunder shall be paid in
full. All payments shall be applied first to interest on the unpaid balance and
the remainder to principal.
Interest hereon shall be calculated on the basis of a 360-day year prior to the
actual number of days elapsed until all accrued and unpaid interest is paid in
full. All payments of principal and interest hereunder shall be payable in
lawful currency of the United States.
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If payment in full of the principal balance and accrued interest is not actually
received by the Payee on or before the Maturity Date, the Maker agrees to pay
Payee a late charge equal to the above specified interest rate plus two percent
(2%) per annum on that delinquent amount until paid. All interest due and
payable hereunder which is not paid when due for any reason shall be cumulated
and accrue interest at the rate hereunder.
This Convertible Note is given in consideration of a loan by Payee to Maker in
the principal amount of the Convertible Note.
The holder of this Convertible Note and all successors thereof shall have all
the rights of a holder in due course as provided by the laws of the state of New
York.
Maker hereby waives demand, presentment, protest, notice or protest and/or
dishonor and all other notices or requirements that might otherwise be required
by law. The Maker promises to pay on demand all costs of collection, including
reasonable attorney's fees and court costs, paid or incurred by Payee in
enforcing this Convertible Note upon an Event of Default (as that term is
defined below) hereunder.
The occurrence of any of the following shall constitute an "Event of Default"
under this Convertible Note:
a. The failure of the Maker to make any payment when due under this
Convertible Note;
b. The institution of legal proceedings by or against the Maker under any
state insolvency laws, federal bankruptcy law, or similar debtor
relief laws then in effect.
c. A breach of any of the terms of this Note or the Subscription
Agreement between the parties of even date.
Upon an Event of Default, Payee may, at Payee's option, without notice, declare
all principal and interest due under this Convertible Note to be due and payable
immediately, and may exercise his conversion options. Payee may waive any Event
of Default before or after it occurs and may restore this Convertible Note in
full effect without impairing the right to declare it due for a subsequent
default.
SECURITY
This Note shall be secured by a blanket lien on all of the assets of the Maker.
The Maker shall file and cause any subsidiaries to file a UCC-1 recording the
lien of the Payee on the assets of the Maker and any subsidiary and take all
other steps necessary and appropriate to record the Payee's and security
interest in the appropriate records. Maker shall immediately provide Payee with
a copy of such filings. Failure to so file such recordings shall be an
additional event of default.
CONVERSION INTO COMMON STOCK
At any time prior to the Maturity Date, subject to Add-on Board approval, Payee
shall have the option to convert the unpaid principal balance of this
Convertible Note, or any portion thereof, together with all accrued interest,
into that number of shares of the Common Stock (the "Shares") of the Maker equal
to the unpaid principal balance of the Convertible Note, or portion thereof
converted, divided by a price per share determined by dividing Two Million
Dollars ($2,000,000) by the number of shares outstanding on the date of
conversion immediately before the event of conversion (the "Conversion Rate").
Adjustments to Conversion Rate The Conversion Rate is subject to adjustment from
time to time in the event of (i) the issuance of Common Stock as a dividend or
distribution on any class of the Company's capital stock; (ii) the combination,
subdivision or reclassification of the Common Stock; (iii) the distribution to
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all holders of Common Stock of cash dividends or distributions; (iv) the split
or reverse split of the Company's Common stock; and/or (v) the sale of Common
Stock at a price, or the issuance of options, warrants or convertible securities
with an exercise or conversion price per share, less than the lower of the then
current Conversion Rate equivalent price or the then current market price of the
Common Stock (except upon exercise of options outstanding on the date of this
certificate or options thereafter granted to employees, officers, directors,
stockholders or consultants pursuant to existing stock plans). No adjustment in
the Conversion Rate will be required until cumulative adjustments require an
adjustment of at least 5% in the Conversion Rate. No fractional shares will be
issued upon conversion, but any fractions will be adjusted in cash on the basis
of the then current market price of the Common Stock.
Exercise In order to exercise this conversion right, the Payee shall surrender
this Convertible Note to the Maker, accompanied by written notice of his
intention to exercise this conversion right, which notice shall set forth the
principal amount of this Convertible Note to be converted ("Notice of
Conversion"). Within ten (10) business days of Maker's receipt of the Notice of
Conversion and this Convertible Note, the Maker shall deliver or cause to be
delivered to the Payee, written confirmation that the Common Stock has been
issued in the name of the Payee.
MECHANICS OF EXERCISE.
