Document:

ex4_16.htm

EXHIBIT 4.16

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

FLINT TELECOM GROUP, INC.

PROMISSORY NOTE

$29,000                                                                                            September 9, 2010

WHEREAS, Flint Telecom Group, Inc. and Buzzbahn LLC desire to amend and restate an existing promissory note in the principal amount of $40,000 which has been assigned as of May 11, 2011 in the amount of $29,000.00 from Michael Kakares to Buzzbahn LLC to read as follows:

FOR VALUE RECEIVED, Flint Telecom Group, Inc., a Nevada corporation whose principal office is located at 7500 College Blvd., Suite 500, Overland Park, KS 66210 (the "Company"), promises to pay to the order of Buzzbahn LLC (the "Payee"), at the office of the Payee at 3 Harbor Road, Cold Spring Harbor, NY 11724, or at such other place as Payee may designate in writing, the principal sum of Twenty Nine Thousand Dollars ($29,000) (the "Principal Amount") on the terms set forth below. Interest shall accrue at a rate of ten percent (10%) per annum. All payments hereunder shall be made in U.S. currency and without setoff, deduction or counterclaim.

1. Definitions.

Capitalized terms not defined herein shall have the same meaning as set forth in the Investment Agreement.  The following terms shall have the meanings herein specified:

     "Event of Default" means an event specified in Section 3 hereof.

  

  

  

     "Holder" means the Payee, and each endorsee, pledgee, assignee, owner and holder of this Note, as such; and any consent, waiver or agreement in writing by the then Holder with respect to any matter or thing in connection with this Note, whether altering any provision hereof or otherwise, shall bind all subsequent Holders.  Notwithstanding the foregoing, the Company may treat the registered holder of this Note as the Holder for all purposes.

     "Principal Amount" shall have the meaning set forth in the initial paragraph.

     "Person" means an individual, trust, partnership, firm, association, corporation or other organization or a government or governmental authority.

          Words of one gender include the other gender; the singular includes the plural; and the plural includes the singular, unless the context otherwise requires.

2. Payment of this Note - Principal and Interest.

(a)           Payment after Milestone Deadline.  All principal and accrued interest shall be due and payable on September 9, 2011 and, at any time thereafter, the Holder may proceed to collect such principal and accrued interest.

(b)           Conversion Privilege. The Holder shall have the right immediately and until this Note is fully paid, to convert the entire outstanding and unpaid portion of this Note, at the election of the Holder (the date of giving of such notice of conversion being a "Conversion Date") into fully paid and non-assessable shares of Common Stock as such stock exists on the date of issuance of this Note (such shares, the “Conversion Shares”), or any shares of capital stock of Borrower into which such Common Stock shall hereafter be changed or reclassified, at the conversion price per share equal to equal to 50% of the lowest closing bid price of the Common Stock as reported on the exchange upon which the Common Stock is traded for any of the four trading days including the day upon which a Notice of Conversion is received by the Company, provided such Notice of Conversion is delivered by fax to the Company between the hours of 4 P.M. Eastern Standard or Daylight Savings Time and 8 P.M. Eastern Standard or Daylight Savings Time (the "Conversion Price"). Upon delivery to the Company of a completed Notice of Conversion, a form of which is attached hereto as Exhibit A, Borrower shall issue and deliver to the Holder that number of Conversion Shares for the portion of the Note converted in accordance with the foregoing.

(c)    Notwithstanding anything to the contrary contained herein, the number of Conversion Shares that may be acquired by the Holder upon conversion of this Note (or otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following such conversion (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the 1934 Act, does not exceed 4.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such conversion). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder.

(d)           Prepayment.   The Company may prepay this Note at any time without penalty.

  

  

  

3. Events of Default.

The existence of any of the following conditions shall constitute an Event of Default:

(a)           Nonpayment of the Note in accordance with Section 2.a above, if such breach remains unpaid and uncured for a period of ten (10) business days.

(b)           Commencement of proceedings under any bankruptcy or insolvency law or other law for the reorganization, arrangement, composition or similar relief or aid of debtors or creditors if such proceeding remains undismissed and unstayed for a period of 60 days following notice to the Company by the Holder.

(b)           If the Company shall dissolve, liquidate or wind up its affairs or sell substantially all of its assets, unless the provisions of Section 4 of this Note are met, in which case there is no Event of Default.

(c)           Attachment or similar process of execution is levied against a material portion of the Company's assets and such process is not terminated and any orders issued pursuant thereto canceled within 90 calendar days.

4. Reorganization, Reclassification, Consolidation, Merger or Sale.  If any reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected, appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof shall thereafter be applicable to the surviving corporation. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, the surviving corporation (if other than the Company) resulting from such consolidation or the corporation purchasing such assets shall assume by written instrument, executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder such assets as, in accordance with the foregoing provisions, such Holder may be entitled to receive.

