NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR 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 (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER),
IN A GENERALLY ACCEPTABLE 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.
Principal
Amount: $82,931.27
|
Issue
Date: MARCH 30, 2017
|
8% CONVERTIBLE NOTE
WHEREAS,
J. P. Carey Enterprises, Inc.,
a Florida company controlled by Joseph C. Canouse, and Friendable,
Inc. a Nevada Corporation (“Borrower” or
“Company”), entered into a Consulting Agreement, dated
April 1, 2014 (the “Consulting
Agreement”);
WHEREAS,
J. P. Carey Enterprises, Inc.
was due to be paid $10,000 per month in the form of a convertible
debenture;
WHEREAS,
the Consulting Agreement had a
term of seven months and J. P. Carey Enterprises, Inc. believed the
Company owed it compensation of $70,000;
WHEREAS,
the Company believed it had
cancelled the Consulting Agreement in April 2014;
WHEREAS
, as of March 29, 2016, the
Company disputed it owed any money to J. P. Carey Enterprises,
Inc.;
WHEREAS,
on March 29, 2016, Joseph C.
Canouse, the natural person that controls J. P. Carey Enterprises,
Inc., commenced litigation against the Company to collect $70,000
plus interest;
WHEREAS,
the Company and Mr. Canouse
entered into settlement talks regarding this litigation on July 19,
2016;
WHEREAS,
the Company acknowledges that,
as of July 19, 2016, it owed $70,000 plus interest to J. P. Carey
Enterprises, Inc.;
WHEREAS,
the Company and J. P. Carey
Enterprises, Inc. did not successfully conclude a settlement until
after judgment in the sum of $82,931.27 was entered against the
Company in the case styled Joseph C. Canouse v. Friendable, Civil
Action No. 16EV001265H, State Court of Fulton County, Georgia on
December 7, 2016; and
WHEREAS,
t
his Note is being
issued in lieu of the convertible promissory note that the parties
agree the Company should have issued on July 19, 2016 in the
principal amount of $82,931.27. The Holder (as defined below)
shall be entitled to tack back to July 19, 2016 for purposes of
Rule 144 promulgated
under the Securities Act of 1933, as
amended (the “Securities Act”)
.
NOW THEREFORE, FOR VALUE RECEIVED
, the
“Borrower” hereby promises to pay to the order of
J. P. CAREY ENTERPRISES,
INC.,
a Florida company, or its assigns (the
“Holder”), on SEPTEMBER 30, 2017, (subject to extension
as set forth below, the “Maturity Date”), the sum of
$82,931.27 as set forth herein, together with interest on the
unpaid principal balance hereof at the rate of eight (8%) per annum
(the “Interest Rate”) from the date of issuance hereof
until this Note plus any and all amounts due hereunder are paid in
full, and any additional amounts set forth herein, including
without limitation any Additional Principal (as defined herein).
Interest shall be computed on the basis of a 365-day year and the
actual number of days elapsed. Any amount of principal or interest
on this Note which is not paid when due shall bear interest at the
rate of twenty-four (24%) per annum from the due date thereof until
the same is paid (“Default Interest”). All payments due
hereunder shall be made in lawful money of the United States of
America. All payments shall be made at such address as the Holder
shall hereafter give to the Borrower by written notice made in
accordance with the provisions of this Note. Whenever any amount
expressed to be due by the terms of this Note is due on any day
which is not a business day, the same shall instead be due on the
next succeeding day which is a business day and, in the case of any
interest payment date which is not the date on which this Note is
paid in full, the extension of the due date thereof shall not be
taken into account for purposes of determining the amount of
interest due on such date. As used in this Note, the term
“business day” shall mean any day other than a
Saturday, Sunday or a day on which commercial banks in the city of
Georgia, Georgia are authorized or required by law or executive
order to remain closed. Each capitalized term used herein, and not
otherwise defined, shall have the meaning ascribed thereto in that
certain Settlement Agreement entered into by and between the
Company and Holder dated on or about the date hereof, pursuant to
which this Note was originally issued (the “Settlement
Agreement”). The Holder may, by written notice to the
Borrower at least five (5) days before the Maturity Date (as may
have been previously extended), extend the Maturity Date to up to
one (1) year following the date of the original Maturity Date
hereunder.
This
Note is free from all taxes, liens, claims and encumbrances with
respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and
will not impose personal liability upon the holder
thereof.
The
following terms shall apply to this Note:
ARTICLE
I. CONVERSION RIGHTS
1.1.
Conversion
Right
. The Holder shall have the right, in its sole and
absolute discretion, at any time from time to time, to convert all
or any part of the outstanding amount due under this Note into
fully paid and non-assessable shares of Common Stock, as such
Common Stock exists on the Issue Date, or any shares of capital
stock or other securities of the Borrower into which such Common
Stock shall hereafter be changed or reclassified at the conversion
price (the “Conversion Price”) determined as provided
herein (a “Conversion”);
provided
,
however
, that in no event shall
the Holder be entitled to convert any portion of this Note in
excess of that portion of this Note upon conversion of which the
sum of (1) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates (other than shares of Common Stock
which may be deemed beneficially owned through the ownership of the
unconverted portion of the Notes or the unexercised or unconverted
portion of any other security of the Borrower subject to a
limitation on conversion or exercise analogous to the limitations
contained herein) and (2) the number of shares of Common Stock
issuable upon the conversion of the portion of this Note with
respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its
affiliates of more than 4.9% of the outstanding shares of Common
Stock. For purposes of the proviso to the immediately preceding
sentence, beneficial ownership shall be determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and Regulation 13D-G
thereunder, except as otherwise provided in clause (1) of such
proviso,
provided
,
further
,
however
, that the
limitations on conversion may be waived by the Holder upon, at the
election of the Holder, not less than 61 days’ prior notice
to the Borrower, and the provisions of the conversion limitation
shall continue to apply until such 61st day (or such later date, as
determined by the Holder, as may be specified in such notice of
waiver). The number of shares of Common Stock to be issued upon
each Conversion of this Note (“Conversion Shares”)
shall be determined by dividing the Conversion Amount (as defined
below) by the applicable Conversion Price then in effect on the
date specified in the notice of conversion, in the form attached
hereto as Exhibit A (the “Notice of Conversion”),
delivered to the Borrower by the Holder in accordance with Section
1.4 below; provided that the Notice of Conversion is submitted by
facsimile or e-mail (or by other means resulting in, or reasonably
expected to result in, notice) to the Borrower before 11:59 p.m.,
Atlanta, Georgia time on such conversion date (the
“Conversion Date”). The term “Conversion
Amount” means, with respect to any Conversion of this Note,
the sum of (1) the principal amount of this Note to be converted in
such Conversion,
plus
(2) accrued and unpaid
interest, if any, on such principal amount being converted at the
interest rates provided in this Note to the Conversion Date,
plus
(3) at the
Holder’s option, Default Interest, if any, on the amounts
referred to in the immediately preceding clauses (1) and/or (2),
plus
(4)
any
Additional Principal for such Conversion,
plus
(5) at the Holder’s
option, any amounts owed to the Holder pursuant to Sections 1.2(c)
and 1.4(g) hereof.