Exercise of the purchase rights represented by this Convertible Note may be
made, in whole or in part, at any time or times on or after the Initial Exercise
Date and on or before the Due Date by delivery to the Company of a duly executed
facsimile copy of the Notice of Exercise Form annexed hereto (or such other
office or agency of the Company as it may designate by notice in writing to the
registered Holder at the address of the Holder appearing on the books of the
Company). Notwithstanding anything herein to the contrary, the Holder shall not
be required to physically surrender this Convertible Note to the Company until
the Holder has converted all of the Note available by conversion hereunder and
the Note has been exercised in full, in which case, the Holder shall surrender
this Note to the Company for cancellation within three Trading Days of the date
the final Notice of Exercise is delivered to the Company. The Holder and the
Company shall maintain records showing the number of shares of Common Stock
received on conversion and the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise Form within ten Business Days of receipt
of such notice. In the event of any dispute or discrepancy, the records of the
Holder shall be controlling and determinative in the absence of manifest error.
Delivery of Certificates Upon Exercise. Certificates for Common Stock shares to
be received hereunder shall be transmitted by the transfer agent of the Company
to the Holder by physical delivery to the address specified by the Holder in the
Notice of Exercise after delivery to the Company of the Notice of Exercise Form,
surrender of this Convertible Note (if required). This Convertible Note shall be
deemed to have been exercised on the date the Notice of Exercise is received by
the Company. The shares of Common Stock shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the Convertible Note has been exercised by Notice of Exercise.
Delivery of New Convertible Note Upon Exercise. If this Convertible Note shall
have been exercised in part, the Company shall, at the request of a Holder and
upon surrender of this Convertible Note certificate, at the time of delivery of
the certificate or certificates representing Common Shares, deliver to Holder a
new Convertible Note evidencing the rights of Holder to purchase the unconverted
shares of Common Stock called for by this Convertible Note, which new
Convertible Note shall in all other respects be identical with this Convertible
Note.
No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Convertible Note. As
to any fraction of a share which Holder would otherwise be entitled to purchase
upon such exercise, the Company shall at its election, either pay a cash
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adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the conversion price or round up to the next whole share.
Charges, Taxes and Expenses. Issuance of certificates for Common Stock shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the event certificates for Common Stock
are to be issued in a name other than the name of the Holder, this Convertible
Note when surrendered for exercise shall be accompanied by the Assignment Form
attached hereto duly executed by the Holder; and the Company may require, as a
condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
CERTAIN ADJUSTMENTS.
Stock Dividends and Splits. If the Company, at any time while this Convertible
Note is outstanding: (A) pays a stock dividend or otherwise make a distribution
or distributions on shares of any Common Stock or any other equity or equity
equivalent securities payable in shares of any Common Stock (which, for
avoidance of doubt, shall not include any shares of Common Stock issued by the
Company upon exercise of this Convertible Note), (B) subdivides outstanding
shares of any Common Stock into a larger number of shares, (C) combines
(including by way of reverse stock split) any shares of Common Stock into a
smaller number of shares, or (D) issues by reclassification of shares any Common
Stock or any shares of capital stock of the Company, then in each case the
Exercise Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock (excluding treasury shares, if any)
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event
and the number of shares issuable upon exercise of this Convertible Note shall
be proportionately adjusted such that the aggregate Exercise Price of this
Convertible Note shall remain unchanged. Any adjustment made pursuant to this
Section 3(a) shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
TRANSFER OF CONVERTIBLE NOTE.
Transferability. Subject to compliance with any applicable securities laws and
the conditions set forth in Section 3(d) hereof, this Convertible Note and all
rights hereunder (including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of this Convertible Note at
the principal office of the Company or its designated agent, together with a
written assignment of this Convertible Note substantially in the form attached
hereto duly executed by the Holder or its agent or attorney and funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and deliver
a new Convertible Note or Convertible Notes in the name of the assignee or
assignees and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Convertible Note evidencing
the portion of this Convertible Note not so assigned, and this Convertible Note
shall promptly be canceled. A Convertible Note, if properly assigned, may be
exercised by a new holder for the purchase of Common Stock without having a new
Convertible Note issued.
New Convertible Notes. This Convertible Note may be divided or combined with
other Convertible Notes upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and denominations
in which new Convertible Notes are to be issued, signed by the Holder or its
agent or attorney. Subject to compliance with Section 4(a), as to any transfer
that may be involved in such division or combination, the Company shall execute
and deliver a new Convertible Note or Convertible Notes in exchange for the
Convertible Note or Convertible Notes to be divided or combined in accordance
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with such notice. All Convertible Notes issued on transfers or exchanges shall
be dated the original Issue Date and shall be identical with this Convertible
Note except as to the number of Convertible Note Shares, said Convertible Note
Shares being that Common Stock that may be issued upon conversion of this
Convertible Note, issuable pursuant thereto.
Convertible Note Register. The Company shall register this Convertible Note,
upon records to be maintained by the Company for that purpose (the "Convertible
Note Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Convertible Note as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.
Transfer Restrictions. If, at the time of the surrender of this Convertible Note
in connection with any transfer of this Convertible Note, the transfer of this
Convertible Note shall not be registered pursuant to an effective registration
statement under the Securities Act and under applicable state securities or blue
sky laws, the Company may require, as a condition of allowing such transfer,
that the Holder or transferee of this Convertible Note, as the case may be,
comply with the provisions of the securities laws and regulations.
