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 GTC TELECOM CORP. THAT SUCH REGISTRATION IS NOT REQUIRED.
CONVERTIBLE NOTE
FOR VALUE RECEIVED, GTC TELECOM CORP., a Nevada corporation (hereinafter
called "Borrower"), hereby promises to pay to ________________________________,
(the "Holder") or its registered assigns or successors in interest or order,
without demand, the sum of ___________________________ ("Principal Amount"),
with simple and unpaid interest thereon, on November 23, 2006 (the "Maturity
Date"), if not sooner paid.
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
INTEREST; AMORTIZATION
1.1. Interest Rate. Subject to Section 5.7 hereof, interest payable
on this Note shall accrue at a rate per annum (the "Interest Rate") of twelve
percent (12%). Interest on the Principal Amount shall accrue from the date of
this Note and shall be payable, in arrears, together with Principal Amount
payments as described below and on the Maturity Date, whether by acceleration or
otherwise.
1.2. Minimum Monthly Principal Payments. Amortizing payments of the
outstanding Principal Xxxxxx and interest of this Note shall commence on the one
hundred and twentieth day after the date of this Note and on the same day of
each month thereafter (each a "Repayment Date") until the Principal Amount has
been repaid in full, whether by the payment of cash or by the conversion of such
principal into Common Stock pursuant to the terms hereof. Subject to Section 2.1
and Article 3 below, on the initial three Repayment Dates, the Borrower shall
make payments to the Holder in the amount of two and one-half percent (2-1/2%)
and thereafter for the following eleven payments in the amount of five percent
(5%) of the initial Principal Amount together with any other amounts which are
then owing under this Note that have not been paid (collectively, the "Monthly
Amount"). Amounts of conversions of Principal Amount made by the Holder or
Borrower pursuant to Section 2.1 or Article III, and amounts converted pursuant
to Section 2.3 of this Noteshall be applied first against outstanding fees and
damages, then accrued interest on the Principal Amount and then to Monthly
Amounts commencing with the Monthly Amount first payable and then Monthly
Amounts thereafter in chronological order. Any Principal Amount, interest and
any other sum arising under the Subscription Agreement that remains outstanding
on the Maturity Date shall be due and payable on the Maturity Date.
1.3. Default Interest Rate. Following the occurrence and during the
continuance of an Event of Default, which, if susceptible to cure is not cured
within twenty (20) days, otherwise then from the first date of such occurrence,
the annual interest rate on this Note shall (subject to Section 6.7)
automatically be increased to eighteen percent (18%), and all outstanding
obligations under this Note, including unpaid interest, shall continue to accrue
interest from the date of such Event of Default at such interest rate applicable
to such obligations until such Event of Default is cured or waived.
ARTICLE II
CONVERSION REPAYMENT
2.1. Payment of Monthly Amount in Cash or CommonStock. Subject to
Section 3.2 hereof, the Borrower, at the Borrower's election, shall pay the
Monthly Amount (i) in cash within three (3) business days after the applicable
Repayment Date, or (ii) in registered Common Stock at an applied conversion rate
equal to the lesser of (A) $0.13, or (B) eighty-five percent (85%) of the
average of the five (5) closing bid prices of the Common Stock as reported by
Bloomberg L.P. for the five (5) trading days preceding such Repayment Date.
Unless waived by the Holder, the Borrower may not elect to pay a Monthly Amount
due on a Repayment Date in Common Stock in an amount of shares of Common Stock
which would exceed in the aggregate for all Holders of Notes similar to this
Note, thirty-five percent (35%) of the aggregate daily trading volume for the
seven trading days preceding the Repayment Date as reported by Bloomberg L.P.
for the Principal Market. Such shares of Common Stock must be delivered to the
Holder not later than three (3) business days of the applicable Repayment Date.
