--------------------------------------------------------------------------------

Exhibit 10.38
 

THIS SECURED CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, APPLICABLE STATE SECURITIES LAWS, OR APPLICABLE LAWS OF ANY FOREIGN
JURISDICTION.  THIS SECURED CONVERTIBLE PROMISSORY NOTE AND SUCH UNDERLYING
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION
OR RESALE, AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, RENOUNCED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS AND IN THE
ABSENCE OF COMPLIANCE WITH APPLICABLE LAWS OF ANY FOREIGN JURISDICTION, OR THE
AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS.

MASSIVE INTERACTIVE, INC.
SECURED CONVERTIBLE PROMISSORY NOTE

$[•]
 ________ __, 2015

1.           Principal.  Massive Interactive, Inc., a Nevada corporation (the
“Company”), for value received, hereby promises to pay to the order of [•]
(“Holder”) in lawful money of the United States of America at the address for
notices to Holder set forth below, the principal amount of $[•], together with
interest as set forth below.  This Note was issued by the Company in connection
with a private offering (the “Offering”) of substantially identical Secured
Convertible Promissory Notes (collectively, the “Notes”) pursuant to those
certain Note Subscription Agreements entered into by the Company with the
purchasers of Notes (each, a “Purchase Agreement”), and is subject to its
terms.  Capitalized terms not otherwise defined herein shall have the meaning
given in the Purchase Agreement.

2.           Interest and Maturity; Purchase Premium.  The Company promises to
pay interest on the unpaid principal amount of this Note from the date hereof
until such principal amount is paid in full at an annual rate of 12%, or such
lesser rate as shall be the maximum rate allowable under applicable
law.  Interest from the date hereof shall be computed on the basis of a 360-day
year of twelve 30-day months.  Unless prepaid or converted earlier as set forth
below, all unpaid principal and unpaid accrued interest on this Note shall be
due and payable upon the earlier of (the first to occur, the “Maturity Date”):
(i) a Deemed Liquidation Event (as defined below), (ii) the closing of a
Qualified Financing (defined below) or (iii) December 31, 2015.  A “Deemed
Liquidation Event” shall mean: (A) any sale of all or substantially all of the
assets of the Company; (B) any consolidation or merger of the Company with or
into any other corporation or other entity or person, or any other corporate
reorganization, other than any such consolidation, merger or reorganization in
which the holders of equity securities of the Company immediately prior to such
consolidation, merger or reorganization, continue to hold a majority of the
equity securities of the surviving entity in substantially the same proportions
(or, if the surviving entity is a wholly owned subsidiary, its parent)
immediately after such consolidation, merger or reorganization; or (C) any
transaction or series of related transactions to which the Company is a party in
which in excess of fifty percent (50%) of the Company’s equity securities are
transferred (other than a Qualified Financing or conversion of convertible
promissory notes outstanding on the date of the Purchase Agreement).  In the
event of a Deemed Liquidation Event, the Company will pay each holder of a Note
an additional purchase premium equal to one hundred percent (100%) of the
principal amount of the Note (the “Purchase Premium”). In the event this Note
remains outstanding and unpaid after the Maturity Date, the Company will make
cash payments of liquidated damages to the Holder equal to 1% of the original
principal amount of this Note for each month this Note remains outstanding and
unsatisfied, up to a cap of 12%.
 
 
 
1

--------------------------------------------------------------------------------

 
 
3.           Prepayment.  All outstanding principal and accrued and unpaid
interest of this Note may be prepaid without penalty, in whole or in part, with
the written consent of the holders of a majority in interest of the then
outstanding principal amounts on the Notes, voting together as a single group (a
“Requisite Majority”).  Any prepayment of this Note will be credited first
against accrued interest, then principal.  Upon payment in full of the amount of
all principal and interest payable hereunder, this Note shall be surrendered to
the Company for cancellation.

