EXHIBIT 10.40
THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 ACT AND SUCH REGISTRATION OR QUALIFICATION AS MAY BE NECESSARY UNDER THE
SECURITIES LAWS OF ANY JURISDICTION, OR AN OPINION OF COUNSEL SATISFACTORY TO
THE MAKER THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
INTERCALLNET, INC.
and
INTER-CALL-NET TELESERVICES, INC.
8% SECURED CONVERTIBLE PROMISSORY NOTE DUE JUNE 30, 2006
US$1,500,000 June 13, 2002
Each of INTERCALLNET, INC., a Florida corporation ("Intercallnet" or
the "Company"), and INTER-CALL-NET TELESERVICES, INC., a Florida corporation
("Intercallnet Teleservices", and together with Intercallnet, the "Maker"), for
value received, hereby jointly and severally promises to pay to STANFORD VENTURE
CAPITAL HOLDINGS, INC., a Delaware corporation (the "Holder"), or its permitted
assigns, in accordance with the terms and conditions of this Convertible
Promissory Note (the "Note") the aggregate principal amount of all outstanding
Disbursements or Advances (as applicable) under the Loan Agreement up to an
aggregate principal amount of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS
(US$1,500,000.00) (such aggregate principal amount of all outstanding
Disbursements or Advances (as applicable) as may be disbursed or advanced (as
applicable) by the Holder from time to time pursuant to this Note and the Loan
Agreement either (i) in accordance with the Disbursement Schedule (as defined
below) or (ii) pursuant to any Advance Request (as applicable), is herein
referred to as the "Principal Amount"), plus interest (computed on the basis of
a 360 day year) on the Principal Amount from time to time remaining unpaid
hereon at the rate of 8% per annum from the date hereof until the entire
Principal Amount hereof and all interest accrued thereon is paid (or converted
as provided in Section 3 hereof), less any prepayment of the Principal Amount
theretofore made by the Maker pursuant to Section 9 of this Note and Section 3.7
of the Loan Agreement. The Principal Amount hereof and interest hereon shall be
payable at the principal office of the Holder in Miami, Florida, in coin or
currency of the United States of America which at the time of payment shall be
legal tender for the payment of public and private debts.
This Note is issued as of this 13th day of June, 2002, and shall be
subject to the terms, conditions and provisions of the Loan Agreement, the
Pledge Agreement (the "Pledge Agreement"), and the Security Agreement (the
"Security Agreement"), each dated as of June 13, 2002, and each by and between
the Maker and the Holder, including, without limitation, the representations and
warranties of the Maker included therein. Capitalized terms used but not
otherwise defined in this Note shall have the meanings set forth in the Loan
Agreement.
1. Principal and Interest. The Principal Amount relating to Working
Capital Proceeds shall be funded by the Holder in accordance with the funding
schedule attached as Exhibit "A" hereto (the "Disbursement Schedule"). The
Principal Amount relating to Call Center Proceeds shall be funded by the Holder,
at the Holder's sole and absolute discretion, subject to and upon the terms and
conditions of the Loan Agreement and upon the Holder's receipt of an Advance
Request. The Principal Amount relating to either Working Capital Proceeds or
Call Center Proceeds shall be due and payable by the Maker to the Holder as
follows: (a) one third of the then outstanding Principal Amount shall be due and
payable on June 30, 2004; (b) one third of the then outstanding Principal Amount
shall be due and payable on June 30, 2005; and (c) one third of the then
outstanding Principal Amount shall be due and payable on June 30, 2006 (the
"Maturity Date"). Interest shall be paid semi-annually, beginning December 31,
2002, and thereafter on each June 30 and December 31 until the outstanding
Principal Amount of this Note has been paid in full to the Holder. All
principal, interest, fees and expenses not otherwise paid in accordance with the
terms of this Note shall become due and payable on the Maturity Date.
2. Security. The full payment by the Maker to the Holder of the full
outstanding Principal Amount hereof, together with all accrued but unpaid
interest thereon, shall be secured by certain assets of the Maker, in accordance
with the terms and conditions set forth in the Security Agreement.