1.2.
Conversion
Price
.
a)
Calculation of Conversion
Price
. The conversion price hereunder (the “Conversion
Price”) shall equal the lower of: (i) the closing sale price
of the Common Stock on the Principal Market on the Trading Day
immediately preceding the Closing Date, and (ii) 50% of either the
lowest sale price for the Common Stock on the Principal Market
during the twenty five
(25) consecutive
Trading Days immediately preceding the Conversion Date or the
closing bid price, whichever is lower,
provided, however
, if the
Company’s share price at any time loses the bid (ex: 0.0001
on the ask with zero market makers on the bid on level 2), then the
Conversion Price may, in the Holder’s sole and absolute
discretion, be reduced to a fixed conversion price of 0.00001 (if
lower than the conversion price otherwise),
and provided,
that if on the date of
delivery of the Conversion Shares to the Holder, or any date
thereafter while Conversion Shares are held by the Holder, the
closing bid price per share of Common Stock on the Principal Market
on the Trading Day on which the Common Shares are traded is less
than the sale price per share of Common Stock on the Principal
Market on the Trading Day used to calculate the Conversion Price
hereunder, then such Conversion Price shall be automatically
reduced such that the Conversion Price shall be recalculated using
the new low closing bid price (“Adjusted Conversion
Price”) and shall replace the Conversion Price above, and
Holder shall be issued a number of additional shares such that the
aggregate number of shares Holder receives is based upon the
Adjusted Conversion Price, and
provided, further
, that the Conversion
Price shall be subject to Section 1.2(b) below. For the purpose of
clarity, any shares required to be issued as a result of an
Adjusted Conversion Price shall be deemed to be “Conversion
Shares” under this Note. If an Event of Default under Section
3.9 of the Note has occurred, Holder, in its sole discretion, may
elect to use a Conversion Price which shall equal the lower of: (i)
the closing sale price of the Common Stock on the Principal Market
on the Trading Day immediately preceding the Closing Date; (ii) 50%
of either the lowest sale price or the closing bid price, whichever
is lower for the Common Stock on the Principal Market during any
Trading Day in which the Event of Default has not been cured. If
such Common Stock is not traded on the OTCBB, OTCQB, OTC Pink,
NASDAQ or NYSE, then such sale price shall be the sale price of
such security on the principal securities exchange or trading
market where such security is listed or traded or, if no sale price
of such security is available in any of the foregoing manners, the
average of the closing bid prices of any market makers for such
security that are listed in the “pink sheets” by the
National Quotation Bureau, Inc. If such sale price cannot be
calculated for such security on such date in the manner provided
above, such price shall be the fair market value as mutually
determined by the Borrower and the Holder. If the Borrower’s
Common stock is chilled for deposit at DTC, becomes chilled at any
point while this Note remains outstanding or deposit or other
additional fees are payable due to a Yield Sign, Stop Sign or other
trading restrictions, or if the closing sale price at any time
falls below $0.0009 (as appropriately and equitably adjusted for
stock splits, stock dividends, stock contributions and similar
events), then such 50% figure specified in clause 1.2(a)(ii) above
shall be reduced to 35%. In the event that the shares of the
Borrower’s Common Stock are not deliverable via DWAC
following the conversion of any amount hereunder, an additional 5%
discount will be attributed to the Conversion Price. “Trading
Day” shall mean any day on which the Common Stock is tradable
for any period on the OTC Pink, or on the principal securities
exchange or other securities market on which the Common Stock is
then being traded. Additionally, if the Company ceases to be a
reporting company pursuant to the Exchange Act or if the Note
cannot be converted into free trading shares after 181 days from
the date deemed appropriate by the counsel to Holder issuing the
Rule 144 opinion, an additional 15% discount will be attributed to
the Conversion Price for any and all Conversions submitted
thereafter.
b)
If at any time the
Conversion Price as determined hereunder for any Conversion would
be less than the par value of the Common Stock, then the Conversion
Price hereunder shall equal such par value for such Conversion and
the Conversion Amount for such Conversion shall be increased to
include Additional Principal, where “Additional
Principal” means such additional amount to be added to the
Conversion Amount to the extent necessary to cause the number of
Conversion Shares issuable upon such Conversion to equal the same
number of Conversion Shares as would have been issued had the
Conversion Price not been subject to the minimum price set forth in
this Section 1.2(b).
c)
Without in any way
limiting the Holder’s right to pursue other remedies,
including actual damages and/or equitable relief, the parties agree
that if delivery of the Common Stock issuable upon conversion of
this Note is not delivered by the Deadline (as defined below) the
Borrower shall pay to the Holder $1,000.00 per day in cash, for
each day beyond the Deadline that the Borrower fails to deliver
such Common Stock. Such cash amount shall be paid to Holder by the
fifth day of the month following the month in which it has accrued
or, at the option of the Holder, shall be added to the principal
amount of this Note, in which event interest shall accrue thereon
in accordance with the terms of this Note and such additional
principal amount shall be convertible into Common Stock in
accordance with the terms of this Note. The Borrower agrees that
the right to convert this Note is a valuable right to the Holder.
