ex_10-24.htm


Exhibit 10.24


 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.







SPARE BACKUP, INC., A DELAWARE CORPORATION


CONVERTIBLE REVOLVING CREDIT NOTE


                                                                                                              



 



	$1,500,000   	June 17, 2011





 




FOR VALUE RECEIVED, the undersigned, Spare Backup, Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order of BioFilm IP, LLC, a Nevada Limited Liability Company or their assigns (collectively, the “Noteholder”), in lawful money of the United States of America, and in immediately payable funds, the aggregate unpaid principal amount of the loan described in the Subscription Agreement referred to below.  The principal hereof outstanding and any unpaid accrued interest thereon shall be due and payable on the date which is three years from the date of this Note (the “Maturity Date”).  This Note shall bear interest on the unpaid principal balance from time to time outstanding, until paid, at the rate of ten percent (10%) per annum. Thereafter, interest will be payable monthly in arrears commencing August 1, 2011.  During the period that this Note shall be outstanding, and loan and related interest not heretofore paid shall be due and payable on demand commencing three years from the date hereof.  Payment of all amounts due hereunder shall be made at the address of the Noteholder provided for in the Subscription Agreement.







The Company hereby authorizes the Noteholder to endorse on the Schedule annexed to this Note the amount and type of all revolving credit loans made to the Company, all renewals and payments of principal amounts in respect of such revolving credit loans, and the outstanding principal amount of all revolving credit loans; provided, however, that the failure to make such notation with respect to any revolving credit loan or payment shall not limit or otherwise affect the obligation of the Company under the Subscription Agreement or this Note.







The Note has been issued pursuant to a Subscription Agreement of even date herewith between the Company and the Noteholder (the “Subscription Agreement”), which contains representations and warranties and additional covenants of the Company with respect to the Note.  Capitalized terms not otherwise defined herein shall have the meaning set forth in the Subscription Agreement.  THE PROVISIONS OF THE SUBSCRIPTION AGREEMENT ARE INCORPORATED HEREIN BY REFERENCE.









  





  











  




 




1.           PAYMENTS.  The Company hereby promises to pay to the Noteholder, in lawful money of the United States of America, and in immediately payable funds, the principal sum of the amount outstanding at the Maturity Date unless theretofore converted as hereinafter provided.  The principal amount hereof and any unpaid accrued interest thereon shall be due and payable on the Maturity Date (unless such payment date is accelerated as provided in Section 4 hereof).  Payment of all amounts due hereunder shall be made at the address of the Noteholder provided for in the Subscription Agreement.  The Company further promises to pay interest at the rate of 10% per annum on the outstanding principal as provided above.  The Company reserves the right to satisfy this obligation to pay interest hereby through issuance of its Common Stock (hereinafter defined), which number of shares of Common Stock shall be calculated based on the average closing prices of the Common Stock of the Company for the five trading days preceding the interest payment date as provided above.












2.           PREPAYMENT.  This Note may be prepaid, in whole or in part, without penalty with five days prior written notice to the Noteholder.







        3.           CONVERSION.  At any time prior to the Maturity Date, the outstanding principal amount of this Note (the “Outstanding Balance”) is convertible into Common Stock, $001 par value (the “Common Stock”), at the option of the Noteholder at a conversion price at the greater of $0.05 or a 25% below the 5 day moving average of the closing bid price of spare backup common stock immediately prior to Spare backup's receipt of the Noteholder's written notice of conversion







The Noteholder can draw down a maximum of $300,000 per month, in any given month for the term of the note at a maximum amount of $75,000 per week, up to the Maximum amount outstanding of $1,500,000.







In order to convert the Outstanding Balance, Noteholder shall deliver to the Company a written Election to Convert, a form of which is attached hereto as Exhibit A.  Immediately upon receipt of the written Election to Convert, the Company shall issue and cause to be delivered with all reasonable dispatch to or upon the written order of the Noteholder, and in such name or names as the Noteholder may designate, a certificate or certificates for the full number of shares of Common Stock so purchased upon conversion of the Note.  Such certificate or certificates shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a holder of record of such securities as of the date of delivery of the Election to Convert, notwithstanding that the certificate or certificates representing such securities shall not actually have been delivered or that the stock transfer books of the Company shall then be closed.







