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.
Principal
Amount:
$_________
Issue Date: June ___, 2009
Purchase
Price: $__________
SUBORDINATED SECURED
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Flint Telecom Group, Inc., a
Nevada corporation (hereinafter called “Borrower”),
hereby promises to pay to __________________,located at
___________________,
Fax: ( ) ___-____
(together with its successors, representatives, and permitted
assigns, the “Holder”) or order, without demand, the
sum of ____________________ ($ )
(“Principal Amount”) on December __, 2010
(the “Maturity Date”), if not sooner paid.
The Purchase Price of this Note represents
a 15.00% original issue discount to the Principal Amount (the
“OID”).
This Note has been entered into pursuant to the
terms of a subscription agreement between the Borrower and the
Holder dated at or about the date hereof (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
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Interest . The outstanding principal amount of
this Note shall bear simple interest at a rate
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of ten percent
(10%) per annum from the date of this Note above until the Maturity
Date. Such interest will be based on a 365-day year and
calculated for the actual number of days elapsed in which interest
is being calculated.
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Interest
Payments . The
Borrower shall pay the Holder all accrued but unpaid interest
on
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the first
business day of each calendar month commencing the month of August
2009. The Holder shall have no obligation to deliver to
the Borrower any invoice or other statement setting forth the
amount of principal, interest or any other amount due on any
payment date, and any absence by the Holder to provide any such
invoice or statement shall not reduce or otherwise impair the
Borrower’s obligation to pay any amounts payable
hereunder. The Borrower shall make all interest payments
under this Note to the Holder by 5:00 p.m. EST on the date when
due. The Borrower shall make all payments in United
States Dollars in immediately available funds transferred by wire
transfer to an account designated by the Holder.
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Default
Interest . Upon the occurrence of an Event of
Default (as defined in Article III
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hereof), then
to the extent permitted by law, the Borrower will pay interest in
cash to the Holder, payable on demand, on the outstanding principal
balance of this Note from the date of the Event of Default until
such Event of Default is cured at the rate of the lesser of
eighteen percent (18%) per annum and the maximum applicable legal
rate per annum.
1.4
Ranking . Except as set forth in the next
sentence, this Note shall be senior in priority to all obligations
of the Borrower. This note shall be subordinate in
payment to Thermo Credit LLC obligations for a line of credit not
to exceed $2,000,000 created on June 4, 2009 and as further
described in the Borrower’s SEC Form 8-K filed on June 9,
2009, and the $1,800,000 worth of Series C Preferred Stock rights
of China Voice Holding Corp. as further described in the
Borrower’s SEC Form 8-K filed on April 30, 2009.
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Security . Payment of the principal of, and
interest on, this Note and all other amounts due
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under the
Subscription Agreement, is secured by certain personal property as
provided in the Security Agreement.
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Payment . Payment of this Note and all
interest thereon shall be paid to the Holder by wire
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transfer to an
account designated by the Holder or at such address outside of the
United States and its possessions as the Holder may instruct the
Borrower in writing in U.S. Dollars.
1.7.
Amortization . The Borrower shall pay to the
Holder beginning on [April 1,2010 and on the first day of each
month thereafter, one eighteenth (1/18 th) of the face value of this Note with a final
payment on the unpaid or unconverted remaining Principal Amount on
the Maturity Date. If at any time the Principal Amount
of this Note shall be paid in full pursuant to the terms hereof,
then all accrued interest shall be payable at the time of such
principal payment.
1.8
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
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.
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, $0.01 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,
and accrued interest, 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,determined as
provided herein. Upon delivery to the Borrower of a
completed Notice of Conversion, a form of which is annexed hereto
as Exhibit A, Borrower shall issue and deliver to the Holder within
four (4) business days after the Conversion Date (such fourth 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. 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 outstanding principal
amount of the Note and accrued but unpaid interest, if any, 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 equal to $0.275 (“Conversion
Price”).
(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 (A) the Borrower
effects any merger or consolidation of the Borrower with
or into another entity, (B) the Borrower effects any sale of all or
substantially all of its assets in one or a series of related
transactions, (C) any tender offer or exchange offer
(whether by the Borrower or another entity) is completed pursuant
to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, (D)
the Borrower consummates a stock purchase agreement or other
business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more persons or entities whereby such
other persons or entities acquire more than the 50% of the
outstanding shares of Common Stock (not including any shares of
Common Stock held by such other persons or entities making or party
to, or associated or affiliated with the other persons or entities
making or party to, such stock purchase agreement or other business
combination), (E) any “person” or “group”
(as these terms are used for purposes of Sections 13(d) and 14(d)
of the 1934 Act) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of 50% of the aggregate Common Stock of the
Borrower, or (F) the Borrower effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a
“Fundamental Transaction”), this Note,
as to the unpaid principal portion thereof and accrued interest
thereon, shall thereafter be deemed to evidence the right to
convert into such number and kind of shares or other securities and
property as would have been issuable or distributable on account of
such Fundamental Transaction, upon or with respect to the
securities subject to the conversion right immediately prior to
such Fundamental Transaction. The foregoing provision
shall similarly apply to successive Fundamental 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
Fundamental Transaction.
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 any Common Stock except
for the Excepted Issuances, prior to the complete conversion or
payment of this Note, for a consideration per share that is less
than the Conversion Price that would be in effect at the time of
such issuance, then, and thereafter successively upon each such
issuance, the Conversion Price shall be reduced to such other lower
issue price. For purposes of this adjustment, the
issuance of any security or debt instrument of the Borrower
carrying the right to convert such security or debt instrument into
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, debt instrument,
warrant, right, or option 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 the other rights of
the Holder described in the Subscription
Agreement. Common Stock issued or issuable by the
Borrower for no consideration will be deemed issuable or to have
been issued for $0.01 per share of Common Stock.
(d) Whenever
the Co