The damages resulting from a failure, attempt to frustrate, or
interference with such conversion right are difficult if not
impossible to quantify. Accordingly the parties acknowledge that
the liquidated damages provision contained in this Section are
justified.
1.3.
Authorized
Shares
. The Borrower covenants that the Borrower will at all
times while this Note is outstanding reserve from its authorized
and unissued Common Stock a sufficient number of shares, free from
preemptive rights, to provide for the issuance of Common Stock upon
the full conversion or adjustment of this Note. The Borrower is
required at all times to have authorized and reserved two (2) times
the number of shares that is actually issuable upon full conversion
or adjustment of this Note (based on the Conversion Price of the
Notes in effect from time to time) (the “Reserved
Amount”). Initially, the Company will instruct the Transfer
Agent to reserve four hundred eighty-seven million, five hundred
thousand (487,500,000) shares of common stock in the name of the
Holder for issuance upon conversion hereof. The Borrower represents
that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable. In addition, if the Borrower shall
issue any securities or make any change to its capital structure
which would change the number of shares of Common Stock into which
this Note shall be convertible at the then current Conversion
Price, the Borrower shall at the same time make proper provision so
that thereafter there shall be a sufficient number of shares of
Common Stock authorized and reserved, free from preemptive rights,
for conversion of this Note in full. The Borrower (i) acknowledges
that it has irrevocably instructed its transfer agent to issue
certificates for the Common Stock issuable upon conversion of this
Note, and (ii) agrees that its issuance of this Note shall
constitute full authority to its officers and agents who are
charged with the duty of executing stock certificates to execute
and issue the necessary certificates for shares of Common Stock in
accordance with the terms and conditions of this Note.
If, at any time the
Borrower does not maintain the Reserved Amount it will be
considered an Event of Default under Section 3.2 of the
Note.
1.4.
Method of
Conversion
.
a)
Mechanics of Conversion
.
Subject to Section 1.1, this Note may be converted by the Holder in
whole or in part at any time and from time to time after the Issue
Date, by submitting to the Borrower a Notice of Conversion (by
facsimile, e-mail or other reasonable means of communication
dispatched on the Conversion Date prior to 11:59 p.m., Atlanta,
Georgia time).
b)
Book Entry upon Conversion
.
Notwithstanding anything to the contrary set forth herein, upon
conversion of this Note in accordance with the terms hereof, the
Holder shall not be required to physically surrender this Note to
the Borrower unless the entire unpaid principal amount of this Note
is so converted. The Holder and the Borrower shall maintain records
showing the principal amount so converted and the dates of such
conversions or shall use such other method, reasonably satisfactory
to the Holder and the Borrower, so as not to require physical
surrender of this Note upon each such conversion. In the event of
any dispute or discrepancy, such records of the Borrower shall,
prima facie,
be controlling
and determinative in the absence of manifest error. Notwithstanding
the foregoing, if any portion of this Note is converted as
aforesaid, the Holder may not transfer this Note unless the Holder
first physically surrenders this Note to the Borrower, whereupon
the Borrower will forthwith issue and deliver upon the order of the
Holder a new Note of like tenor, registered as the Holder (upon
payment by the Holder of any applicable transfer taxes) may
request, representing in the aggregate the remaining unpaid
principal amount of this Note. The Holder and any assignee, by
acceptance of this Note, acknowledge and agree that, by reason of
the provisions of this paragraph, following conversion of a portion
of this Note, the unpaid and unconverted principal amount of this
Note represented by this Note may be less than the amount stated on
the face hereof.
c)
Payment of Taxes
. The Borrower
shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of
shares of Common Stock or other securities or property on
conversion of this Note in a name other than that of the Holder (or
in street name), and the Borrower shall not be required to issue or
deliver any such shares or other securities or property unless and
until the person or persons (other than the Holder or the custodian
in whose street name such shares are to be held for the
Holder’s account) requesting the issuance thereof shall have
paid to the Borrower the amount of any such tax or shall have
established to the satisfaction of the Borrower that such tax has
been paid.
d)
Delivery of Common Stock upon
Conversion
. Upon receipt by the Borrower from the Holder of
a facsimile transmission or e-mail (or other reasonable means of
communication) of a Notice of Conversion meeting the requirements
for conversion as provided in this Section 1.4 or upon an event
triggering the calculation of an Adjusted Conversion Price, the
Borrower shall issue and deliver or cause to be issued and
delivered to or upon the order of the Holder certificates for the
Common Stock issuable upon such conversion within three (3)
business days after such receipt or such an event (the
“Deadline”) (and, solely in the case of conversion
of
the entire unpaid
principal amount hereof, surrender of this Note) in accordance with
the terms hereof.
e)
Obligation of Borrower to Deliver
Common Stock
. Upon receipt by the Borrower of a duly and
properly executed Notice of Conversion or upon an event triggering
the calculation of an Adjusted Conversion Price, the Holder shall
be deemed to be the holder of record of the Common Stock issuable
upon such conversion or as a result of an Adjusted Conversion
Price, the outstanding principal amount and the amount of accrued
and unpaid interest on this Note shall be reduced to reflect such
conversion or adjustment, and, unless the Borrower defaults on its
obligations under this Article I, all rights with respect to the
portion of this Note being so converted shall forthwith terminate
except the right to receive the Common Stock or other securities,
cash or other assets, as herein provided, on such conversion. If
the Holder shall have given a Notice of Conversion as provided
herein or upon an event triggering the calculation of an Adjusted
Conversion Price, the Borrower’s obligation to issue and
deliver the certificates for Common Stock shall be absolute and
unconditional, irrespective of the absence of any action by the
Holder to enforce the same, any waiver or consent with respect to
any provision thereof, the recovery of any judgment against any
person or any action to enforce the same, any failure or delay in
the enforcement of any other obligation of the Borrower to the
holder of record, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder of any obligation to the Borrower, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Borrower to the Holder in connection with such conversion. The
Conversion Date specified in the Notice of Conversion shall be the
Conversion Date so long as the Notice of Conversion is received by
the Borrower before 11:59 p.m., Georgia, Georgia time, on such
date.