MISCELLANEOUS.
No Rights as Shareholder Until Exercise. This Convertible Note does not entitle
the Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
Loss, Theft, Destruction or Mutilation of Convertible Note. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Convertible Note or
any stock certificate relating to the Convertible Note Shares, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it (which, in the case of the Convertible Note, shall not include the posting of
any bond), and upon surrender and cancellation of such Convertible Note or stock
certificate, if mutilated, the Company will make and deliver a new Convertible
Note or stock certificate of like tenor and dated as of such cancellation, in
lieu of such Convertible Note or stock certificate.
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall
not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.
AUTHORIZED SHARES.
The Company covenants that during the period the Convertible Note is
outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Convertible Note
Shares upon the exercise of any purchase rights under this Convertible Note. The
Company further covenants that its issuance of this Convertible 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 Convertible Note Shares upon the exercise of the conversion rights under
this Convertible Note. The Company will take all such reasonable action as may
be necessary to assure that such Convertible Note Shares may be issued as
provided herein without violation of any applicable law or regulation, or of any
requirements of the Trading Market upon which the Common Stock may be listed.
The Company covenants that all Convertible Note Shares which may be issued upon
the exercise of the purchase rights represented by this Convertible Note will,
upon exercise of the conversion rights represented by this Convertible Note, be
duly authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).
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Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Convertible Note, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such actions as
may be necessary or appropriate to protect the rights of Holder as set forth in
this Convertible Note against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any Convertible
Note Shares above the amount payable therefor upon such exercise immediately
prior to such increase in par value, (b) take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable Convertible Note Shares upon the exercise of this
Convertible Note, and (c) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Convertible Note.
Before taking any action that would result in an adjustment in the number of
Convertible Note Shares for which this Convertible Note is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
Jurisdiction. All questions concerning the construction, validity, enforcement
and interpretation of this Convertible Note shall be determined in accordance
with the provisions of this Note in and under the laws of the State of New York.
Restrictions. The Holder acknowledges that the Convertible Note Shares acquired
upon the exercise of this Convertible Note, if not registered, may have
restrictions upon resale imposed by state and federal securities laws.
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise
any right hereunder on the part of Holder shall operate as a waiver of such
right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any provision
of this Convertible Note, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
Notices. Any notice, request or other document required or permitted to be given
or delivered to the Holder by the Company shall be delivered by certified mail.
Limitation of Liability. No provision hereof, in the absence of any affirmative
action by Holder to exercise this Convertible Note to purchase Convertible Note
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
Remedies. Holder, in addition to being entitled to exercise all rights granted
by law, including recovery of damages, will be entitled to specific performance
of its rights under this Convertible Note. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Convertible Note and hereby agrees to
waive and not to assert the defense in any action for specific performance that
a remedy at law would be adequate.
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Successors and Assigns. Subject to applicable securities laws, this Convertible
Note and the rights and obligations evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Convertible Note are
intended to be for the benefit of all Holders from time to time of this
Convertible Note and shall be enforceable by the Holder or holder of Convertible
Note Shares.
Amendment. This Convertible Note may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder.
Severability. Wherever possible, each provision of this Convertible Note shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Convertible Note shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Convertible Note.
Headings. The headings used in this Convertible Note are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this
Convertible Note.
IN WITNESS WHEREOF, the Company has caused this Convertible Note to be
executed by its officer thereunto duly authorized as of the date first above
indicated.
MAKER:
Add-On Exchange, Inc.
Date: October 17, 2010
Signature: /s/ John Rafuse
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John Rafuse, CEO
PAYEE:
GoIP Global, Inc.
Date: October 17, 2010
Signature: /s/ Isaac Sutton
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Isaac H. Sutton, CEO
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NOTICE OF EXERCISE
TO: Add-On Exchange, Inc.
(1) The undersigned hereby elects to convert into Common Stock of the Company
pursuant to the terms of the attached Convertible Note (only if exercised in
full), and tenders herewith said Convertible Note, together with all applicable
transfer taxes, if any.
(2) Please issue a certificate or certificates representing said Common Stock
shares in the name of the undersigned or in such other name as is specified
below:
The Common Stock shares shall be delivered by physical delivery of a certificate
to:
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[SIGNATURE OF HOLDER]
Name of Investing
Entity:
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SIGNATURE OF AUTHORIZED SIGNATORY OF
INVESTING ENTITY:
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Name of Authorized
Signatory:
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Title of Authorized
Signatory:
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Date:
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ASSIGNMENT FORM
(To assign the foregoing Note, execute this form and supply required
information. Do not use this form to convert the Note.)
FOR VALUE RECEIVED, [ ] all of or [ ] amount of the foregoing
Convertible Note and all rights evidenced thereby are hereby assigned to
whose address is
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Dated: ,
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Holder's
Signature:
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Holder's Address:
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Signature
Guaranteed:
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