Exhibit
10.8


 


THESE
SECURITIES ARE NOT REGISTERED UNDER STATE OR FEDERAL SECURITIES LAWS, AND
MAY NOT BE OFFERED, OR SOLD, PLEDGED (EXCEPT A PLEDGE PURSUANT TO THE
TERMS OF WHICH ANY OFFER OR SALE UPON FORECLOSURE WOULD BE MADE IN A MANNER
THAT WOULD NOT VIOLATE THE REGISTRATION PROVISIONS OF FEDERAL OR STATE
SECURITIES LAWS) OR OTHERWISE DISTRIBUTED FOR VALUE, NOR MAY THESE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT OPINION OF
COUNSEL, CONCURRED IN BY COUNSEL FOR THE COMPANY, THAT NO VIOLATION OF SAID
REGISTRATION PROVISIONS WOULD RESULT THEREFROM.


 


CONVERTIBLE PROMISSORY NOTE


 


	
  $1,000,000.00

  	
   

  	
  August 7,
  2009

  
	
   

  	
   

  	
  New York, New
  York

  



 


For value received of One
Million Dollars ($1,000,000), XShares Group, Inc., a Delaware corporation
(the “Company”), promises to pay to MGT Capital Investments, Inc.
(the “Holder”), the principal sum of One Million Dollars ($1,000,000.00).
Interest shall accrue from the date of this Note on the unpaid principal amount
at a rate equal to ten percent (10%) per annum, compounded annually.  This
Note is being made in conjunction with the execution of that certain Securities
Purchase Agreement of even date herewith (the “Purchase Agreement”) in
order to provide the Company with access to amounts funded hereunder prior to
the second Closing (as defined in the Purchase Agreement).  This Note is subject to the following terms
and conditions.


 


1.                                       Maturity.


 


(a)                                  Unless converted as provided in Section 2,
this Note will automatically mature and be due and payable on December 31,
2009  (the “Maturity Date”).  Subject to Sections 1(b) and 2 below,
interest shall accrue on this Note  but
shall not be due and payable until the Maturity Date  .


 


(b)                                 Notwithstanding the foregoing, the entire
unpaid principal sum of this Note, together with accrued and unpaid interest
thereon and interest at the rate of eighteen (18%) percent per annum going
forward, shall become immediately due and payable upon the insolvency of the
Company, the commission of any act of bankruptcy by the Company, the execution
by the Company of a general assignment for the benefit of creditors, the filing
by or against the Company of a petition in bankruptcy or any petition for
relief under the federal bankruptcy act or the continuation of such petition
without dismissal for a period of ninety (90) days or more, the appointment of
a receiver or trustee to take possession of the property or assets of the
Company, the breach of any representations, warranties or covenants under the
Purchase Agreement or this Note, or the failure to pay this Note on the
Maturity Date.


 


(c)                                  This Note may be prepaid in full at any
time prior to conversion pursuant to Section 2( below), with or without
notice, without penalty or premium.


 


2.                                       Conversion.


 


(a)                                  Conversion into Series B
Preferred Stock.  The entire
principal amount of this Note shall be converted into shares of the Company’s Series B
Preferred Stock at the second Closing. 
Accrued interest on this Note shall be converted into Accruing Dividends
(as defined in the Company’s Second Amended and Restated Articles of
Incorporation attached to the Purchase Agreement (the “Certificate”))
from the date hereof.


 


(b)                                 Conversion prior to
Second Closing.  If at any time prior to the second Closing,
there shall be (a) an acquisition of the Company by another entity other
than Holder or its affiliates by means of a merger, consolidation, or other
transaction or series of related transactions resulting in the exchange of the
outstanding shares of the Company’s capital stock such that shareholders of the
Company prior to such transaction own, directly or indirectly, less than 50% of
the voting power of the surviving entity, or (b) a sale or transfer of all
or substantially all of the Company’s assets to any other person other than
Holder or its affiliates, then, at the Holder’s option, the entire 


 


1

















 


unpaid principal sum of
this Note, and interest thereon, shall be immediately paid to the Holder or
converted into shares of the Company’s Series B Preferred Stock at a price
of $0.0284 per share.