Whichever of the NASD, OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ
National Market System, American Stock Exchange, or New York Stock Exchange or
such other principal market or exchange where the Common Stock is listed or
traded is the principal trading exchange or market for the Common Stock is the
Principal Market. The Borrower must send notice to the Holder by confirmed
telecopier not later than 3:00 PM, New York City time on the last Trading Day
preceding a Repayment Date notifying Holder of Borrower's election to pay the
Monthly Redemption Amount in cash or stock. The Notice must state the amount of
cash and or stock to be paid and include supporting calculations. Elections by
the Borrower must be made to all Holders of Notes similar to this Note in
proportion to the relative Note principal held by such Note Holders. If such
notice is not timely sent or if the Monthly Redemption Amount is not timely
delivered, then Holder shall have the right, instead of the Company, to elect
within five trading days after the later of the applicable Repayment Date or
required Delivery Date, as the case may be whether to be paid in cash or Common
Stock. Such Holder's election shall not be construed to be a waiver of any
default by Borrower relating to non-timely compliance by Borrower with any of
its obligations under this Note.
2.2. No Effective Registration. Notwithstanding anything to the
contrary herein, no amount payable hereunder may be paid in shares ofCommon
Stock by the Borrower without the Holder's consent unless (a) either (i) an
effective current Registration Statement covering the shares of Common Stock to
be issued in satisfaction of such obligations exists, or (ii) an exemption from
registration of the Common Stock is available pursuant to Rule 144(k) of the
Securities Act, and (b) no Event of Default hereunder, or an event which could
ripen into an Event of Default, exists and is continuing, unless such event or
Event of Default is cured within any applicable cure period or is otherwise
waived in writing by the Holder in whole or in part at the Holder's option.
2.3. Mandatory Conversion. Provided an Event of Default (or an event
that with the passage of time or the giving of notice could become an Event of
Default) is not continuing or was not extant during the prior twenty business
days, then commencing after the date the Registration Statement described in
Section 11.1(iv) of the Subscription Agreement has been declared effective
("Actual Effective Date"), the Borrower will have the option by written notice
to the Holder ("Notice of Mandatory Conversion") of compelling the Holder to
convert the outstanding and unpaid principal of this Note into Common Stock at
the Fixed Conversion Price then in affect ("Mandatory Conversion"). The Notice
of Mandatory Conversion must be given, if at all, on the first business day
following a consecutive ten (10) day trading period ("Lookback Period") during
which the closing bid price for the Borrower's Common Stock as reported by
Bloomberg, LP for the Principal Market is more than $0.35 each day during the
Lookback Period. The date the Notice of Mandatory Conversion is given is the
"Mandatory Conversion Date." The Notice of Mandatory Conversion shall specify
the aggregate principal amount of the Note which is subject to Mandatory
Conversion. Mandatory Conversion Notices must be given proportionately to all
Holders of Notes who received Notes similar in terms and tenure as this Note.
The maximum aggregate amount for all Notices of Mandatory Conversion that may be
given for each Mandatory Conversion Date may not exceed 35% of the daily trading
volume for the seven (7) trading days preceding the Mandatory Conversion Date
multiplied by the volume weighted average price of the Common Stock as reported
by Bloomberg L.P. for the Principal Market using the AQR function for such seven
day trading period. A Notice of Mandatory Conversion may not be given unless
the Registration Statement (as defined in the Subscription Agreement) has been
effective for the unrestricted public resale of the Registrable Securities (as
defined in the Subscription Agreement) each day during the Lookback Period. The
Borrower shall reduce the amount of Note principal subject to a Notice of
Mandatory Conversion by the amount of Note Principal for which the Holder had
delivered a Notice of Conversion to the Borrower during the twenty (20) trading
days preceding the Mandatory Conversion Date. The amount of Note principal
included in a Mandatory Redemption Notice shall be further reduced to an amount
that would not cause the Holder to exceed the limitation described in Section
3.2 of this Note. A further Mandatory Conversion Notice may not be given until
twenty (20) trading days have elapsed from the preceding Mandatory Conversion
Date. Each Mandatory Conversion Date shall be a deemed Conversion Date and the
Borrower will be required to deliver the Common Stock issuable pursuant to a
Mandatory Conversion Notice in the same manner and time period as described in
Section 2.1 above.