f)
Delivery of Common Stock by Electronic
Transfer
. In lieu of delivering physical certificates
representing the Common Stock issuable upon conversion, provided
the Borrower is participating in the Depository Trust Company
(“DTC”) Fast Automated Securities Transfer
(“FAST”) program, upon request of the Holder and its
compliance with the provisions contained in Section 1.1 and in this
Section 1.4, the Borrower shall use its best efforts to cause its
transfer agent to electronically transmit the Common Stock issuable
upon conversion or upon an event triggering the calculation of an
Adjusted Conversion Price to the Holder by crediting the account of
Holder’s Prime Broker with DTC through its Deposit Withdrawal
Agent Commission (“DWAC”) system.
g)
Failure to Deliver Common Stock Prior
to Deadline
. Without in any way limiting the Holder’s
right to pursue other remedies, including actual damages and/or
equitable relief, the parties agree that if delivery of the Common
Stock issuable upon conversion or adjustment of this Note is not
delivered by the Deadline, the Borrower shall pay to the
Holder
$1,000.00 per day
in cash, for each day beyond the Deadline that the Borrower fails
to deliver such Common Stock to the Holder. Such cash amount shall
be paid to Holder by the fifth day of the month following the month
in which it has accrued or, at the option of the Holder, shall be
added to the principal amount of this Note, in which event interest
shall accrue thereon in accordance with the terms of this Note and
such additional principal amount shall be convertible into Common
Stock in accordance with the terms of this Note. The Borrower
agrees that the right to convert and/or receive shares in the event
of an adjustment is a valuable right to the Holder. The damages
resulting from a failure, attempt to frustrate, or interference
with such conversion or adjustment right are difficult if not
impossible to qualify. Accordingly the parties acknowledge that the
liquidated damages provision contained in this Section 1.4(g) are
justified.
h)
Reserved
.
i)
Charges and Expenses
. Issuance
of Common Stock to Holder, or any of its assignees, upon the
conversion of this Note shall be made without charge to the Holder
for any issuance fee, transfer tax, legal opinion and related
charges, postage/mailing charge or any other expense with respect
to the issuance of such Common Stock. Company shall pay all
Transfer Agent fees incurred from the issuance of the Common Stock
to Holder, as well as any and all other fees and charges required
by the Transfer Agent as a condition to effectuate such issuance.
Any such fees or charges as noted in this Section that are paid by
the Holder (whether from the Company’s delays, outright
refusal to pay, or otherwise), will be automatically added to the
Principal Amount of the Note and tack back, for purposes of Rule
144, to the date deemed appropriate by the counsel to Holder
issuing the Rule 144 opinion.
1.1
Restricted
Securities
. The shares of Common Stock issuable upon
conversion or adjustment of this Note may not be sold or
transferred unless (i) such shares are sold pursuant to an
effective registration statement under the Securities Act or (ii)
the Borrower or its transfer agent shall have been furnished with
an opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable
transactions) to the effect that the shares to be sold or
transferred may be sold or transferred pursuant to an exemption
from such registration including, but not limited to, pursuant to
Rule 144 which opinion (solely in the case of a Rule 144 opinion)
will be issued at the Company’s expense and the conversion
dollar amount will be reduced (solely in the case of a Rule 144
opinion ) by $750.00 to cover the cost of such legal opinion
(solely in the case of a Rule 144 opinion) or (iii) such shares are
transferred to an “affiliate” (as defined in Rule 144)
of the Borrower who agrees to sell or otherwise transfer the shares
only in accordance with this Section 1.5 and who is an
“accredited investor” (as defined in Rule 501(a) of the
Securities Act). Any legend set forth on any stock certificate
evidencing any Conversion Shares shall be removed and the Borrower
shall issue to the Holder a new certificate therefore free of any
transfer legend if (i) the Borrower or its transfer agent shall
have received an opinion of counsel form, substance and scope
customary for opinions of counsel in comparable transactions, to
the effect that a public sale or transfer of such Common Stock may
be made without registration under the Securities Act, which
opinion shall be reasonably acceptable to the Company, or (ii) in
the case of the Common Stock issued or issuable upon conversion of
this Note, such security is registered for sale by the Holder under
an effective registration statement filed under the Securities Act
or otherwise may be sold pursuant to Rule 144 without any
restriction as to the number of securities as of a particular date
that can then be immediately sold.
1.1.
Effect of Certain
Events
.
a)
Effect of Merger, Consolidation,
Etc
. At the option of the Holder, the sale, conveyance or
disposition of all or substantially all of the
b)
assets
of the Borrower, the effectuation by the Borrower of a transaction
or series of related transactions in which more than 50% of the
voting power of the Borrower is disposed of, or the consolidation,
merger or other business combination of the Borrower with or into
any other Person (as defined below) or Persons when the Borrower is
not the survivor shall either: (i) be deemed to be an Event of
Default (as defined in Article III) pursuant to which the Borrower
shall be required to pay to the Holder upon the consummation of and
as a condition to such transaction an amount equal to the Default
Amount (as defined in Article III) or (ii) be treated pursuant to
Section 1.6(b) hereof. “Person” shall mean any
individual, corporation, limited liability company, partnership,
association, trust or other entity or organization.