 


(c)                                  Mechanics and Effect of
Conversion.  No fractional shares of the Company’s capital
stock will be issued upon conversion of this Note.  In lieu of any fractional share to which the
Holder would otherwise be entitled, the Company will pay to the Holder in cash
the amount of the unconverted principal and interest balance of this Note that
would otherwise be converted into such fractional share.  Upon conversion of this Note pursuant to this
Section 2, the Holder shall surrender this Note, duly endorsed, at the
principal offices of the Company or any transfer agent of the Company.  At its expense, the Company will, as soon as
practicable thereafter, issue and deliver to such Holder, at such principal
office, a certificate or certificates for the number of shares to which such
Holder is entitled upon such conversion, together with any other securities and
property to which the Holder is entitled upon such conversion under the terms
of this Note, including a check payable to the Holder for any cash amounts
payable as described herein.  Upon
conversion of this Note, the Company will be forever released from all of its
obligations and liabilities under this Note with regard to that portion of the
principal amount and accrued interest being converted including without
limitation the obligation to pay such portion of the principal amount and
accrued interest.


 


3.                                       Payment. 
All payments shall be made in lawful money of the United States of
America at such place as the Holder hereof may from time to time designate in
writing to the Company.  Payment shall be
credited first to the accrued interest then due and payable and the remainder
applied to principal.


 


4.                                       Transfer; Successors and
Assigns.  The terms and conditions of this Note shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties.  Notwithstanding
the foregoing, the Holder may not assign, pledge, or otherwise transfer this
Note, except for transfers to affiliates. 
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 satisfactory to the Company. 
Thereupon, a new note for the same principal amount and 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.


 


5.                                       Governing Law. 
This Note and any controversy arising out of or relating to this Note
shall be governed by and construed in accordance with the General Corporation
Law of the State of Delaware as to matters within the scope thereof, and as to
all other matters shall be governed by and construed in accordance with the
internal laws of the State New York, without regard to conflict of law
principles that would result in the application of any law other than the law
of the State of New York.


 


6.                                       Notices. 
All notices and other communications given or made pursuant to this Note
shall be in writing and shall be deemed effectively given upon the earlier of
actual receipt or:  (a) personal
delivery to the party to be notified, (b) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid, or (c) one (1) business day after deposit with a nationally
recognized overnight courier, freight prepaid, specifying next business day
delivery, with written verification of receipt. 
All communications shall be sent to the respective parties at their
address as set forth on the signature page, or to such e-mail address,
facsimile number or address as subsequently modified by written notice given in
accordance with this Section 6.


 


7.                                       Amendments and Waivers.  Any term of this Note may be amended only with
the written consent of the Company and the Holder.  Any amendment or
waiver effected in accordance with this Section 7 shall be binding upon
the Company, the Holder and each transferee of the Note.


 


8.                                       Shareholders, Officers
and Directors Not Liable.  In no event
shall any shareholder, officer or director of the Company be liable for any
amounts due or payable pursuant to this Note.


 


9.                                       Failure or Indulgence
Not Waiver.  No failure or delay on the part of the Holder
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, 


 


2

















 


nor shall any waiver by
the Holder of any such right or rights on any one occasion be deemed a waiver
of the same right or rights on any future occasion.


 


10.                                 Action to Collect on
Note.  If action is instituted to collect on this
Note, the Company promises to pay all costs and expenses, including reasonable
attorney’s fees, incurred in connection with such action.


 


	
   

  	
  XSHARES GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey Feldman

  
	
   

  	
  Its:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  XShares Group, Inc.

  
	
   

  	
   

  	
  420 Lexington Avenue,
  Suite 2550

  
	
   

  	
   

  	
  New York, NY 10170

  
					



 


ACKNOWLEDGED AND ACCEPTED:


this 7th day of August 2009


By: MGT CAPITAL INVESTMENTS, INC.,


 


	
  By:

  	
  /s/ Tim Paterson Brown

  	
   

  
	
  Its:

  	
  Chief Executive Officer

  	
   

  



 


Address:                                               MGT Capital Investments, Inc.


Kensington Centre


66 Hammersmith Road


London W14 8UD


United Kingdom


 


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