ARTICLE III
CONVERSION RIGHTS
3.1. Holder's Conversion Rights. Subject to Section 3.2 and the
mandatory conversion provisions therein, the Holder shall have the right, but
not the obligation, to convert all or any portion of the then aggregate
outstanding Principal Amount of this Note, together with interest and fees due
hereon, and any sum arising under the Subscription Agreement, and the
Transaction Documents, including but not limited to Liquidated Damages, into
shares of Common Stock, subject to the terms and conditions set forth in this
Article III at the rate of $0.13 per share of Common Stock ("Fixed Conversion
Price") as same may be adjusted pursuant to this Note and the Subscription
Agreement. The Holder may exercise such right by delivery to the Borrower of a
written Notice of Conversion pursuant to Section 3.3.
3.2. Conversion Limitation. Notwithstanding anything contained herein
to the contrary, the Holder shall not be entitled to convert pursuant to the
terms of this Note nor may this Note be converted in whole or in part into an
amount of Common Stock that would be convertible into that number of Common
Stock which would exceed the difference between the number of shares of Common
Stock beneficially owned by such Holder and 4.99% of the outstanding shares of
Common Stock. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and Regulation 13d-3 thereunder. The foregoing limitation shall be
calculated as of each Conversion Date. Aggregate conversions over time shall
not be limited to 4.99%. The Holder may waive the Conversion Share limitation
described in this Section 3.2, in whole or in part, upon 61 days prior notice to
the Borrower. The Holder may allocate which of the equity of the Borrower
deemed beneficially owned by the Holder shall be included in the 4.99% amount
described above and which shall be allocated to the excess above 4.99%.
3.3. Mechanics of Xxxxxx's Conversion.
(a) In the event that the Holder elects to convert any amounts
outstanding under this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion (a
"Notice of Conversion") to the Borrower, which Notice of Conversion shall
provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and amounts being converted. The original Note is not required to be
surrendered to the Borrower until all sums due under the Note have been paid.
On each Conversion Date (as hereinafter defined) and in accordance with its
Notice of Conversion, the Holder shall make the appropriate reduction to the
Principal Amount, accrued interest and fees as entered in its records. Each
date on which a Notice of Conversion is delivered or telecopied to the Borrower
in accordance with the provisions hereof shall be deemed a "Conversion Date." A
form of Notice of Conversion to be employed by the Holder is annexed hereto as
Exhibit A.
(b) Pursuant to the terms of a Notice of Conversion, the Borrower
will issue instructions to the transfer agent accompanied by an opinion of
counsel, if so required by the Borrower's transfer agent, within two (2)
business days after the date of the delivery to Borrower of the Notice of
Conversion and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within three (3)
business days after receipt by the Borrower of the Notice of Conversion (the
"Delivery Date"). In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Borrower of the Notice of Conversion. The
Holder shall be treated for all purposes as the record holder of such shares of
Common Stock, unless the Holder provides the Borrower written instructions to
the contrary.Notwithstanding the foregoing to the contrary, the Borrower or its
transfer agent shall only be obligated to issue and deliver the shares to the
DTC on the Holder's behalf via DWAC (or certificates free of restrictive
legends) if the registration statement providing for the resale of the shares of
Common Stock issuable upon the conversion of this Note is effective and the
Holder has complied with all applicable securities laws in connection with the
sale of the Common Stock, including, without limitation, the prospectus delivery
requirements. In the event that Conversion Shares cannot be delivered to the
Holder via DWAC, the Borrower shall deliver physical certificates representing
the Conversion Shares by the Delivery Date.
3.4. Conversion Mechanics.
(a) The number of shares of Common Stock to be issued upon each
conversion of this Note pursuant to this Article III shall be determined by
dividing that portion of the Principal Amount and interest and fees to be
converted, if any, by the then applicable Fixed Conversion Price.
(b) The Fixed Conversion Price and number and kind of shares or other
securities to be issued upon conversion shall be subject to adjustment from time
to time upon the happening of certain events while this conversion right remains
outstanding, as follows:
X. Xxxxxx, 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, 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 (as defined in
the Subscription Agreement), prior to the complete conversion or payment of this
Note, for a consideration less than the Fixed Conversion Price that would be in
effect at the time of such issue, then, and thereafter successively upon each
such issuance, the Fixed 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 Fixed 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 Fixed Conversion Price
described in this paragraph is in addition to the other rights of the Holder
described in the Subscription Agreement.
