Contract
Exhibit
10.28
NEITHER
THIS SECURITY NOR THE SECURITIES ISSUABLE AS A CONSEQUENCE OF THIS SECURITY HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
$688,523.65
DECEMBER 23, 2008 SUPERSEDING NOTE
FOR VALUE
RECEIVED, ACCESSKEY, INC. (the “Company”), a Nevada corporation, having a place
of business at 0000 X0 Xxxxxxx Xxxx XX, Xxxxx 000, Xxxxxxxxxxx, Xxx Xxxxxx,
00000, hereby promises to pay to the order of Nutmeg/Patriot Fund, LLLP
(“Holder”), a Minnesota Limited Liability Company, having its principal address
at 000 Xxxxxx Xx., Xxxxx 00, Xxxxxxxxxx, XX 00000, the sum of $688,523.65. This
Superseding Note (this “Note”) is issued in conjunction with one or more loans
to the Company for the Company’s operations, and supersedes the previously
issued October 1, 2007 Convertible Note, May 1,
2008 Convertible Note, and the attempted issuance of an August 22, 2008
Superseding Note.
1. Maturity. The
amount outstanding under this Note will be due and payable at the address of
Holder or such other place as Holder may designate on September 30, 2010 (the
“Maturity Date”). The attempted August 22, 2008 Superseding Note
issuance is deemed null and void due to ambiguities.
2. Payments of Interest and
Principal. Interest on the borrowed outstanding principal balance
under this Note shall be payable quarterly, commencing on the first banking day
of each quarter, including credit for an October 1, 2008 payment, and a January
1, 2009 payment, and thereafter, until the Maturity Date (each, an “Interest
Date”); provided however, the first payments, otherwise due under the August 22,
2008 Superseding Note on October 1, 2008, and otherwise due on January 1, 2009,
will be added to principal and treated as paid but reborrowed under the terms
hereof.
3. Interest. Subject
to certain ceilings in the amounts (creating the Maximum Interest, as set forth
below), the amount of interest payable under the Note will approximate the
amount of profit that the Holder would have made with a stock investment of a
like amount, instead of the purchase of this Note. Specifically, the
parties have made the assumption that the Note Amount would have acquired a
specified number of shares the “Applicable Shares”, which term shall mean, at
any time, the principal balance of the Note, divided by $0.0075. In
other words, the Note Amount, divided by $0.0075 results in the beginning number
of Applicable Shares, upon which the calculation of theoretical profit is made.
The amount of interest payable to the Holder is a function of stock price
increases, if any, times this number of Applicable Shares, subject to the
Maximum Interest and the Minimum Interest, as set forth below. If the
share price doubles, then the Holder should double its money, earning, as
interest, an amount equal to the stock price increase on the Applicable Shares,
in addition to being repaid the amount of the Note. Significantly, as
the price goes up, the value of this Note increases accordingly. However, the
number of shares for the Company to repurchase the Note, remains constant, equal
to the Applicable Shares, which, if paid in stock, at the election of the
Company, would be at a 25% discount. See paragraphs 4 and 5
below. The following formula creates that result.
The
outstanding principal balance of this Note shall bear interest, payable
quarterly, in an amount equal to the product (X) of the following formula: X=
(Y-Y1)
x (Z). Y is the greater of (a) the closing bid price of the Company’s common
stock on the Interest Date or (b) the average closing bid price for Common Stock
on the five trading days immediately prior to the Interest Date; Y1 is the
pricing used for the preceding Interest Date or other applicable prior pricing
Interest Date and Z is the number of Applicable Shares. For purposes of the
first Interest Date computation, $0.0075 shall be used as the Y1. Until
there is any payment of Principal on the Note, Z, or the number of Applicable
Shares, shall be 91,803,154. Other
than for the first Interest Date computation, Y1 shall
never be less than the Y1 for any
preceding Interest Date computation (no double benefit for price increases,
followed by a price decrease followed by another price increase). For purposes
of this computation, pricing shall be as reported on xxxxxxxxxx.xxx on such
dates (or other analogous reporting source agreed upon by both parties if
xxxxxxxxxx.xxx is no longer reporting the Company’s common stock price).
Notwithstanding the preceding, the Interest for any quarter shall not be less
than 2½% (the “Minimum Interest”) of the Principal balance at the beginning of
the quarter. Notwithstanding the preceding, Y shall not be greater than 125% of
the Y1
(the “Maximum Interest”).
Additionally,
notwithstanding anything herein to the contrary, in the event of a dividend by
the Company, Holder shall be entitled to its share of the dividend, be it stock
dividend or cash dividend, or any similar transaction or distribution by the
Company (a “Dividend”), in Holder’s capacity as a noteholder, to the same extent
as though the Holder had shares of
stock issued to Holder as an In-Kind Payment, calculated on the day of such
Dividend, without regard to the last 3 paragraphs of Section 5.
