Exhibit 10.2
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION
OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO VOIP INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
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Principal Amount $
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Issue Date: December 18, 2007
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Purchase Price $
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SECURED CONVERTIBLE NOTE
FOR
VALUE RECEIVED, VOIP INC., a Texas corporation (hereinafter
called “Borrower”), hereby promises to pay to
_________________________________________,
_________________________________________________________________
(the “Holder”) or order, without demand, the sum
of _________________________________________ Dollars
($__________), on June 18, 2008 (the “Maturity
Date”), if not retired sooner.
This
Note has been entered into pursuant to the terms of a
subscription agreement between the Borrower and the Holder,
dated of even date herewith (the “Subscription
Agreement”), and shall be governed by the terms of such
Subscription Agreement. Unless otherwise separately defined
herein, all capitalized terms used in this Note shall have the
same meaning as is set forth in the Subscription Agreement.
The following terms shall apply to this Note:
ARTICLE I
GENERAL PROVISIONS
1.1
Payment Grace Period .
The Borrower shall have a ten (10) day grace period to pay any
monetary amounts due under this Note, after which grace period and
during the pendency of any other Event of Default (as defined
below) a default interest rate of fifteen percent (15%) per annum
shall apply to the amounts owed hereunder.
1.2
Conversion Privileges .
The Conversion Privileges set forth in Article II shall remain in
full force and effect immediately from the date hereof and until
the Note is paid in full or otherwise satisfied regardless of the
occurrence of an Event of Default. The Note shall be payable in
full on the Maturity Date, unless previously converted into Common
Stock in accordance with Article II hereof; provided, that if an
Event of Default has occurred, the Holder may extend the Maturity
Date up to an amount of time equal to the pendency of the Event of
Default. Such extension must be on notice in writing.
1.3
Note Repayment .
The Borrower undertakes to pay all amounts due on this Note out of
the proceeds from and on the closing dates of sales by the Borrower
of any equity or debt instruments in amounts equal to fifteen
percent (15%) of net future financings until such time that all
amounts due under the Note have been repaid.
ARTICLE II
CONVERSION RIGHTS
The
Holder shall have the right to convert the principal and any
interest due under this Note into Shares of the Borrower's
Common Stock, $.001 par value per share (“Common
Stock”) as set forth below.
2.1.
Conversion into the Borrower's Common Stock .
(a)
The
Holder shall have the right from and after the date of the
issuance of this Note and then at any time until this Note is
fully paid, to convert any outstanding and unpaid principal
portion of this Note subject to the availability of adequate
shares of the Company’s common stock being available for
issue (“Adequate Authorized Shares”), at the
election of the Holder (the date of giving of such notice of
conversion being a "Conversion Date") into fully paid and
nonassessable shares of Common Stock as such stock exists on
the date of issuance of this Note, or any shares of capital
stock of Borrower into which such Common Stock shall hereafter
be changed or reclassified, at the conversion price as defined
in Section 2.1(b) hereof (the "Conversion Price"), determined
as provided herein. Upon delivery to the Borrower of a
completed Notice of Conversion, a form of which is annexed
hereto, Borrower shall issue and deliver to the Holder within
three (3) business days after the Conversion Date (such third
day being the “Delivery Date”) that number of
shares of Common Stock for the portion of the Note converted
in accordance with the foregoing. At the election of the
Holder, the Borrower will deliver accrued but unpaid interest
on the Note, if any, through the Conversion Date directly to
the Holder on or before the Delivery Date (as defined in the
Subscription Agreement). The number of shares of Common Stock
to be issued upon each conversion of this Note shall be
determined by dividing that portion of the principal of the
Note to be converted by the Conversion Price.
(b)
Subject to adjustment as provided in Section 2.1(c) hereof, the
Conversion Price per share shall be the lesser of (i) $0.072 or
(ii) seventy percent (70%) of the three (3) lowest closing bid
prices for the ten (10) days prior to the conversion, subject to
adjustment as described herein and in the Subscription
Agreement.
(c)
The
Conversion Price and number and kind of shares or other
securities to be issued upon conversion determined pursuant to
Section 2.1(a), shall be subject to adjustment from time to
time upon the happening of certain events while this
conversion right remains outstanding, as follows:
A.