c)
Adjustment Due to Merger,
Consolidation, Etc
. If, at any time when this Note is issued
and outstanding and prior to conversion of all of the Notes, there
shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a
result of which shares of Common Stock of the Borrower shall be
changed into the same or a different number of shares of another
class or classes of stock or securities of the Borrower or another
entity, or in case of any sale or conveyance of all or
substantially all of the assets of the Borrower other than in
connection with a plan of complete liquidation of the Borrower,
then the Holder of this Note shall thereafter have the right to
receive upon conversion of this Note, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore issuable upon conversion, such
stock, securities or assets which the Holder would have been
entitled to receive in such transaction had this Note been
converted in full immediately prior to such transaction (without
regard to any limitations on conversion set forth herein), and in
any such case appropriate provisions shall be made with respect to
the rights and interests of the Holder of this Note to the end that
the provisions hereof (including, without limitation, provisions
for adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Note) shall thereafter be
applicable, as nearly as may be practicable in relation to any
securities or assets thereafter deliverable upon the conversion
hereof. The Borrower shall not affect any transaction described in
this Section 1.6(b) unless (a) it first gives, to the extent
practicable, thirty (30) days prior written notice (but in any
event at least fifteen (15) days prior written notice) of the
record date of the special meeting of shareholders to approve, or
if there is no such record date, the consummation of, such merger,
consolidation, exchange of shares, recapitalization, reorganization
or other similar event or sale of assets (during which time, for
clarification, the Holder shall be entitled to convert this Note)
and (b) the resulting successor or acquiring entity assumes by
written instrument the obligations of this Section 1.6(b). The
above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers or share
exchanges.
d)
Adjustment Due to Distribution
.
If the Borrower shall declare or make any distribution of its
assets (or rights to acquire its assets) to holders of Common Stock
as a dividend, stock repurchase, by way of return of capital or
otherwise (including any dividend or distribution to the
Borrower’s shareholders in cash or shares (or rights to
acquire shares) of capital stock of a subsidiary (i.e., a
spin-off)) (a “Distribution”), then the Holder of this
Note shall be entitled, upon any conversion of this Note after the
date of record for determining shareholders entitled to such
Distribution, to receive the amount of such assets which would have
been payable to the Holder with respect to the shares of Common
Stock issuable upon such conversion had such Holder been the holder
of such shares of Common Stock on the record date for the
determination of shareholders entitled to such Distribution. Such
assets shall be held in escrow by the Company pending any such
conversion
e)
Purchase
Rights
. If, at any time when any Notes are issued and
outstanding, the Borrower issues any convertible securities or
rights to purchase stock, warrants, securities or other property
(the “Purchase Rights”) pro rata to the record holders
of any class of Common Stock, then the Holder of this Note will be
entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without
regard to any limitations on conversion contained herein)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights or, if no such
record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
f)
Stock Dividends and Stock
Splits
. If the Company, at any time while this Note is
outstanding: (A) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on
shares of Common Stock or any securities convertible into or
exercisable for Common Stock; (B) subdivides outstanding shares of
Common Stock into a larger number of shares; (C) combines
(including by way of a reverse stock split) outstanding shares of
Common Stock into a smaller number of shares; or (D) issues, in the
event of a reclassification of shares of the Common Stock, any
shares of capital stock of the Company, then the Conversion Price
(and each sale or bid price used in determining the Conversion
Price) shall be multiplied by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after
such event. Any adjustment made pursuant to this Section 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.
g)
Notice of Adjustments
. Upon the
occurrence of each adjustment or readjustment of the Conversion
Price as a result of the events described in this Section 1.6, the
Borrower, at its expense, shall promptly compute such adjustment or
readjustment and prepare and furnish to the Holder a certificate
setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The
Borrower shall, upon the written request at any time of the Holder,
furnish to such Holder a like certificate setting forth (i) such
adjustment or readjustment, (ii) the Conversion Price at the time
in effect and (iii) the number of shares of Common Stock and the
amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.
1.2.
Revocation
.
If any Conversion Shares are not received by the Deadline, the
Holder may revoke the applicable Conversion pursuant to which such
Conversion Shares were issuable. This Note shall remain convertible
after the Maturity Date hereof until this Note is repaid or
converted in full.
1.3.
Prepayment
.
Notwithstanding anything to the contrary contained in this Note,
subject to the terms of this Section, at any time during the period
beginning on the Issue Date and ending on the date which is six (6)
months following the Issue Date (“Prepayment Termination
Date”), Borrower shall have the right, exercisable on not
less than five (5) Trading Days prior written notice to the Holder
of this Note, to prepay the outstanding balance on this Note
(principal and accrued interest), in full, in accordance with this
Section. Any notice of prepayment hereunder (an “Optional
Prepayment Notice”) shall be delivered to the Holder of the
Note at its registered addresses and shall state: (1) that the
Borrower is exercising its right to prepay the Note, and (2) the
date of prepayment which shall be not more than ten (10) Trading
Days from the date of the Optional Prepayment Notice. On the date
fixed for prepayment (the “Optional Prepayment Date”),
the Borrower shall make payment of the Optional Prepayment Amount
(as defined below) to or upon the order of the Holder as specified
by the Holder in writing to the Borrower at least one (1) business
day prior to the Optional Prepayment Date. If the Borrower
exercises its right to prepay the Note, the Borrower shall make
payment to the Holder of an amount in cash (the “Optional
Prepayment Amount”) equal to the Prepayment Factor (as
defined below), multiplied by the sum of:
(w) the then
outstanding principal amount of this Note
plus
(x) accrued and unpaid
interest on the unpaid principal amount of this Note to the
Optional Prepayment Date
plus
(y) Default Interest, if
any, on the amounts referred to in clauses (w) and (x)
plus
(z) any amounts owed to
the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the
Borrower delivers an Optional Prepayment Notice and fails to pay
the Optional Prepayment Amount due to the Holder of the Note within
two (2) business days following the Optional Prepayment Date, the
Borrower shall forever forfeit its right to prepay the Note
pursuant to this Section. After the Prepayment Termination Date,
the Borrower shall have no right to prepay this Note. For purposes
hereof, the “Prepayment Factor” shall equal one hundred
and fifty percent (150%), provided that such Prepayment factor
shall equal one hundred and thirty five percent (135%) if the
Optional Prepayment Date occurs on or before the date which is
ninety (90) days following the Issue Date hereof.
