EXHIBIT 10.2
9.0%
CONVERTIBLE NOTE DUE 2011
For
value received, Fiesta Communications, Inc., a Texas
corporation (the “
Company ”),
with principal offices at 900 North Main, McAllen, Texas 78501,
hereby promises to pay to ATSI Communications, a Nevada corporation
with principal offices at 3201 Cherry Ridge, Suite C300, San
Antonio, Texas 78501, or registered assigns, the sum of Fifty-two
Thousand nine hundred eight-four .39/100 ($52,984.39). Prior to
maturity, this Note will bear interest at a rate equal to 9% per
annum, commencing on May 1, 2008. All past due payments shall bear
interest at the rate of 18% per annum from the date due until paid.
Principal of this Note shall be paid at the principal offices of
the Company in twelve (12) equal quarterly payments consisting
of $5,088.56
on August 1, 2008 (See Exhibit A) and continuing each quarterly
period thereafter. Interest on this Note shall be computed on the
amount of principal outstanding from time to time and paid annually
in arrears commencing on May 1, 2008 and on each quarterly period
thereafter until all accrued and unpaid interest has been
paid.
1.
DEFINITIONS.
. The following terms have the meanings
indicated:
“
Affiliate ”
of the Company means any person or entity, which, directly or
indirectly, is in control of, is controlled by, or is under common
control with, the Company. For purposes of this definition,
“control” of a person or entity means the power,
directly or indirectly, to direct or cause the direction of the
management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the
terms “controlling” and “controlled” have
meanings correlative of the foregoing.
“
Capitalized Lease Obligation ”
means the obligations of the Company under a lease that are
required to be classified and accounted for as capital lease
obligations under GAAP and, for purposes of this definition, the
amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance
with GAAP.
“
Common Stock ”
means any and all shares, interests, or other participations in,
and other equivalents (however designated and whether voting or
non-voting) of the Company’s common stock, par value
$0.001 per share, whether outstanding on the date hereof or issued
after the date hereof, and includes, without limitation, all series
and classes of such common stock.
“
Company ”
means Fiesta Communications, Inc., a Texas corporation, as defined
above, and includes any corporation, which shall succeed to or
assume the obligations of the Company under this Note.
“
Conversion Date ”
means the date on which any principal of, or interest on, this Note
is deemed to be converted to Common Stock pursuant to Section 2 or
Section 3 hereof.
“
Conversion Price ”
means $0.35 per share. The Conversion Price is subject to
adjustment as provided herein.
“
Conversion Stock ”
means the shares of the Company’s Common Stock, issuable upon
conversion of any principal of, or interest on, this Note. The
number and character of shares of Conversion Stock are subject to
adjustment as provided herein, and the term “Conversion
Stock” shall include stock and other securities and property
at any time receivable or issuable upon conversion of any principal
of, or interest on, this Note in accordance with its
terms.
“
Currency Agreement ”
means any foreign exchange contract, currency swap agreement or
other similar agreement or arrangement designed to protect the
Company against fluctuations in currency values.
“
Note ”
means this Convertible Note.
““
GAAP ”
means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of
the United States, as in effect from time to time.
“
Holder ”
means ATSI Communications, Inc., the registered holder of this
Note.
“
Indebtedness ”
means, without duplication, (i) all Obligations of the Company for
borrowed money, (ii) all Obligations of the Company evidenced by
bonds, notes, or other similar instruments, (iii) all Capitalized
Lease Obligations of the Company, (iv) all Obligations of the
Company issued or assumed as the deferred purchase price of
property (but excluding trade accounts payable and other accrued
liabilities arising in the ordinary course of business that are not
overdue by 180 days or more or are being contested in good faith by
appropriate proceedings), (v) all Obligations for the reimbursement
of any obligor on any letter of credit, banker’s acceptance
or similar credit transaction, (vi) guarantees and other contingent
Obligations in respect of indebtedness of other persons or entities
of the type referred to in clauses (i) through (v) above and clause
(viii) below, (vii) all Obligations of any other person or entity
of the type referred to in clauses (i) through (vi) which are
secured by any lien on any property or asset of the Company, the
amount of such Obligation being deemed to be the lesser of the fair
market value of such property or asset or the amount of the
Obligation so secured, and (viii) all Obligations under Currency
Agreements and Interest Swap Obligations of the
Company.