4.           Conversion.

4.1           Optional Conversion upon a Qualified Financing.  If not sooner
repaid or converted as set forth below, all outstanding principal and accrued
but unpaid interest on this Note, as of the close of business on the day
immediately preceding the date of the first closing of the next issuance and
sale of capital stock of the Company, in a single transaction or series of
related transactions, to investors resulting in gross proceeds to the Company of
at least $2,000,000.00 (excluding indebtedness converted in such financing) (a
“Qualified Financing”), may, at the option of the Holder, be converted upon the
first closing of such Qualified Financing into that number of shares of capital
stock of the Company as are issued in such Qualified Financing determined by
dividing (x) the outstanding principal and accrued but unpaid interest on this
Note by (y) the product of 0.8 multiplied by the Stock Price Per Share (as
defined below).  For purposes of this Note, “Stock Price Per Share” means the
lowest cash price per share paid by purchasers of shares in such Qualified
Financing.

4.2           Effect of Conversion.  The Company shall not issue fractional
shares of equity securities but shall pay the dollar equivalent of any
fractional shares otherwise issuable upon conversion of this Note.  Upon
conversion of this Note pursuant to this Section 4, the applicable amount of
outstanding principal and accrued and unpaid interest of the Note shall be
converted without any further action by the Holder; provided, however, that the
Company shall not be obligated to issue certificates evidencing the units of the
securities issuable upon such conversion unless such Note is either delivered to
the Company or its transfer agent, or the Holder notifies the Company or its
transfer agent that such Note has been lost, stolen or destroyed and executes an
agreement satisfactory to the Company to indemnify it from any loss incurred by
it in connection with such Note.  The Company shall, as soon as practicable
after such delivery, or such agreement and indemnification, issue and deliver at
such office to such Holder of such Note, a certificate or certificates for the
securities to which the Holder shall be entitled and a check payable to the
Holder in the amount of any cash amounts payable as the result of a conversion
into fractional shares of the securities, as determined by the officers of the
Company.  The person or persons entitled to receive securities issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such securities on such date.  Any conversion effected in accordance
with this Section 4 shall be binding upon the Holder hereof.
 
 
 
 
2

--------------------------------------------------------------------------------

 
 
5.           Attorney’s Fees.  If the indebtedness represented by this Note or
any part thereof is collected in bankruptcy, receivership or other judicial
proceedings or if this Note is placed in the hands of attorneys for collection
after default, the Company agrees to pay, in addition to the principal and
interest payable hereunder, reasonable attorneys’ fees and costs incurred by
Holder.

6.           Notices.  Any notice required or permitted under this Note shall be
given in writing and shall be deemed effectively given upon personal delivery or
three business days following deposit with the United States Post Office, by
registered or certified mail, postage prepaid, or sent by confirmed electronic
mail, addressed to the address of the receiving party set forth in the Purchase
Agreement or at such other address as the recipient shall have furnished in
writing in accordance with this Section.

7.           Defaults and Remedies.

7.1           Events of Default.  An “Event of Default” shall occur hereunder:
 
(i)   if the Company shall default in the payment of the principal of this Note,
when and as the same shall become due and payable and after written demand for
payment thereof has been made and such amount remains unpaid for 15 business
days after the date of such notice; or
 
(ii)   if the Company shall default in the payment of any interest on this Note,
when and as the same shall become due and payable and after written demand for
payment thereof has been made and such amount remains unpaid for 15 business
days after the date of such notice; or
 
(iii)   if the Company shall default in the due observance or performance of any
covenant, representation, warranty, condition or agreement on the part of the
Company to be observed or performed pursuant to the terms hereof or pursuant to
the terms of the Purchase Agreement, and such default is not remedied or waived
within the time periods permitted therein, or if no cure period is provided
therein, within 30 calendar days after the Company receives written notice of
such default; or
 
(iv)   if the Company shall commence any proceeding in bankruptcy or for
dissolution, liquidation, winding-up, composition or other relief under state or
federal bankruptcy laws;
 
(v)   if such proceedings are commenced against the Company, or a receiver or
trustee is appointed for the Company or a substantial part of its property, and
such proceeding or appointment is not dismissed or discharged within 120
calendar days after its commencement; or

 
3

--------------------------------------------------------------------------------

 

(vi)   if at any time Ron Downey ceases to be the sole director and chief
executive officer of the Company.