ARTICLE
II. CERTAIN COVENANTS
2.1.
Distributions
on Capital Stock
. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the
Holder’s written consent (a) pay, declare or set apart for
such payment, any dividend or other distribution (whether in cash,
property or other securities) on shares of capital stock other than
dividends on shares of Common Stock solely in the form of
additional shares of Common Stock or (b) directly or indirectly or
through any subsidiary make any other payment or distribution in
respect of its capital stock except for distributions pursuant to
any shareholders’ rights plan which is approved by a majority
of the Borrower’s disinterested directors.
2.2.
Restriction
on Stock Repurchases
. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the
Holder’s written consent redeem, repurchase or otherwise
acquire (whether for cash or in exchange for property or other
securities or otherwise) in any one transaction or series of
related transactions any shares of capital stock of the Borrower or
any warrants, rights or options to purchase or acquire any such
shares.
2.3.
Reserved
.
2.4.
Reserved
.
2.5.
Reserved
.
2.6.
Charter
.
So long as the Borrower shall have any obligations under this Note,
the Borrower shall not amend its charter documents, including
without limitation its certificate of incorporation and bylaws, in
any manner that materially and adversely affects any rights of the
Holder.
2.7.
Transfer
Agent
. The Borrower shall not change its transfer agent
without the prior written consent of the Holder. Any resignation by
the transfer agent without a replacement transfer agent consented
to by the Holder prior to such replacement taking effect shall
constitute an Event of Default hereunder.
ARTICLE
III. EVENTS OF DEFAULT
Any one
or more of the following events which shall occur and/or be
continuing shall constitute an event of default (each, an
“Event of Default”):
3.1.
Failure
to Pay Principal or Interest
. The Borrower fails to pay the
principal hereof or interest thereon when due on this Note, whether
at maturity, upon acceleration or otherwise.
3.2.
Conversion
and the Shares
. The Borrower fails to issue shares of Common
Stock to the Holder (or announces or threatens in writing that it
will not honor its obligation to do so at any time following the
execution hereof or) upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this Note,
fails to transfer or cause its transfer agent to transfer (issue)
(electronically or in certificated form) any certificate for shares
of Common Stock issued to the Holder upon conversion of or
otherwise pursuant to this Note as and when required by this Note,
the Borrower directs its transfer agent not to transfer or delays,
impairs, and/or hinders its transfer agent in transferring (or
issuing) (electronically or in certificated form) any certificate
for shares of Common Stock to be issued to the Holder upon
conversion of or otherwise pursuant to this Note as and when
required by this Note, or fails to remove (or directs its transfer
agent not to remove or impairs, delays, and/or hinders its transfer
agent from removing) any restrictive legend (or to withdraw any
stop transfer instructions in respect thereof) on any certificate
for any shares of Common Stock issued to the Holder upon conversion
of or otherwise pursuant to this Note as and when required by this
Note (or makes any written announcement, statement or threat that
it does not intend to honor the obligations described in this
paragraph) and any such failure shall continue uncured (or any
written announcement, statement or threat not to honor its
obligations shall not be rescinded in writing) for five (5)
business days after the Holder shall have delivered a Notice of
Conversion. It is an obligation of the Borrower to remain current
in its obligations to its transfer agent. It shall be an event of
default of this Note, if a conversion of this Note is delayed,
hindered or frustrated due to a balance owed by the Borrower to its
transfer agent. If at the option of the Holder, the Holder advances
any funds to the Borrower’s transfer agent in order to
process a conversion, such advanced funds shall be paid by the
Borrower to the Holder within forty-eight (48) hours of a demand
from the Holder.
3.3.
Breach
of Covenants
. The Borrower breaches any material covenant or
other material term or condition contained in this Note and any
collateral documents and such breach continues for a period of
seven (7) days after written notice thereof to the Borrower from
the Holder.
3.4.
Breach
of Representations and Warranties
. Any 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 when
made and the breach of which has (or with the passage of time will
have) a material adverse effect on the rights of the Holder with
respect to this Note.
3.5.
Receiver or Trustee
. The
Borrower or any subsidiary of the 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.
3.6.
Judgments
. Any money judgment,
writ or similar process shall be entered or filed against the
Borrower or any subsidiary of the Borrower or any of its property
or other assets for more than $50,000.00, and shall remain
unvacated, unbonded or unstayed for a period of twenty
(20)
days unless otherwise consented to by the Holder, which consent
will not be unreasonably withheld.
3.7.
Bankruptcy
. Bankruptcy,
insolvency, reorganization or liquidation proceedings or other
proceedings, voluntary or involuntary, for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Borrower or any subsidiary of the
Borrower.
3.8.
Delisting of Common Stock
. The
Borrower shall fail to maintain the listing of the Common Stock on
at least one of the OTCBB, or OTCQB, OTC Pink or an equivalent
replacement exchange, NASDAQ, the NYSE or AMEX.
3.9.
Failure to Comply with the Exchange
Act
. The Borrower shall fail to comply in any material
respect with the reporting requirements of the Exchange Act; and/or
the Borrower shall cease to be subject to the reporting
requirements of the Exchange Act.
3.10.
Liquidation
. Any dissolution,
liquidation, or winding up of Borrower or any substantial portion
of its business.
3.11.
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, provided, however, that any disclosure of the Borrower’s
ability to continue as a “going concern” shall not be
an admission that the Borrower cannot pay its debts as they become
due.
3.12.
Maintenance of Assets
. The
failure by Borrower, during the term of this Note, 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).
3.13.
Financial Statement
Restatement
. The restatement of any financial statements
filed by the Borrower with the SEC for any date or period from two
years prior to the Issue Date of this Note and until this Note is
no longer outstanding, if the result of such restatement would, by
comparison to the unrestated financial statement, have constituted
a material adverse effect on the rights of the Holder with respect
to this Note.