3. Conversion.
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(a) General. This Note may be converted into shares of common
stock of Intercallnet, par value $0.0001 per share (the "Common Stock"), in
accordance with the terms of this Section 3. For purposes of this Note,
"Conversion Amount" shall mean the amount equal to all of (i) the Principal
Amount, plus (ii) all accrued but unpaid interest under this Note at the time of
the conversion. The initial Conversion Price for conversions of this Note into
shares of Common Stock shall be $1.20, subject to adjustment as set forth in
Section 3(f) below.
(b) Optional Conversion. The Holder shall have the right, at
any time and from time to time after the date of issuance, at such Holder's
option, to convert any portion of the Conversion Amount into that number of
shares of Common Stock obtained by dividing the Conversion Amount to be so
converted by the Conversion Price with respect to conversion into Common Stock;
provided, however, that the Holder acknowledges and agrees that the conversion
by the Holder of any portion of the Conversion Amount must be exercised in
increments of not less than $100,000.
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(c) Mechanics of Conversion. Before the Holder converts any of
the Principal Amount hereof or accrued interest hereon into shares of Common
Stock, such Holder shall surrender this Note, duly endorsed, at the principal
office of the Company and shall give written notice to the Company at such
office of its election to convert all or any portion of the Conversion Amount
into shares of Common Stock (the "Conversion Notice"). The Conversion Notice
shall state (i) the Conversion Amount, and (ii) the name of the Holder or the
name(s) of the nominee(s) of such Holder, and their respective addresses, in
which the certificate or certificates for shares of Common Stock issuable upon
such conversion shall be issued. The Note shall be accompanied by proper
cancellation and satisfaction of payment thereof to the Company. The date when
such written notice is received by the Company, together with the cancellation
and satisfaction of payment of the Note shall be the "Conversion Date." As
promptly as practicable after the Conversion Date, the Company shall issue and
shall deliver to the Holder, or on its written order, such certificate or
certificates for the number of whole shares of Common Stock issuable upon the
conversion of the Note in accordance with the provisions of this Section 3,
rounded down to the nearest whole share as provided in Section 3(d), in respect
of any fraction of a share of Common Stock issuable upon such conversion. Such
conversion shall be deemed to have been effected immediately prior to the close
of business on the Conversion Date, and at such time the rights of the Holder as
holder of the Note shall cease and the person(s) in whose name(s) any
certificate(s) for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares of
Common Stock represented thereby. Following any conversion as provided herein,
the Principal Amount of this Note shall be reduced in an amount equal to the
portion so converted. Appropriate adjustments shall be made on the records of
the Company.
(d) No Fractional Shares. No fractional shares shall be issued
upon conversion of this Note or any portion thereof. Instead of issuing any
fractional shares that would otherwise be issuable upon conversion of this Note,
the Company shall round down to the nearest whole number of shares and pay to
such Holder cash in an amount equal to the amount of such fractional interest,
multiplied by the Conversion Price.
(e) Adjustment of Conversion Price. Except as set forth in
Section 3(f), the Conversion Price shall be adjusted from time to time as
provided in this Section 3(e).
(i) (A) Effect on Conversion Price Upon Dilutive
Issuances of Common Stock or Convertible Securities. If the Company shall, while
any Principal Amount of this Note is outstanding, issue or sell shares of its
Common Stock (or Common Stock Equivalents, as defined below) without
consideration or at a price per share less than the Conversion Price in effect
immediately prior to such issuance or sale (except as to the issuance or sale of
shares of Common Stock pursuant to the exercise and/or conversion of any Common
Stock Equivalents issued prior to the date of this Note), then and in such
event, such Conversion Price, as in effect immediately prior to such issuance,
upon each such issuance or sale, except as hereinafter provided, shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying the Conversion Price in effect immediately prior
to such calculation by a fraction:
(1) the numerator of which shall be (a) the
number of shares of Common Stock outstanding immediately prior to the issuance
of such additional shares of Common Stock or Common Stock Equivalents
(calculated on a fully diluted basis assuming the exercise or conversion of all
then exercisable options, warrants, purchase rights or convertible securities),
plus (b) the number of shares of Common Stock which the aggregate consideration
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received by the Company for the total number of such additional shares of Common
Stock or Common Stock Equivalents so issued would purchase at the Conversion
Price in effect immediately prior to such issuance, and
(2) the denominator of which shall be (a)
the number of shares of Common Stock outstanding immediately prior to the
issuance of such additional shares of Common Stock or Common Stock Equivalents
(calculated on a fully diluted basis assuming the exercise or conversion of all
then exercisable options, warrants, purchase rights or convertible securities),
plus (b) the number of such additional shares of Common Stock or Common Stock
Equivalents so issued.