In the event that the outstanding Common Stock of the Company hereafter is restructured or revised by recapitalization, reclassification, combination of shares, stock split or split-up or stock dividend, the aggregate number and kind of Common Stock subject to conversion under this Note shall be adjusted appropriately, both as to the number of shares of Common Stock and the Conversion Price.  No fractional shares will be issued upon conversion, but any fractional share will be rounded up to the nearest whole share of Common Stock.









  





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In case of any sale exchange, tender offer, redemption or buyout of the Company’s Common Stock, or any consolidation of the Company with or merger of the Company into another corporation, or in case of any sale, transfer or lease to another corporation of all or substantially all other property of the Company, the Company or such successor or purchasing corporation, as the case may be, shall execute with the Noteholder an agreement that the Noteholder shall have the right thereafter, upon payment of the per share conversion price in effect immediately prior to such action, to convert, on the same basis which it would have or have been entitled to receive after the happening of such consolidation, merger, sale, transfer or lease had such conversion been accomplished immediately prior to such action.  Such agreement shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided herein.  These provisions shall similarly apply to successive consolidations, mergers, sales, transfers or leases.  This right shall terminate following notice by the Company and failure of Noteholder to exercise the option to convert as provided above.







4.           CONVERSION.


As used herein, “Trading Day” means a day on which the shares of Common Stock are traded on the national securities exchange on which the shares of Common Stock are then listed or quoted, or (b) if the shares of Common Stock are not listed on a national securities exchange, a day on which the shares of Common Stock are traded in the over-the-counter market; provided, however, that in the event that the shares of Common Stock are not listed or quoted as set forth in (a) and (b) hereof, then Trading Day shall mean any calendar day that is not a Saturday, Sunday or federal holiday.  5 day average will be calculated on the closing offer.







5.           DEFAULT.  The occurrence of any one of the following events shall constitute an Event of Default upon notice thereof as hereinafter provided:







(a)           The non-payment, when due, of any principal or interest pursuant to this Note;







(b)           The material breach of any representation or warranty in this Note or in the Subscription Agreement.  In the event the Noteholder becomes aware of a breach of this Section 7(b), the Noteholder shall notify the Company in writing of such breach and the Company shall have ten days’ notice to effect a cure of such breach;







(c)           The material breach of any covenant or undertaking in this Note or in the Subscription Agreement, not otherwise provided for in this Section 7.  In the event the Noteholder becomes aware of a breach of this Section 7(c), the Noteholder shall notify the Company in writing of such breach and the Company shall have ten days notice to effect a cure of such breach;







(d)           A default shall occur in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any indebtedness of the Company or an event of default or similar event shall occur with respect to such indebtedness, if the effect of such default or event (subject to any required notice and any applicable grace period) would be to accelerate the maturity of any such indebtedness or to permit the holder or holders of such indebtedness to cause such indebtedness to become due and payable prior to its express maturity;









  





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(e)           The commencement by the Company of any voluntary proceeding under any bankruptcy, reorganization, arrangement, insolvency, readjustment or debt, receivership, dissolution, or liquidation law or statute or any jurisdiction, whether now or hereafter in effect; or the adjudication of the Company as insolvent or bankrupt by a decree of a court of competent jurisdiction; or the petition or application by the Company for, acquiescence in, or consent by the Company to, the appointment of any receiver or trustee for the Company or for all or a substantial part of the property of the Company; or the assignment by the Company for the benefit of creditors; or the written admission of the Company of its inability to pay its debts as they mature; or







(f)           The commencement against the Company of any proceeding relating to the Company under any bankruptcy, reorganization, arrangement, insolvency, adjustment of debt, receivership, dissolution or liquidation law or statute or any jurisdiction, whether now or hereafter in effect, provided, however, that the commencement of such a proceeding shall not constitute an Event of Default unless the Company consents to the same or admits in writing the material allegations of same, or said proceeding shall remain undismissed for 30 days; or the issuance of any order, judgment or decree for the appointment of a receiver or trustee for the Company or for all or a substantial part of the property of the Company, which order, judgment or decree remains undismissed for 30 days; or a warrant of attachment, execution, or similar process shall be issued against any substantial part of the property of the Company.







Upon the occurrence of any Event of Default, the Noteholder may, by written notice to the Company, declare all or any portion of the unpaid principal amount due to Noteholder, together with all accrued interest thereon, immediately due and payable.