3.14.
Reverse Splits
. The Borrower
effectuates a reverse split of its Common Stock without twenty (20)
days prior written notice to the Holder.
3.15.
Replacement of Transfer Agent
.
In the event that the Borrower proposes to replace its transfer
agent, the Borrower fails to provide, prior to the effective date
of such replacement, a fully executed Irrevocable Transfer Agent
Instructions in a form as initially delivered on the Issue Date
signed by the successor transfer agent to Borrower and the
Borrower.
3.16.
Cross-Default
.
Upon
the occurrence and during the continuation of any Event of Default
specified in Section 3.1 (solely with respect to failure to pay the
principal hereof or interest thereon when due at the Maturity
Date), the Note shall become immediately due and payable and the
Borrower shall pay to the Holder, in full satisfaction of its
obligations hereunder, an amount equal to the Default Sum (as
defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF
ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL
BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO
THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN
AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN);
MULTIPLIED BY (Z) TWO
(2). Upon the
occurrence and during the continuation of any Event of Default
specified in Sections
3.1 (solely with
respect to failure to pay the principal hereof or interest thereon
when due on this Note upon a Trading Market Prepayment Event
pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8,
3.9, 3.11, 3.12, 3.13, 3.14, 3.17, 3.18 and/or 3. 15 exercisable
through the delivery of written notice to the Borrower by such
Holders (the “Default Notice”), and upon the occurrence
of an Event of Default specified in the remaining sections of
Articles III (other than failure to pay the principal hereof or
interest thereon at the Maturity Date specified in Section 3,1
hereof), the Note shall become immediately due and payable and the
Borrower shall pay to the Holder, in full satisfaction of its
obligations hereunder, an amount equal to the greater of (i) 150%
times
the
sum
of
(w) the
then outstanding principal amount of this Note
plus
(x) accrued and unpaid
interest on the unpaid principal amount of this Note to the date of
payment (the “Mandatory Prepayment Date”)
plus
(y) Default Interest, if
any, on the amounts referred to in clauses (w) and/or (x)
plus
(z) any
amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g)
hereof (the then outstanding principal amount of this Note to the
date of payment
plus
the amounts referred to in
clauses (x), (y) and (z) shall collectively be known as the
“Default Sum”) or (ii) the “parity value”
of the Default Sum to be prepaid, where parity value means (a) the
highest number of shares of Common Stock issuable upon conversion
of or otherwise pursuant to such Default Sum in accordance with
Article I, treating the Trading Day immediately preceding the
Mandatory Prepayment Date as the “Conversion Date” for
purposes of determining the lowest applicable Conversion Price,
unless the Default Event arises as a result of a breach in respect
of a specific Conversion Date in which case such Conversion Date
shall be the Conversion Date),
multiplied by
(b) the highest
Closing Price for the Common Stock during the period beginning on
the date of first occurrence of the Event of Default and ending one
day prior to the Mandatory Prepayment Date (the “Default
Amount”) and all other amounts payable hereunder shall
immediately become due and payable, all without demand, presentment
or notice, all of which hereby are expressly waived, together with
all costs, including, without limitation, legal fees and expenses,
of collection, and the Holder shall be entitled to exercise all
other rights and remedies available at law or in
equity.
If the
Borrower fails to pay the Default Amount within five (5) business
days of written notice that such amount is due and payable, then
the Holder shall have the right at any time, so long as the
Borrower remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Borrower,
upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Borrower equal
to the Default Amount divided by the Conversion Price then in
effect. The Holder may still convert any amounts due hereunder,
including without limitation the Default Sum, until such time as
this Note has been repaid in full.
3.17.
Inside Information
.
The Borrower or its officers, directors, and/or affiliates attempt
to transmit, convey, disclose, or any actual transmittal,
conveyance, or disclosure by the Borrower or its officers,
directors, and/or affiliates of, material non-public information
concerning the Borrower, to the Holder or its successors and
assigns, which is not immediately cured by Borrower’s filing
of a Form 8-K pursuant to Regulation FD on that same
date.
3.18
Bid Price
. The
Borrower shall lose the “bid” price for its Common
Stock ($0.0001 on the “Ask” with zero market makers on
the “Bid” per Level 2) and/or a market (including the
OTC Pink, OTCQB or an equivalent replacement
exchange).
ARTICLE
IV. MISCELLANEOUS
4.1.
Failure or Indulgence Not
Waiver
. No failure or delay on the part of the Holder 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 privileges. All
rights and remedies existing hereunder are cumulative to, and not
exclusive of, any rights or remedies otherwise
available.
4.2.
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, email 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 or email,
with accurate confirmation generated by the transmitting facsimile
machine or computer, at the address, email or number given by each
party to the other (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 second 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.
4.3.
Amendments
.
This Note and any provision hereof may only be amended by an
instrument in writing signed by the Borrower and the Holder. 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.
4.4.
Assignability
.
This Note shall be binding upon the Borrower and its successors and
assigns, and shall inure to be the benefit of the Holder and its
successors and assigns. Each transferee of this Note must be an
“accredited investor” (as defined in Rule 501(a) of the
Securities Act). Notwithstanding anything in this Note to the
contrary, this Note may be pledged as collateral in connection with
a bona fide margin account or other lending
arrangement.
4.5.
Cost
of Collection
. If default is made in the payment of this
Note, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys’ fees.
4.6.
Governing
Law
. This Note shall be governed by and construed in
accordance with the laws of the State of Georgia 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 Georgia or in the federal courts located in the
State of Georgia and county Fulton County, Georgia. 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 the Borrower in any other jurisdiction to collect on the
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. This
Note shall be deemed an unconditional obligation of Borrower for
the payment of money and, without limitation to any other remedies
of Holder, may be enforced against Borrower by summary proceeding
pursuant to Georgia Civil Procedure Law and Rules Section 3213 or
any similar rule or statute in the jurisdiction where enforcement
is sought. For purposes of such rule or statute, any other document
or agreement to which Holder and Borrower are parties or which
Borrower delivered to Holder, which may be convenient or necessary
to determine Holder’s rights hereunder or Borrower’s
obligations to Holder are deemed a part of this Note, whether or
not such other document or agreement was delivered together
herewith or was executed apart from this Note.