The provisions of this Section 3(e)(i)(A) may be waived in any instance
(without the necessity of convening any meeting of shareholders of the Company)
upon the written consent of the Holder.
(i) (B) Effect on Conversion Price Upon Other
Dilutive Issuance of Warrants, Options and Purchase Rights to Common Stock or
Convertible Securities.
(1) For the purposes of this Section
3(e)(i), the issuance at any time, following the date of this Note, of any
warrants, options, subscription or purchase rights with respect to shares of
Common Stock, of any securities convertible into or exchangeable for shares of
Common Stock, or the issuance of any warrants, options, subscription or purchase
rights with respect to such convertible or exchangeable securities
(collectively, "Common Stock Equivalents"), shall be deemed an issuance of
Common Stock if the Net Consideration Per Share (as hereinafter determined)
received by the Company for such Common Stock Equivalents shall be less than the
Conversion Price in effect at the time of such issuance. Any obligation,
agreement or undertaking to issue Common Stock Equivalents at any time in the
future shall be deemed to be an issuance at the time such obligation, agreement
or undertaking is made or arises. No further adjustment of the Conversion Price
shall be made under this Section 3(e)(i)(B) upon the actual issuance of any
shares of Common Stock pursuant to the exercise, conversion or exchange of any
Common Stock Equivalents if any adjustments shall previously have been made upon
the issuance of any such Common Stock Equivalents as above provided.
(2) Should the Net Consideration Per Share
of any such Common Stock Equivalents be decreased from time to time, upon the
effectiveness of each such change, the Conversion Price will be that which would
have been obtained (1) had the adjustments made upon the issuance of such Common
Stock Equivalents been made upon the basis of the actual Net Consideration Per
Share of such securities, and (2) had adjustments made to the Conversion Price
since the date of issuance of such Common Stock Equivalents been made to such
Conversion Price as adjusted pursuant to (1) above. Any adjustment of the
Conversion Price with respect to this paragraph which relates to Common Stock
Equivalents shall be disregarded if, as, and when all of such Common Stock
Equivalents expire or are canceled without being exercised, so that the
Conversion Price effective immediately upon such cancellation or expiration
shall be equal to the Conversion Price in effect at the time of the issuance of
the expired or canceled Common Stock Equivalents, with such additional
adjustments as would have been made to the Conversion Price had the expired or
canceled Common Stock Equivalents not been issued.
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(3) For purposes of this paragraph, the "Net
Consideration per Share" which may be received by the Company shall be
determined as follows:
(a) The "Net Consideration Per
Share" shall mean the amount equal to the total amount of consideration, if any,
received by the Company for the issuance of such Common Stock Equivalents, plus
the minimum amount of consideration, if any, payable to the Company upon
exercise, or conversion or exchange thereof, divided by the aggregate number of
shares of Common Stock that would be issued if all such Common Stock Equivalents
were exercised, exchanged or converted.
(b) The "Net Consideration Per
Share" which may be received by the Company shall be determined in each issuance
as of the date of issuance of Common Stock Equivalents without giving effect to
any possible future upward price adjustments or rate adjustments which may be
applicable with respect to such Common Stock Equivalents.
(i) (C) Consideration Other than Cash. For purposes
of this Section 3(e)(i), if a part or all of the consideration received by the
Company in connection with the issuances of shares of the Common Stock or the
issuance of any of the securities described in this Section 3(e)(i) consists of
property other than cash, such consideration shall be deemed to have a fair
market value as is reasonably determined in good faith by the Board of Directors
of the Company.