7.2           Acceleration.  If an Event of Default occurs under Section 7.1
(iv), (v) or (vi), then the outstanding principal of and accrued and unpaid
interest on this Note shall automatically become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which are
expressly waived.  If any other Event of Default occurs and is continuing, the
Holder, by written notice to the Company, may declare the outstanding principal
of and accrued and unpaid interest on this Note to be due and payable
immediately.  Upon any such declaration of acceleration, such principal and
interest shall become immediately due and payable and the Holder shall be
entitled to exercise all of its rights and remedies hereunder and under the
Purchase Agreement whether at law or in equity.  The failure of the Holder to
declare the Note due and payable shall not be a waiver of their right to do so,
and the Holder shall retain the right to declare this Note due and payable
unless the Holder shall execute a written waiver.

8.           No Dilution or Impairment.  The Company will not, by amendment of
its governing documents, or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Note, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder of this
Note against dilution or other impairment.

9.           Waiver of Notice of Presentment.  The Company hereby waives
presentment, demand for performance, notice of non-performance, protest, notice
of protest and notice of dishonor.  No delay on the part of Holder in exercising
any right hereunder shall operate as a waiver of such right or any other right.

10.           Non-Waiver.  The failure of the Holder to enforce or exercise any
right or remedy provided in this Note or at law or in equity upon any default or
breach shall not be construed as waiving the rights to enforce or exercise such
or any other right or remedy at any later date.  No exercise of the rights and
powers granted in or held pursuant to this Note by the Holder, and no delays or
omissions in the exercise of such rights and powers shall be held to exhaust the
same or be construed as a waiver thereof, and every such right and power may be
exercised at any time and from time to time.

11.           Governing Law.  This Note is being delivered in and shall be
construed in accordance with the laws of the State of New York, without regard
to its conflicts of laws or choice of law provisions.

12.           No Shareholder Rights.  Nothing contained in this Note shall be
construed as conferring upon the Holder or any other person the right to vote or
to consent or to receive notice as a shareholder of the Company.  As a condition
of conversion of this Note, the Holder agrees to join whatever voting
agreements, shareholder agreements, purchase agreements or other documents as
are signed by other participants in the Qualified Financing.

 
4

--------------------------------------------------------------------------------

 

13.           Amendment.  Any term of this Note may be amended, and any
provision hereof waived, with the written consent of the Company and a Requisite
Majority; provided, however, that no such amendment or waiver may (i) modify the
outstanding principal amount or interest rate of this Note, or (ii)
disproportionately and adversely affect the Holder relative to the holders of
all other Notes, in each case without the Holder’s consent. Any amendment
effected in accordance with this Section shall be binding upon all holders of
Notes, each future holder of the Notes, and the Company. By acceptance hereof,
the Holder acknowledges that in the event the required consent is obtained, any
term of this Note may be amended or waived with or without the consent of the
Holder.

14.           Benefit; Assignment.  This Note shall be binding upon and inure to
the benefit of and shall be enforceable by the Holder and the Company and their
proper successors and permitted assigns.  The Holder may not assign, transfer,
pledge or grant a security interest in its rights in whole or in part under this
Note to any person without the prior written consent of the Company, except for
transfers to affiliates of the Holder that do not violate any securities laws. 
Subject to the preceding sentence, this Note may be transferred only upon
surrender of the original Note for registration of transfer, duly endorsed, or
accompanied by a duly executed written instrument of transfer in form reasonably
satisfactory to the Company.  Thereupon, a new note for the same principal
amount and interest (and reflecting accrued interest) will be issued to, and
registered in the name of, the transferee.  Interest and principal are payable
only to the registered holder of this Note.

15.           Security Agreement.  This Note is secured by a Security Agreement
dated as of the First Closing and the Holder is hereby granted the benefits of
such Security Agreement.  By execution of this Note, the Holder hereby joins the
Security Agreement as a secured party.

[Signature page follows.]
 
 
 
 
 
 
 
 
 

 
5

--------------------------------------------------------------------------------

 

This Note is hereby issued by the Company as of the year and date first above
written.
 

  COMPANY:

MASSIVE INTERACTIVE, INC.
               
 
By:
      Name:       Title:            

                                                       

Acknowledged and agreed:

[____________]

             
By:
    Name:     Title:          

 

[Signature Page to Secured Convertible Promissory Note]

--------------------------------------------------------------------------------