4.7.
Certain
Amounts
. Whenever pursuant to this Note the Borrower is
required to pay an amount in excess of the outstanding principal
amount (or the portion thereof required to be paid at that time)
plus accrued and unpaid interest plus Default Interest on such
interest, the Borrower and the Holder agree that the actual damages
to the Holder from the receipt of cash payment on this Note may be
difficult to determine and the amount to be so paid by the Borrower
represents stipulated damages and not a penalty and is intended to
compensate the Holder in part for loss of the opportunity to
convert this Note and to earn a return from the sale of shares of
Common Stock acquired upon conversion of this Note at a price in
excess of the price paid for such shares pursuant to this Note. The
Borrower and the Holder hereby agree that such amount of stipulated
damages is not plainly disproportionate to the possible loss to the
Holder from the receipt of a cash payment without the opportunity
to convert this Note into shares of Common Stock.
4.8.
Disclosure
.
Upon receipt or delivery by the Company of any notice in accordance
with the terms of this Note, unless the Company has in good faith
determined that the matters relating to such notice do not
constitute material, non-public information relating to the Company
or any of its Subsidiaries, the Company shall within one (1)
Trading Day after any such receipt or delivery, publicly disclose
such material, non-public information on a Current Report on Form
8-K or otherwise. In the event that the Company believes that a
notice contains material, non- public information relating to the
Company or any of its Subsidiaries, the Company so shall indicate
to such Holder contemporaneously with delivery of such notice, and
in the absence of any such indication, the Holder shall be allowed
to presume that all matters relating to such notice do not
constitute material, non-public information relating to the Company
or its Subsidiaries.
4.9.
Notice
of Corporate Events
. Except as otherwise provided below, the
Holder of this Note shall have no rights as a Holder of Common
Stock unless and only to the extent that it converts this Note into
Common Stock. The Borrower shall provide the Holder with prior
notification of any meeting of the Borrower’s shareholders
(and copies of proxy materials and other information sent to
shareholders). In the event of any taking by the Borrower of a
record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend or
other distribution, any right to subscribe for, purchase or
otherwise acquire (including by way of merger, consolidation,
reclassification or recapitalization) any share of any class or any
other securities or property, or to receive any other right, or for
the purpose of determining shareholders who are entitled to vote in
connection with any proposed sale, lease or conveyance of all or
substantially all of the assets of the Borrower or any proposed
liquidation, dissolution or winding up of the Borrower, the
Borrower shall mail a notice to the Holder, at least twenty (20)
days prior to the record date specified therein (or thirty (30)
days prior to the consummation of the transaction or event,
whichever is earlier), of the date on which any such record is to
be taken for the purpose of such dividend, distribution, right or
other event, and a brief statement regarding the amount and
character of such dividend, distribution, right or other event to
the extent known at such time. The Borrower shall make a public
announcement of any event requiring notification to the Holder
hereunder substantially simultaneously with the notification to the
Holder in accordance with the terms of this Section
4.9.
4.10.
Remedies
. The Borrower
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder, by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the
Borrower acknowledges that the remedy at law for a breach of its
obligations under this Note will be inadequate and agrees, in the
event of a breach or threatened breach by the Borrower of the
provisions of this Note, that the Holder shall be entitled, in
addition to all other available remedies at law or in equity, and
in addition to the penalties assessable herein, to an injunction or
injunctions restraining, preventing or curing any breach of this
Note and to enforce specifically the terms and provisions thereof,
without the necessity of showing economic loss and without any bond
or other security being required.
4.11.
Usury
.
This Note shall be subject to the anti-usury limitations of Georgia
state law.
(Remainder of Page
intentionally left blank)
IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its
name by its duly authorized officer as of the Issue Date first set
forth above.
FRIENDABLE,
INC.
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By:
|
/s/ Robert A Rositano,
Jr.
|
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Name: Robert A
Rositano, Jr. Title: CEO
|
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EXHIBIT
A
NOTICE
OF CONVERSION
The
undersigned hereby elects to convert principal under the 8%
Convertible Note of FRIENDABLE, INC., a Nevada corporation (the
Company
”),
into shares of common stock (the “
Common Stock
”), of the
Company according to the conditions hereof, as of the date written
below. If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by
the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if
any.
By the
delivery of this Notice of Conversion the undersigned represents
and warrants to the Company that its ownership of the Common Stock
does not exceed the amounts specified under Section 1.1 of this
Note, as determined in accordance with Section 13(d) of the
Exchange Act.
The
undersigned agrees to comply with the prospectus delivery
requirements under the applicable securities laws in connection
with any transfer of the aforesaid shares of Common Stock pursuant
to any prospectus.
Conversion calculations:
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Issue Date of Note: _______________
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Date to Effect Conversion: _________
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Conversion Price:
____________________________________________________________
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Principal Amount of Note to be Converted:
________________________________________
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Interest Accrued on Account
|
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of Conversion at Issue:
________________________________________________________
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Additional Principal on Account of Conversion
|
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Pursuant to Section 1.2(b) of the Note:
____________________________________________
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|
|
Number of shares of Common Stock to be issued:
___________________________________
|
|
___________________________________________________________________________
|
|
Remaining Balance of Note*:
___________________________________________________
|
|
Signature:
___________________________________________________________________
|
|
|
|
Name:
______________________________________________________________________
|
|
|
|
Address for Delivery of Common Stock Certificates:
_________________________________
|
|
____________________________________________________________________________
|
|
____________________________________________________________________________
|
|
|
|
Or
|
|
|
|
DWAC Instructions:
|
|
Broker No: ______________________
|
|
Account No: _____________________
|
*Sum
provided does not include accrued interest and/or additional
fees