“
Interest Swap Obligations ”
means the Obligations of the Company pursuant to any arrangement
with any other person or entity, whereby, directly or indirectly,
the Company is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate
of interest on a stated notional amount in exchange for periodic
payments made by such other person or entity calculated by applying
a fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, interest rate swaps, caps,
floors, collars and similar agreements.
“
Maturity Date ”
means May 1, 2011.
“
Obligations ”
means all obligations for principal, premium, interest, penalties,
fees, commissions, indemnifications, reimbursements, damages and
other liabilities payable under the documentation governing any
Indebtedness.
2.
CONVERSION.
2.1
Conversion .
Upon mutual agreement between the Holder and the Company, the
principal amount of this Note, and all accrued and unpaid interest
thereon, may be converted at any time into shares of Conversion
Stock at the Conversion Price. The number of shares of Common Stock
issuable upon conversion of this Note shall equal the principal
amount hereof (and accrued interest thereon) divided by the
Conversion Price.
2.2
Exercise of Conversion Privilege .
In order to convert this Note, the Holder or the Company shall
present this Note to the other party accompanied by written notice
of election to convert this Note. As soon as practicable after the
receipt of such notice, the presentation of this Note, and mutual
agreement between the parties, the Company shall issue to the
Holder a certificate or certificates for the number of shares of
Conversion Stock issuable upon the conversion of the principal
amount of this Note and the accrued and unpaid interest thereon.
The effective date of such conversion shall be the close of
business on the date on which such notice shall have been received
and the mutual agreement is signed between the
parties.
3.
ISSUANCE
OF CONVERSION STOCK. As soon as practicable after conversion
of this Note, any installment of principal, or any interest
accrued hereon, the Company, at its expense, will cause to be
issued in the name of and delivered to the Holder, a
certificate or certificates for the number of shares of
Conversion Stock to which the Holder shall be entitled upon
such conversion (bearing such legends as may be required by
applicable state and federal securities laws in the opinion of
legal counsel of the Company), together with any other
securities and property to which the Holder is entitled upon
such conversion under the terms of this Note or such interest.
No fractional shares will be issued upon conversion of this
Note; any installment of principal, or any interest accrued
hereon. If upon any conversion of this Note, any installment
of principal, or any interest accrued hereon, a fraction of a
share would otherwise result, then in lieu of such fractional
share the Company will pay the cash value of that fractional
share, calculated on the basis of the applicable Conversion
Price.
4.
ADJUSTMENT
PROVISIONS. The number and character of shares of Conversion
Stock issuable upon conversion of this Note, any installment
of principal, or any interest accrued hereon (or any shares of
stock or other securities or property at the time receivable
or issuable upon conversion of this Note, any installment of
principal, or any interest accrued hereon), and the Conversion
Price therefore, are subject to adjustment upon occurrence of
the following events after the date this Note is
issued:
4.1
Stock Dividends, Splits, Combinations and
Reclassifications .
If the Company shall (i) declare a dividend or other distribution
payable in securities of the Company, (ii) split its outstanding
Common Stock into a larger number, (iii) combine its outstanding
Common Stock into a smaller number, or (iv) increase or decrease
the number of shares of its Common Stock in a reclassification of
the Common Stock (including any such reclassification in connection
with a merger, consolidation or other business combination in which
the Company is the continuing entity), then the Conversion Price in
effect immediately prior to such dividend or other distribution,
split, combination or reclassification, as the case may be, shall
forthwith be proportionally adjusted. Successive adjustments to the
Conversion Price shall be made upon each such dividend or other
distribution, split, combination or reclassification.
4.2
Adjustment for Other Dividends and Distributions
.
In case the Company shall make or issue, or shall fix a record date
for the determination of eligible holders entitled to receive, a
dividend or other distribution payable in respect to the Conversion
Stock that is payable in (a) securities of the Company (other than
issuances with respect to which adjustment is made under Section
5.1), or (b) assets (other than cash dividends paid or payable
solely out of retained earnings), then, and in each such case, the
Holder, upon conversion of this Note, any installment of principal,
or any interest accrued hereon, at any time after the consummation,
effective date or record date of such event, shall receive, in
addition to the shares of Conversion Stock issuable upon such
conversion, the securities or such other assets of the Company to
which the Holder would have been entitled upon such date if the
Holder had converted this Note, any installmen
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