Exhibit 10.8
THESE SECURITIES ARE NOT REGISTERED
UNDER STATE OR FEDERAL SECURITIES LAWS, AND MAY NOT BE
OFFERED, OR SOLD, PLEDGED (EXCEPT A PLEDGE PURSUANT TO THE TERMS OF
WHICH ANY OFFER OR SALE UPON FORECLOSURE WOULD BE MADE IN A MANNER
THAT WOULD NOT VIOLATE THE REGISTRATION PROVISIONS OF FEDERAL OR
STATE SECURITIES LAWS) OR OTHERWISE DISTRIBUTED FOR VALUE, NOR
MAY THESE SECURITIES BE TRANSFERRED ON THE BOOKS OF THE
COMPANY, WITHOUT OPINION OF COUNSEL, CONCURRED IN BY COUNSEL FOR
THE COMPANY, THAT NO VIOLATION OF SAID REGISTRATION PROVISIONS
WOULD RESULT THEREFROM.
CONVERTIBLE PROMISSORY
NOTE
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$1,000,000.00
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August 7, 2009
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New York, New York
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For value received of One Million
Dollars ($1,000,000), XShares Group, Inc., a Delaware
corporation (the “ Company ”), promises to pay
to MGT Capital Investments, Inc. (the “ Holder
”), the principal sum of One Million Dollars ($1,000,000.00).
Interest shall accrue from the date of this Note on the unpaid
principal amount at a rate equal to ten percent (10%) per annum,
compounded annually. This Note is being made in
conjunction with the execution of that certain Securities Purchase
Agreement of even date herewith (the “ Purchase
Agreement ”) in order to provide the Company with access
to amounts funded hereunder prior to the second Closing (as
defined in the Purchase Agreement). This Note is subject to
the following terms and conditions.
1.
Maturity
.
(a)
Unless converted as provided in
Section 2, this Note will automatically mature and be due and
payable on December 31, 2009 (the “ Maturity Date
”). Subject to Sections 1(b) and 2 below, interest
shall accrue on this Note but shall not be due and payable until
the Maturity Date .
(b)
Notwithstanding the foregoing, the
entire unpaid principal sum of this Note, together with accrued and
unpaid interest thereon and interest at the rate of eighteen (18%)
percent per annum going forward, shall become immediately due and
payable upon the insolvency of the Company, the commission of any
act of bankruptcy by the Company, the execution by the Company of a
general assignment for the benefit of creditors, the filing by or
against the Company of a petition in bankruptcy or any petition for
relief under the federal bankruptcy act or the continuation of such
petition without dismissal for a period of ninety (90) days or
more, the appointment of a receiver or trustee to take possession
of the property or assets of the Company, the breach of any
representations, warranties or covenants under the Purchase
Agreement or this Note, or the failure to pay this Note on the
Maturity Date.
(c)
This Note may be prepaid in full at
any time prior to conversion pursuant to Section 2( below),
with or without notice, without penalty or premium.
2.
Conversion
.
(a)
Conversion into Series B
Preferred Stock . The entire principal amount of this Note
shall be converted into shares of the Company’s Series B
Preferred Stock at the second Closing. Accrued interest on
this Note shall be converted into Accruing Dividends (as defined in
the Company’s Second Amended and Restated Articles of
Incorporation attached to the Purchase Agreement (the “
Certificate ”)) from the date hereof.
(b)
Conversion prior to Second
Closing . If at any time prior to the second Closing,
there shall be (a) an acquisition of the Company by another
entity other than Holder or its affiliates by means of a merger,
consolidation, or other transaction or series of related
transactions resulting in the exchange of the outstanding shares of
the Company’s capital stock such that shareholders of the
Company prior to such transaction own, directly or indirectly, less
than 50% of the voting power of the surviving entity, or (b) a
sale or transfer of all or substantially all of the Company’s
assets to any other person other than Holder or its affiliates,
then, at the Holder’s option, the entire
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