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 ICOA, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
CONVERTIBLE NOTE
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FOR VALUE RECEIVED, ICOA, INC., a Delaware corporation (hereinafter called
the "BORROWER"), hereby promises to pay to GO ONLINE NETWORKS CORPORATION, 0000
Xxxxx Xxxxxxxxx, Xxxxx 000/000, Xxxxx Xxxx, Xxxxxxxxxx 00000, Fax: 000-000-0000
(the "HOLDER") on order, without demand, the sum of One Hundred Thousand Dollars
($100,000), with simple interest accruing at the annual rate of 8%, on or before
June 30, 2002 (the "Maturity Date").
The following terms shall apply to this Note:
ARTICLE I
DEFAULT RELATED PROVISIONS
1.1 Payment Grace Period. The Borrower shall have a thirty (30) day
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grace period to pay any monetary amounts due under this Note, after which grace
period a default interest rate of twelve percent (12%) per annum shall apply to
the amounts owed hereunder.
1.2 Conversion Privileges. The Conversion Privileges set forth in
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Article II shall remain in full force and effect immediately from the date
hereof and until the Note is paid in full.
1.3 Interest Rate. Subject to the Holder's right to convert, interest
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payable on this Note shall accrue at the annual rate of eight percent (8%) and
be payable on the Maturity Date, or sooner as described below.
ARTICLE II
CONVERSION RIGHTS
The Holder shall have the right to convert the principal amount and
interest due under this Note into Shares of the Borrower's Common Stock as set
forth below.
2.1. Conversion into the Borrower's Common Stock.
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(a) The Holder shall have the right from and after July 30, 2002, and
then at any time until this Note is fully paid, to convert any outstanding and
unpaid principal portion of this Note, and at the Holder's election, the
interest accrued on the Note, (the date of giving of such notice of conversion
being a "CONVERSION DATE") into fully paid and nonassessable shares of common
stock of the Borrower as such stock exists on the date of issuance of this Note,
or any shares of capital stock of the Borrower into which such stock shall
hereafter be changed or reclassified (the "COMMON STOCK") at a conversion price
per share equal to 75% of the average bid price for the stock for the 3 trading
days preceding the notice of conversion (the "CONVERSION PRICE"), subject to
adjustment as provided in Section 2.1(b) hereof. Upon delivery to the Borrower
of the Holder's written request for conversion (a "Notice of Conversion"), the
Borrower shall issue and deliver to the Holder within three business days from
the Conversion 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 through the
Conversion Date directly to the Holder within three (3) business days after
receipt by the Company of the Notice of Conversion. 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 and
interest, if any, by the Conversion Price.
(b) The Conversion Price described in Section 2.1(a) above 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:
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. Subject to the provisions of this Section, if the
Borrower at any time shall issue any shares of Common Stock prior to the
conversion of the entire principal amount of the Note (otherwise than as: (i)
provided in Sections 2.1(b)A, 2.1(b)B or 2.1(b)C or this subparagraph D; or (ii)
pursuant to options, warrants, or other obligations to issue shares, outstanding
on the date hereof; ((i) and (ii) above, are hereinafter referred to as the
"EXISTING OPTION OBLIGATIONS") for a consideration less than the Conversion
Price that would be in effect at the time of such issue, then, and thereafter
successively upon each such issue, the Conversion Price shall be reduced as
follows: (i) the number of shares of Common Stock outstanding immediately prior
to such issue shall be multiplied by the Conversion Price in effect at the time
of such issue and the product shall be added to the aggregate consideration, if
any, received by the Borrower upon such issue of additional shares of Common
Stock; and (ii) the sum so obtained shall be divided by the number of shares of
Common Stock outstanding immediately after such issue. The resulting quotient
shall be the adjusted conversion price. Except for the Existing Option
Obligations and options that may be issued under any employee incentive stock
option and/or any qualified stock option plan adopted by the Borrower, for
purposes of this adjustment, the issuance of any security of the Borrower
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 shares of Common Stock
upon exercise of such conversion or purchase rights.
(d) The Borrower acknowledges that it does not have a sufficient number
of authorized and unissued shares of Common Stock to issue and deliver to the
Holder in the event of the full conversion of this Note. The Borrower represents
and warrants that, it will, by June 30, 2002 take any and all action required
to provide for a sufficient number of shares of Common Stock upon the full
conversion of this Note. The Borrower 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.