(i) (D) Exception to Anti-dilution. This Section
3(e)(i) shall not apply under any of the circumstances which would constitute an
Extraordinary Common Stock Event (as described below). Further, this Section
3(e)(i) shall not apply with respect to:
(1) the shares of Common Stock (or options
to purchase such shares of Common Stock) issued or issuable at not less than the
then fair market value to officers, employees or directors of, or consultants
to, the Company pursuant to any stock purchase or option plan or other employee
stock bonus arrangement approved by the Company's Board of Directors, the
aggregate number of which shall not exceed 1,500,000 shares of Common Stock
(subject to adjustments as provided for in the Company's 2001 Stock Option Plan
(the "Plan"), and inclusive of shares subject to currently outstanding employee
options issued under the Plan, but exclusive of stock options issued outside of
the Plan);
(2) securities issuable as a stock dividend
or upon any subdivision of shares of Common Stock, provided that the securities
issued pursuant to such stock dividend or subdivision are limited to additional
shares of Common Stock; and
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(3) the shares of Common Stock into which
the shares of Series A Convertible Preferred Stock of the Company are converted;
and
(4) the shares of Common Stock into which
this Note is converted.
(ii) Upon Extraordinary Common Stock Event. Upon the
happening of an Extraordinary Common Stock Event (as hereinafter defined), the
Conversion Price (and all other conversion values set forth in Section 3(e)(i)
above) shall, simultaneously with the happening of such Extraordinary Common
Stock Event, be adjusted by multiplying the Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such Extraordinary Common Stock Event and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such Extraordinary Common Stock Event, and the product so obtained shall
thereafter be the Conversion Price. The Conversion Price, as so adjusted, shall
be readjusted in the same manner upon the happening of any successive
Extraordinary Common Stock Event or Events.
An "Extraordinary Common Stock Event" shall
mean (i) the issue of additional shares of Common Stock as a dividend or other
distribution on outstanding shares of Common Stock, (ii) a subdivision of
outstanding shares of Common Stock into a greater number of shares of Common
Stock, or (iii) a redemption, repurchase, combination or reverse stock split of
outstanding shares of Common Stock into a smaller number of shares of Common
Stock.
(f) Trade Payables Issuance. Notwithstanding anything
contained in this Section 3 to the contrary, the issuance by the Company of up
to a maximum of 1,250,000 shares of Series B Preferred Stock, for the sole
purpose of satisfying up to a maximum of US$500,000 of the Company's Trade
Payables (as defined below), shall not trigger any adjustment to the Conversion
Price pursuant to Section 3(e). For purposes of this Section 3(f), the term
"Trade Payables" shall mean amounts owed by the Company as of the date hereof on
open account to, or pursuant to open account arrangements with, creditors for
goods and services furnished to the Company or its subsidiaries.
(g) Dividends. In the event the Company shall make or issue,
or shall fix a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution (other than a distribution
in liquidation or other distribution otherwise provided for herein) with respect
to the Common Stock payable in (i) securities of the Company other than shares
of Common Stock, or (ii) other assets (excluding cash dividends or
distributions), then and in each such event provision shall be made so that the
Holder shall receive upon conversion thereof in addition to the number of shares
of Common Stock receivable thereupon, the number of securities or such other
assets of the Company which they would have received had the Note been converted
into Common Stock on the date of such event and had such Holder thereafter,
during the period from the date of such event to and including the Conversion
Date (as that term is hereafter defined in Section 3(c)), retained such
securities or such other assets receivable by him during such period, giving
application to all other adjustments called for during such period under this
Section 3 with respect to the rights of Holder.
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(h) Capital Reorganization or Reclassification. If the Common
Stock issuable upon the conversion of the Note shall be changed into the same or
different number of shares of any class or classes of capital stock, whether by
capital reorganization, recapitalization, reclassification or otherwise (other
than a subdivision or combination of shares or stock dividend provided for
elsewhere in this Section 3, or a merger, consolidation or sale of all or
substantially all of the Company's capital stock or assets to any other person),
then and in each such event Holder shall have the right thereafter to convert
the Note into the kind and amount of shares of capital stock and other
securities and property receivable upon such reorganization, recapitalization,
reclassification or other change by the holders of the number of shares of
Common Stock into which the Note might have been converted immediately prior to
such reorganization, reclassification or change, all subject to further
adjustment as provided herein.