6.           NOTICES.  Any notice, request, instruction, or other document required by the terms of this Note, or deemed by any of the Parties hereto to be desirable, to be given to any other Party hereto shall be in writing and shall be given by personal delivery, overnight delivery, mailed by registered or certified mail, postage prepaid, with return receipt requested, or sent by facsimile transmission to the addresses of the Parties set forth below each Party’s signature on the Subscription Agreement.  The persons and addresses set forth below each Party’s signature on the Subscription Agreement may be changed from time to time by a notice sent as aforesaid.  If notice is given by personal delivery or overnight delivery in accordance with the provisions of this Section, such notice shall be conclusively deemed given at the time of such delivery provided a receipt is obtained from the recipient.  If notice is given by mail in accordance with the provisions of this Section, such notice shall be conclusively deemed given upon receipt and delivery or refusal.  If notice is given by facsimile transmission in accordance with the provisions of this Section, such notice shall be conclusively deemed given at the time of delivery if during business hours and if not during business hours, at the next business day after delivery, provided a confirmation is obtained by the sender.









  





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7.           EXCLUSIVE JURISDICTION AND VENUE.  The Parties agree that the courts of the County of Los Angeles, State of California shall have sole and exclusive jurisdiction and venue for the resolution of all disputes arising under the terms of this Agreement and the transactions contemplated herein.







8.           GOVERNING LAW.                                            This Note shall be governed by and construed and interpreted in accordance with the laws of the State of California applicable to contracts made and to be performed entirely therein, without giving effect to the rules and conflicts of law.







9.           ATTORNEYS FEES.  In the event the Holders or any assignee thereof shall refer this Note to an attorney for collection, the Company agrees to pay all the costs and expenses incurred in attempting or effecting collection hereunder, including reasonable attorney’s fees, whether or not suit is instituted.




 


10.          CONFORMITY WITH LAW.  It is the intention of the Company and of the Noteholder to conform strictly to applicable usury and similar laws.  Accordingly, notwithstanding anything to the contrary in this Note, it is agreed that the aggregate of all charges which constitute interest under applicable usury and similar laws that are contract for, chargeable or receivable under or in respect of this Note, shall under no circumstances exceed the maximum amount of interest permitted by such laws, and any excess, whether occasioned by acceleration or maturity of this Note or otherwise, shall be canceled automatically, and if theretofore paid, shall be either refunded to the Company or credited on the principal amount of this Note.







[SIGNATURE PAGE FOLLOWS]


 




  





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IN WITNESS WHEREOF, the Company has signed and sealed this Note and delivered it in the State of California as of __________________________, 2011.







COMPANY:







SPARE BACKUP, INC.


a Delaware corporation

















By:                                                                           


          Cery B. Perle, President and CEO












INVESTOR:







BIOFILM IP, LLC


a Nevada Limited Liability Company







By:

















____________________________________


 


Daniel X. Wray, Managing Member


 




  





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EXHIBIT A







FORM OF ELECTION TO CONVERT







The undersigned, the holder of the attached Note, hereby irrevocably elects to exercise their right to convert $_____________ of the Note into securities of Spare Backup, Inc., a Delaware corporation, as more fully described in the Note, and requests that the certificates for such securities be issued in the name of, and delivered to, ______________________________, whose address is ______________________________________________________________.

















Dated:__________________________                                                                SIGNATURE:







_________________________________________

(Signature must conform in all respects to name


of Noteholder as specified in the Note)


 


_________________________________________

(Insert Social Security or Federal Tax I.D.


Number of Noteholder)







IF NOTE IS HELD JOINTLY, BOTH PARTIES MUST SIGN:












_________________________________________


(Signature must conform in all respects to name


of Noteholder as specified in the Note)


 


_________________________________________


(Insert Social Security or Federal Tax I.D.


Number of Joint Noteholder)









  





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SCHEDULE TO REVOLVING CREDIT NOTE








SCHEDULE TO REVOLVING CREDIT NOTE













	
 


Date Made


 Renewed or


 Paid


 

	
 


 


Type of Loan


 

	
 


Amount of


 Principal Renewed


 or Paid

	
 


Unpaid Principal


 Balance of


 Revolving Credit


 Note


 

	
 


Name of Person


 Making Notation


	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  





 


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