(c) Whenever the Conversion Price is adjusted pursuant to Section 3.4(b)
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.
3.5. Reservation. During the period the conversion right exists,
Borrower will reserve from its authorized and unissued Common Stock not less
than onehundred seventy-five percent (175%) of the number of shares to provide
for the issuance of Common Stock upon the full conversion of thisNote. Borrower
represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable. Xxxxxxxx agrees that its issuance of this Note
shall constitute full authority to its officers, agents, and transfer agents who
are charged with the duty of executing and issuing stock certificates to execute
and issue the necessary certificates for shares of Common Stock upon the
conversion of this Note.
3.6 Issuance of Replacement Note. Upon any partial conversion of this
Note, a replacement Note containing the same date and provisions of this Note
shall, at the written request of the Holder, be issued by the Borrower to the
Holder for the outstanding Principal Amount of this Note and accrued interest
which shall not have been converted or paid, provided Xxxxxx has surrendered an
original Note to the Company. In the event that the Holder elects not to
surrender a Note for reissuance upon partial payment or conversion, the Holder
hereby indemnifies the Borrower against any and all loss or damage attributable
to a third-party claim in an amount in excess of the actual amount then due
under the Note.
ARTICLE IV
SECURITY INTEREST
4. Security Interest/Waiver of Automatic Stay. This Note is secured
by a security interest granted to the Collateral Agent for the benefit of the
Holder pursuant to a Security Agreement, as delivered by Borrower to Holder.
The Borrower acknowledges and agrees that should a proceeding under any
bankruptcy or insolvency law be commenced by or against the Borrower, or if any
of the Collateral (as defined in the Security Agreement) should become the
subject of any bankruptcy or insolvency proceeding, then the Holder should be
entitled to, among other relief to which the Holder may be entitled under the
Transaction Documents and any other agreement to which the Borrower and Holder
are parties (collectively, "Loan Documents") and/or applicable law, an order
from the court granting immediate relief from the automatic stay pursuant to 11
U.S.C. Section 362 to permit the Holder to exercise all of its rights and
remedies pursuant to the Loan Documents and/or applicable law. THE BORROWER
EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION
362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER
11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER
STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL
STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE
HOLDER TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
APPLICABLE LAW. The Borrower hereby consents to any motion for relief from stay
that may be filed by the Holder in any bankruptcy or insolvency proceeding
initiated by or against the Borrower and, further, agrees not to file any
opposition to any motion for relief from stay filed by the Holder. The Borrower
represents, acknowledges and agrees that this provision is a specific and
material aspect of the Loan Documents, and that the Holder would not agree to
the terms of the Loan Documents if this waiver were not a part of this Note. The
Borrower further represents, acknowledges and agrees that this waiver is
knowingly, intelligently and voluntarily made, that neither the Holder nor any
person acting on behalf of the Holder has made any representations to induce
this waiver, that the Borrower has been represented (or has had the opportunity
to he represented) in the signing of this Note and the Loan Documents and in the
making of this waiver by independent legal counsel selected by the Borrower and
that the Borrower has discussed this waiver with counsel.
ARTICLE V
EVENTS OF DEFAULT
The occurrence of any of the following events of default ("Event of
Default") shall, at the option of the Holder hereof, make all sums of principal
and interest then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable, upon demand, without presentment, or
grace period, all of which hereby are expressly waived, except as set forth
below:
5.1 Failure to Pay Principal or Interest. The Borrower fails to pay
any installment of Principal Amount, interest or other sum due under this Note
or any Transaction Document when due and such failure continues for a period of
five (5) business days after the due date.
5.2 Breach of Covenant. The Borrower breaches any material covenant or
other term or condition of the Subscription Agreement, this Note or Transaction
Document in any material respect and such breach, if subject to cure, continues
for a period of ten (10) business days after written notice to the Borrower from
the Holder.
5.3 Breach of Representations and Warranties. Any material
representation or warranty of the Borrower made herein, in the Subscription
Agreement, Transaction Document or in any agreement, statement or certificate
given in writing pursuant hereto or in connection herewith or therewith shall be
false or misleading in any material respect as of the date made and a Closing
Date.