(i) Merger, Consolidation or Sale of Assets. If at any time or
from time to time there shall be a merger or consolidation of the Company with
or into another corporation (other than a merger or reorganization involving
only a change in the state of incorporation of the Company), or the sale of all
or substantially all of the Company's capital stock or assets to any other
person, then, as a part of such reorganization, merger or consolidation or sale,
provision shall be made so that Holder shall thereafter be entitled to receive
upon conversion of the Note the number of shares of stock or other securities or
property of the Company, or of the successor corporation resulting from such
merger or consolidation, to which Holder would have been entitled if Holder had
converted the Note immediately prior to such capital reorganization, merger,
consolidation or sale. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 3 to the end that the
provisions of this Section 3 (including adjustment of the Conversion Price then
in effect and the number of shares of Common Stock or other securities issuable
upon conversion of the Note) shall be applicable after that event in as nearly
equivalent a manner as may be practicable.
(j) Certificate as to Adjustments; Notice by the Company. In
each case of an adjustment or readjustment of the Conversion Price, the Company
at its expense will furnish Holder with a certificate prepared by the Treasurer
or Chief Financial Officer of the Company, showing such adjustment or
readjustment, and stating in detail the facts upon which such adjustment or
readjustment is based.
(k) Reservation. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, such
number of shares of Common Stock as shall from time to time be sufficient to
effect the conversion of this Note, and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect such
conversion, the Company will take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(l) Payment of Taxes. The Company will pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on conversion of this Note.
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4. Enforcement Event. In the event of an Enforcement Event (as defined
in the Loan Agreement), the Holder of the Note may, so long as such condition
exists, declare the entire outstanding principal balance and unpaid accrued
interest hereon immediately due and payable.
5. Legend. The stock certificates representing the shares of Common
Stock issuable upon conversion of this Note shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
THEY ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE LAW OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
6. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions herein will be made pursuant to
and in accordance with Section 12.4 of the Loan Agreement.
7. No Shareholder Rights. Nothing contained in this Note shall be
construed as conferring upon the Holder or any other person the right to vote or
to consent or to receive notice as a shareholder in respect of meetings of
shareholders or any other matters or any rights whatsoever as a shareholder of
the Company or Intercallnet Teleservices; and no dividends or interest shall be
payable or accrued in respect of this Note or the interest represented hereby or
the shares which may be received upon conversion hereunder until, and only to
the extent that, this Note shall have been converted as herein provided.
8. Registration Rights Agreement; Shareholders' Agreement. The shares
of Common Stock issuable and issued upon conversion of this Note shall be
entitled to certain registration rights, and other rights and obligations, in
accordance with the provisions of that certain Registration Rights Agreement and
that certain Shareholders' Agreement, each dated as of February 28, 2002,
between the Company and the Holder.
9. Prepayment. This Note may be prepaid by the Maker, in whole or in
part, without incurring any prepayment penalty. Payments shall be applied first
to accrued and unpaid interest with the balance to the Principal Amount.
10. No Transfer. This Note may not be offered, sold, transferred,
pledged or otherwise disposed of, in whole or in part, to any person or entity
other than to any Affiliate of the Holder.
11. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.
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12. Jurisdiction. Maker irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of any Florida court or
Federal court of the United States of America sitting in Miami-Dade County, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Note, or for recognition or enforcement of any judgment, and
Maker hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in any such Florida
State court or, to the fullest extent permitted by law, in such Federal court.
Maker hereto agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
Maker irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection that it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Note in any Florida State or Federal court sitting in
Miami-Dade County. Maker hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
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IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed
as of the date set forth below.
DATED: June 13, 2002
INTERCALLNET, INC.
By: /s/ Xxxxx Xxxxxxx
-----------------
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
INTER-CALL-NET TELESERVICES, INC.
By: /s/ Xxxxx Xxxxxxx
-----------------
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
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EXHIBIT A
DISBURSEMENT SCHEDULE
---------------------
------------------------------------------------------------ ---------------------------------------------------------
DATE OF DISBURSEMENT AMOUNT OF DISBURSEMENT
------------------------------------------------------------ ---------------------------------------------------------
June 17, 2002 US$350,000
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July 15, 2002 US$250,000
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August 15, 2002 US$150,000
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September 15, 2002 US$150,000
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