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4. Alternate Methods of
Payment: Subject to the conditions set forth below and customary
equity conditions (including piggyback registration rights), the Company may, at
its sole option, elect to make such payments of principal and interest under
this Note, in freely tradable shares of the Company’s common stock (an “In-Kind
Payment”). In such event, each share of the Company’s Common stock
will be valued at the Fixed Price (as defined in Section 5 below), as determined
at the lesser of (1) on such Interest Date, or (2) on the day the Company
delivers the shares. The Company is required to notify Holder of its
election to make such payment in shares at least ten days prior to the payment
date. Pre-Payment Option: The Company may at any time, upon ten days
written notice, prepay any or all of the outstanding principal balance. Such a
prepayment does not eliminate interest accrued to such date. Instead, interest
accrued to such date shall be calculated as though the date of such prepayment
was the first banking day of a quarter and the date of such prepayment was thus
an Interest Date and shall be calculated without regard to the Maximum
Interest.
5. Optional/
In-Kind Payment. The number of shares of ACCESSKEY, INC. Common Stock that
Holder shall be entitled to receive in the event of an In-Kind Payment, shall be
equal to the greater number of shares, of (a) seventy-five percent (75%) of the
closing bid price for Common Stock on the trading day immediately prior to the
Holder’s receipt of shares pursuant to such payment, or Interest Date of such
payment or (b) seventy-five percent (75%) of the average closing bid price for
Common Stock on the five trading days immediately prior to the Holder’s receipt
of shares pursuant to such payment, or Interest Date of such payment (the “Fixed
Price”); each share of the Company’s Common stock will be valued at the Fixed
Price, as determined at the lesser of (1) the day the Company delivers the
shares or (2) the Interest Date.
Except
for pricing purposes, each In-Kind Payment shall be deemed to have been effected
on the date the shares are received by the Holder, and Holder shall be deemed to
have become on said date the holder of record of the shares of Common Stock
issuable upon such In-Kind Payment. No fractional shares of Common
Stock shall be issued upon an In-Kind Payment.
The
Holder shall not be entitled to shares, and the Company shall not issue shares
upon an In-Kind Payment, if, and to the extent that, such In-Kind Payment would
result in beneficial ownership by the Holder and its affiliates of more than
9.99% of the outstanding shares of common stock of the Company on such exercise
or Payment date, including the number of shares of common stock beneficially
owned by the Holder and its affiliates:
(i) the
number of shares of common stock beneficially owned by the Payee and its
affiliates.
(ii) the
number of shares of common stock issuable upon the exercise of the warrant
and/or options and/or In-Kind Payment and/or other share issuance.
For the purposes of this provision, as
set forth in the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13d-3 thereunder. Subject to the
foregoing, the Holder shall not be limited to aggregate warrant and/or option
exercises and/or other share issuances of only 9.99% and aggregate warrant
and/or option exercises and/or other share issuances to the Holder may exceed
9.99%. The Holder may void the exercise limitation described in this
Section upon 61 days prior written notice to the Company. The Holder
may allocate which of the equity of the Company deemed beneficially owned by the
Holder shall be included in the 9.99% amount described above and which shall be
allocated to the excess above 9.99%.
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In the
event that an In-Kind Payment Notice is sent by the Company, and the shares are
not issuable to the Holder because it would cause the Holder’s shareholdings
(plus the shareholdings of Holder’s affiliates) in the Company to exceed 9.99%,
the Company shall instead, at Holder’s option, either (1) issue an interest
bearing Fixed Price Convertible Note, bearing interest at 10% per annum,
amortized monthly, except that the conversion price shall be fixed, equal to the
conversion price relative to the In-Kind Payment Notice, any share issuance
being again subject to this paragraph in such Fixed Price Secured Convertible
Note, or (2) add the principal amount of such excess to this Note, as though
such excess amount, in US Dollars were then advanced to the
Company.
6. Short-Hold
Covenant. Holder covenants and agrees that, so long as any
indebtedness is outstanding hereunder and provided that this note is not in
default, Holder shall not at any time hold or maintain a short position with
respect to the securities of the Company.
7. Covenants. The
Company covenants and agrees that, so long as any indebtedness is outstanding
hereunder, it will comply with each of the following covenants (except in any
case where Xxxxxx has specifically consented otherwise in writing):
A. Notice of Event of
Default. The Company shall furnish to Holder notice of the occurrence
of any Event of Default (as defined herein) within five (5) days after it
becomes known to an executive officer of Company.