Merger,
Sale of Assets, etc. If the Borrower at any time shall
consolidate with or merge into or sell or convey all or
substantially all its assets to any other corporation, this
Note, as to the unpaid principal portion thereof and accrued
interest thereon, shall thereafter be deemed to evidence the
right to purchase such number and kind of shares or other
securities and property as would have been issuable or
distributable on account of such consolidation, merger, sale
or conveyance, upon or with respect to the securities subject
to the conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance. The foregoing
provision shall similarly apply to successive transactions of
a similar nature by any such successor or purchaser. Without
limiting the generality of the foregoing, the anti-dilution
provisions of this Section shall apply to such securities of
such successor or purchaser after any such consolidation,
merger, sale or conveyance.
B.
Reclassification,
etc. If the Borrower at any time shall, by reclassification or
otherwise, change the Common Stock into the same or a
different number of securities of any class or classes that
may be issued or outstanding, this Note, as to the unpaid
principal portion thereof and accrued interest thereon, shall
thereafter be deemed to evidence the right to purchase an
adjusted number of such securities and kind of securities as
would have been issuable as the result of such change with
respect to the Common Stock immediately prior to such
reclassification or other change.
C.
Stock
Splits, Combinations and Dividends. If the shares of Common
Stock are subdivided or combined into a greater or smaller
number of shares of Common Stock, or if a dividend is paid on
the Common Stock in shares of Common Stock, the Conversion
Price shall be proportionately reduced in case of subdivision
of shares or stock dividend or proportionately increased in
the case of combination of shares, in each such case by the
ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total
number of shares of Common Stock outstanding immediately prior
to such event..
D.
Share
Issuance. So long as this Note is outstanding, if the Borrower
shall issue or agree to issue any shares of Common Stock
except for the Excepted Issuances (as defined in the
Subscription Agreement) for a consideration less than the
Conversion Price in effect at the time of such issue, then,
and thereafter successively upon each such issue, the
Conversion Price shall be reduced to such other lower issue
price. For purposes of this adjustment, the issuance of any
security carrying the right to convert such security into
shares of Common Stock or of any warrant, right or option to
purchase Common Stock shall result in an adjustment to the
Conversion Price upon the issuance of the above-described
security and again upon the issuance of shares of Common Stock
upon exercise of such conversion or purchase rights if such
issuance is at a price lower than the then applicable
Conversion Price. The reduction of the Conversion Price
described in this paragraph is in addition to other rights of
the Holder described in this Note and the Subscription
Agreement.
(d)
Whenever
the Conversion Price is adjusted pursuant to Section 2.1(c)
above, the Borrower shall promptly mail to the Holder a notice
setting forth the Conversion Price after such adjustment and
setting forth a statement of the facts requiring such
adjustment.
2.2.
Optional Redemption of Principal Amount .
Provided an Event of Default or an event which with the passage of
time or the giving of notice could become an Event of Default has
not occurred, whether or not such Event of Default has been cured,
the Borrower will have the option of prepaying the outstanding
Principal amount of this Note ("Optional Redemption"), in whole or
in part, by paying to the Holder a sum of money equal to the number
of Shares of Common Stock issuable upon an assumed conversion of
the outstanding principal and interest of this Note multiplied by
$1.50 (subject to adjustment for stock splits, stock dividends and
similar events), and any and all other sums due, accrued or payable
to the Holder arising under this Note or any Transaction Document
through and as of the Redemption Payment Date as defined below (the
"Redemption Amount"). Borrower’s election to exercise its
right to prepay must be by notice in writing (“Notice of
Redemption”). The Notice of Redemption shall specify the date
for such Optional Redemption (the "Redemption Payment Date"), which
date shall be thirty (30) business days after the date of the
Notice of Redemption (the "Redemption Period"). A Notice of
Redemption shall not be effective with respect to any portion of
the Principal Amount for which the Holder has a pending election to
convert, or for conversions initiated or made by the Holder during
the Redemption Period. On the Redemption Payment Date, the
Redemption Amount, less any portion of the Redemption Amount
against which the Holder has exercised its conversion rights, shall
be paid in good funds to the Holder. In the event the Borrower
fails to pay the Redemption Amount on the Redemption Payment Date
as set forth herein, then (i) such Notice of Redemption will be
null and void, (ii) Borrower will have no right to deliver another
Notice of Redemption, and (iii) Borrower’s failure may be
deemed by Holder to be a non-curable Event of Default. A Redemption
Notice may be given only at a time a registration statement
covering all of the shares issuable upon conversion of all amounts
convertible under this Note (“Registration Statement”)
is effective. A Notice of Redemption may not be given nor may the
Borrower effectuate a Redemption without the consent of the Holder,
if at any time during the Redemption Period an Event of Default or
an Event which with the passage of time or giving of notice could
become an Event of Defaul
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