5.4 Receiver or Trustee. The Borrower or any Subsidiary of Borrower
shall make an assignment for the benefit of creditors, or apply for or consent
to the appointment of a receiver or trustee for them or for a substantial part
of their property or business; or such a receiver or trustee shall otherwise be
appointed.
5.5 Judgments. Any money judgment, writ or similar final process shall
be entered or filed against Borrower or any subsidiary of Borrower or any of
their property or other assets for more than $50,000, and shall remain
unvacated, unbonded or unstayed for a period of forty-five (45) days.
5.6 Non-Payment. The Borrower shall have received a notice of
default, which remains uncured for a period of more than twenty (20) days, on
the payment of any one or more debts or obligations aggregating in excess of One
Hundred Thousand Dollars (US $100,000.00) beyond any applicable grace period;
5.7 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law,
or the issuance of any notice in relation to such event, for the relief of
debtors shall be instituted by or against the Borrower or any Subsidiary of
Borrower and if instituted against them are not dismissed within forty-five (45)
days of initiation.
5.8 Delisting. Delisting of the Common Stock from the OTC Bulletin Board
("Bulletin Board") or other Principal Market; failure to comply with the
requirements for continued listing on the Bulletin Board for a period of seven
consecutive trading days; or notification from the Bulletin Board or any
Principal Market that the Borrower is not in compliance with the conditions for
such continued listing on the Bulletin Board or other Principal Market.
5.9 Stop Trade. An SEC or judicial stop trade order or Principal
Market trading suspension with respect to Xxxxxxxx's Common Stock that lasts for
five or more consecutive trading days.
5.10 Failure to Deliver Common Stock or Replacement Note. Xxxxxxxx's
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note or the Subscription Agreement, and, if requested by
Borrower, a replacement Note.
5.11 Non-Registration Event. The occurrence of a Non-Registration
Event as described in the Subscription Agreement.
5.12 Reverse Splits. The Borrower effectuates a reverse split of its
Common Stock without twenty days prior written notice to the Holder.
5.13 Cross Default. A default by the Borrower of a material term,
covenant, warranty or undertaking of any Transaction Document or other agreement
to which the Borrower and Holder are parties, or the occurrence of a material
event of default under any such other agreement which is not cured after any
required notice and/or cure period.
ARTICLE VI
MISCELLANEOUS
6.1 Failure or Indulgence Not Waiver. No failure or delay on the part
of Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
6.2 Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Borrower to: GTC Telecom Corp., 0000
Xxxxxx Xxxxxx, Xxxxx X-0, Xxxxx Xxxx, XX 00000, Attn: Vi Xxx, Esq., telecopier
number: (000) 000-0000, and (ii) if to the Holder, to the name, address and
telecopy number set forth on the front page of this Note, with a copy by
telecopier only to Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000, telecopier number: (000) 000-0000.
6.3 Amendment Provision. The term "Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented.
6.4 Assignability. This Note shall be binding upon the Borrower and
its successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns.
6.5 Cost of Collection. If default is made in the payment of this
Note, Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.
6.6 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles that would result in the application of the substantive laws
of another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the state of
New York. Both parties and the individual signing this Note on behalf of the
Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or unenforceability of any other provision of this
Note. Nothing contained herein shall be deemed or operate to preclude the Holder
from bringing suit or taking other legal action against the Borrower in any
other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court in favor of the Holder.
6.7 Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate
of interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.
6.8. Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.
6.9 Redemption. This Note may not be redeemed or called without the
consent of the Holder except as described in this Note.
6.10 Shareholder Status. The Holder shall not have rights as a
shareholder of the Borrower with respect to unconverted portions of this Note.
However, the Holder will have the rights of a shareholder of the Borrower with
respect to the Shares of Common Stock to be received after delivery by the
Holder of a Conversion Notice to the Borrower.
IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be signed in its name by an
authorized officer as of the ____ day of May, 2005.
GTC TELECOM CORP.
By:________________________________
Name: X. Xxxx Xxxxxx
Title: CEO
WITNESS:
______________________________________