8. Event of
Default. For purposes of this Note, the Company shall be in default
hereunder (and an “Event of Default” shall have occurred hereunder)
if:
A. The Company shall fail to
pay when due any payment of principal, interest, fees, costs, expenses or any
other sum payable to Holder hereunder or otherwise;
B. The Company shall default
in the performance of any other agreement or covenant contained herein (other
than as provided in subparagraph A above), and such default shall continue
uncured for twenty (20) days after notice thereof to the Company given by
Xxxxxx, or if an Event of Default shall occur under any other Loan
Document;
C. The Company: becomes
insolvent, bankrupt or generally fails to pay its debts as such debts become
due; is adjudicated insolvent or bankrupt; admits in writing its inability to
pay its debts; or shall suffer a custodian, receiver or trustee for it or
substantially all of its property to be appointed and if appointed without its
consent, not be discharged within thirty (30) days; makes an assignment for the
benefit of creditors; or suffers proceedings under any law related to
bankruptcy, insolvency, liquidation or the reorganization, readjustment or the
release of debtors to be instituted against it and if contested by it not
dismissed or stayed within ten (10) days; if proceedings under any law related
to bankruptcy, insolvency, liquidation, or the reorganization, readjustment or
the release of debtors is instituted or commenced by the Company; if any order
for relief is entered relating to any of the foregoing proceedings; if the
Company shall call a meeting of its creditors with a view to arranging a
composition or adjustment of its debts; or if the Company shall by any act or
failure to act indicate its consent to, approval of or acquiescence in any of
the foregoing.
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9. Consequences of
Default. Upon the occurrence of an Event of Default and at any time
thereafter, the entire unpaid principal balance of this Note, together with
interest accrued thereon and with all other sums due or owed by the Company
hereunder, shall become immediately due and payable. In addition, at
the election of Xxxxxx, the principal balance and all past-due interest shall
thereafter bear interest at the rate of 18% per annum until paid.
10. Liquidated
Damages/Remedies not Exclusive.
A. The
remedies of Holder provided herein or otherwise available to Holder at law or in
equity shall be cumulative and concurrent, and may be pursued singly,
successively and together at the sole discretion of Holder, and may be exercised
as often as occasion therefore shall occur; and the failure to exercise any such
right or remedy shall in no event be construed as a waiver or release of the
same.
B. Liquidated
Damages In the event that the Company fails to deliver the shares when due,
whether by Section 4 or 5, or otherwise, the number of shares otherwise due
shall increase by 5% for each month or partial month, until the Company does
deliver such shares. The parties agree that this is a reasonable amount for
liquidated damages, given the difficulty to determine, in advance, what actual
damages may lie.
11. Notice. All
notices required to be given to any of the parties hereunder shall be in writing
and shall he deemed to have been sufficiently given for all purposes when
presented personally to such party or sent by certified or registered mail,
return receipt requested, to such party at its address first set forth
above. Such
notice shall be deemed to be given when received if delivered personally or five
(5) business days after the date mailed. Any notice mailed shall be
sent by certified or registered mail. Any notice of any change in
such address shall also be given in the manner set forth
above. Whenever the giving of notice is required, the giving of such
notice may be waived in writing by the party entitled to receive such
notice.
12. Severability. In the
event that any provision of this Note is held to be invalid, illegal or
unenforceable in any respect or to any extent, such provision shall nevertheless
remain valid, legal and enforceable in all such other respects and to such
extent as may be permissible. Any such invalidity, illegality or
unenforceability shall not affect any other provisions of this Note, but this
Note shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein.
13. Successors and Assigns.
This Note inures to the benefit of the Holder and binds the Company, and its
respective successors and assigns, and the words “Holder” and “Company” whenever
occurring herein shall be deemed and construed to include such respective
successors and assigns.
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14. Assignment.
The Company may assign or transfer its duties hereunder with the written consent
of the Holder.
15. Waiver
of Formalities. Except as provided in this Note, presentment, protest, notice,
notice of dishonor, demand for payment, notice of protest and notice of
non-payment are hereby waived.
16. Non-Waiver
By Holder. The failure or delay by the Holder of this Note in exercising any of
his rights hereunder in any instance shall not constitute a waiver thereof in
that or any other instance. The Holder of this Note may not waive any of its
rights, except in an instrument in writing signed by the Holder.
17. Entire
Agreement. This Note embodies the entire understanding and agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, whether express or implied,
oral and written.
18. Modification of
Agreement. This Note may not be modified, altered or amended, except
by an agreement in writing signed by both the Company and the
Holder.
19. Governing
Law. This instrument shall be construed according to and governed by
the laws of the State of Illinois.
20. Consent to Jurisdiction
and Service of Process. The Company irrevocably appoints each and
every officer of the Company as its attorney upon whom may be served any notice,
process or pleading in any action or proceeding against it arising out of or in
connection with this Note; and the Company hereby consents that any action or
proceeding against it be commenced and maintained in any court within the State
of Illinois by service of process on any such, officer; and the Company agrees
that the courts of the State of Illinois shall have jurisdiction with respect to
the subject matter hereof and the person of the Company. Notwithstanding the
foregoing, Holder, in its absolute discretion may also initiate proceedings in
the courts of any other jurisdiction in which the Company may be found or in
which any of its properties may be located.
IN WITNESS WHEREOF, the Company has
duly executed this Note, in favor of Nutmeg/Patriot
Fund, LLLP, as of the date first written above subject to the terms of the
attached addendum
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COMPANY
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ACCESSKEY,
INC.
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/s/
Xxxxx Xxxxxx
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Xxxxx
Xxxxxx, President
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