2.2 Method of Conversion. This Note may be converted by the Holder in
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whole or in part as described in Section 2.1(a) hereof. Upon partial conversion
of this Note, a new Note containing the same date and provisions of this Note
shall, at the request of the Holder, be issued by the Borrower to the Holder for
the principal balance of this Note and interest which shall not have been
converted or paid.
ARTICLE III
EVENT 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, all without demand, presentment or
notice, or grace period, all of which hereby are expressly waived, except as set
forth below:
3.1 Failure to Pay Principal or Interest. The Borrower fails to pay the
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principal or interest hereon, when due and such failure continues for a period
of thirty (30)
days after the due date.
3.2 Breach of Covenant. The Borrower breaches any material covenant or
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other term or condition of this Note in any material respect and such breach, if
subject to cure, continues for a period of thirty (30) days after written notice
to the Borrower from the Holder.
3.3 Breach of Representations and Warranties. Any material
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representation or warranty of the Borrower made herein, or in any agreement,
statement or certificate given in writing pursuant hereto or in connection
herewith shall be false or misleading.
3.4 Receiver or Trustee. The Borrower shall make an assignment for the
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benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed.
3.5 Judgments. Any money judgment, writ or similar final process shall
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be entered or filed against the Borrower or any of its property or other assets
for more than $50,000, and shall remain unvacated, unbonded or unstayed for a
period of forty-five (45) days.
3.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
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proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower.
3.7 Delisting. Delisting of the Common Stock from the NASD OTC
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Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market System, American
Stock Exchange, or New York Stock Exchange (whichever of the foregoing is at the
time the principal trading exchange or market for the Common Stock, the
"Principal Market"); the Borrower's failure to comply with the conditions for
listing; or notification that the Borrower is not in compliance with the
conditions for such continued listing.
3.9 Stop Trade. An SEC stop trade order or Principal market trading
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suspension.
3.10 Failure to Deliver Common Stock or Replacement Note. The
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Borrower's failure to timely deliver Common Stock to the Holder pursuant to and
in the form required by this Note, or if required a replacement Note.
3.11 Authorized Capital. Borrower's failure to obtain shareholder
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approval to increase its authorized capital and/or effect a reverse split of its
Common Stock by June 30, 2002, so as to result in the Borrower having a
sufficient number of shares of Common Stock to issue and deliver to the Holder
in the event of conversion of the Note.
ARTICLE IV
MISCELLANEOUS
4.1 Failure or Indulgence Not Waiver. No failure or delay on the part
---------------------------------
of the 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.
4.2 Notices. Any notice herein required or permitted to be given shall
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be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Borrower at its principal offices located at 000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxx
Xxxxxx 00000, facsimile number (000) 000-0000, with a copy to Xxxx Xxxxx, Esq.,
Xxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP, 000 Xxxxx Xxx.- 00xx Xxxxx, Xxx Xxxx, XX
00000, and to the Holder at the address set forth on the first page of this
Note, with a copy to Xxxxxxx X. Xxxxxxxx, Esq., 000 Xxxx 00xx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, xxxxxxxxx number (000) 000-0000, or at such
other address as the Borrower or the Holder may designate by ten days advance
written notice to the other parties hereto.
4.3 Amendment Provision. The term "Note" and all reference thereto, as
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used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented.
4.4 Assignability. This Note shall be binding upon the Borrower and its
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successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder.
4.5 Cost of Collection. If default is made in the payment of this
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Note, the Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.
4.6 Governing Law. This Note shall be governed by and construed in
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accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. 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.
4.7 Maximum Payments. Nothing contained herein shall be deemed to
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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.
4.8 Prepayment. This Note may be paid (in whole or in part) prior to
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the Maturity Date without the consent of the Holder.
4.9 Construction. Each party acknowledges that its legal counsel
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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.
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its name
by its Chief Executive Officer on this ___ day of December, 2001.
ICOA, INC.
By: /S/
WITNESS:
/S/
NOTICE OF CONVERSION
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(To be executed by the Holder in order to convert the Note)
The undersigned hereby elects to convert $_________ of the principal and
$_________ of the interest due on the Note issued by ICOA, INC. on December __,
2001 into Shares of Common Stock of ICOA, INC. (the "Company") according to the
conditions set forth in such Note, as of the date written below. The shares of
common stock of ICOA, Inc., par value $.0001 per share ("Common Stock") issued
in connection witht eh conversion of the attached Note are (not) being issued in
connection with the sale of the Common Stock.
Date of Conversion:___________________________________________________________
Conversion Price:______________________________________________________________
Shares To Be Delivered:________________________________________________________
Signature:_____________________________________________________________________
Print Name:____________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________