5. Transfer.  Transfer of this Note shall be subject to prior delivery by the proposed transferee to the Company of an opinion of counsel that such transfer is in compliance with all federal and all other applicable laws. In order to transfer this Note, the Holder, or its duly authorized attorney, shall surrender this Note at the office of the Company pursuant to Section 10 herein, accompanied by an assignment duly executed by the Holder hereof.

6. Loss or Mutilation of Note.  Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, together with an indemnity reasonably satisfactory to the Company, in the case of loss, theft, or destruction, or the surrender and cancellation of this Note, in the case of mutilation, the Company shall execute and deliver to the Holder a new Note of like tenor and denomination as this Note.

  

  

  

7. Holder not Shareholder.  This Note does not confer upon the Holder any right to vote or to consent or to receive notice as a shareholder of the Company, as such, in respect of any matters whatsoever, or any other rights or liabilities as a shareholder, prior to the conversion hereof.

8. Waivers.  The failure of Holder to enforce at any time any of the provisions of this Note shall not, absent an express written waiver signed by Holder specifying the provision being waived, be construed to be a waiver of any such provision, nor in any way to affect the validity of this Note or any part hereof or the right of Holder thereafter to enforce each and every such provision. No waiver of any breach of this Note shall be held to be a waiver of any other or subsequent breach. The Company waives presentment, demand, notice of dishonor, protest and notice of nonpayment and protest.

9. Taxes.  The Company agrees that it will pay, when due and payable, any and all stamp, original issue or similar taxes which may be payable in respect of the issue of this Note.  The Company shall not be required to pay any stamp, original issue or similar tax which may be payable in respect of any transfer involved in the transfer and delivery of this Note to a person other than of the Payee.

10. Notices. All notices or other communications to a party required or permitted hereunder shall be in writing and shall be delivered personally or by facsimile (receipt confirmed electronically) to such party (or, in the case of an entity, to an executive officer of such party) or shall be sent by a reputable express delivery service or by certified mail, postage prepaid with return receipt requested, addressed as follows:

if to Payee to:

Buzzbahn LLC

3 Harbor Rd.

Cold Spring Harbor, NY 11724

Fax: __________________

Email: _________________

if to the Company to:

Vincent Browne

Flint Telecom Group, Inc.

7500 College Blvd., Suite 500

Overland Park, KS 66210

Fax: 913-273-0984

Email: vbrowne@flinttelecomgroup.com

     Any party may change the above specified recipient and/or mailing address by notice to all other parties given in the manner herein prescribed. All notices shall be deemed given on the day when actually delivered as provided above (if delivered personally or by facsimile, provided that any such facsimile is received during regular business hours at the recipient's location) or on the day shown on the return receipt (if delivered by mail or delivery service).

  

  

  

11. Headings. The titles and headings to the Sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Note. This Note shall be construed without regard to any presumption or other rule requiring construction hereof against the party causing this Note to be drafted.

12. Applicable Law and Jurisdiction. The legality, validity, enforceability and interpretation of this Note and the relationship of the parties hereunder shall be governed by the laws of the State of Nevada, without giving effect to the principles of conflict of laws, except with respect to matters of law concerning the internal corporate affairs of any corporate entity which is a party to or the subject of this Agreement, and as to those matters the law of the jurisdiction under which the respective entity derives its powers shall govern.  Any claim, cause of action, suit or demand allegedly arising out of or related to this Note, or the relationship of the parties, shall be brought exclusively in the state or federal courts located in Nevada, and the parties irrevocably consent to the exclusive jurisdiction and venue of such courts and waive any objections they may have at any time to such exclusive jurisdiction and venue.

13. Survival Of Representations And Warranties; Attorneys Fee. This Note shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto. If this Note is not paid when due or if the Company breaches any provisions of this Note,  in addition to all other amounts due herein, the Company promises to pay all costs of collection and all reasonable attorney fees and court costs incurred by Holder.

14.  Assignment.  This Note may not be assigned by either party hereto without the prior written consent of the other (except that the Company may without the prior written consent of the Holder assign this Note in the event of a merger, acquisition, reorganization or the sale of all or substantially all of its assets to another corporation to the surviving entity of such merger, acquisition, reorganization or sale).

IN WITNESS WHEREOF, Flint Telecom Group, Inc. has caused this Promissory Note to be signed in its name by the signature of its duly authorized representative.

Flint Telecom Group, Inc.

/s/ Vincent Browne

By: Vincent Browne

Its: Chief Executive Officerex4_17.htm

EXHIBIT 4.17

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)

 

 

 

 

         US $25,000.00

 

FLINT TELECOMM GROUP, INC

 

9.9% CONVERTIBLE REDEEMABLE NOTE

 

Due February 12, 2012

 

WHEREAS, Flint Telecom Group, Inc. and the Tangiers Investors, LP desire to amend and restate an existing promissory note in the principal amount of $35,000 which has been assigned in the amount of $25,000.00 from David Dunne to the Tangiers Investors, LP to read as follows:

 

 

CONVERTIBLE NOTE

 

	
$25,000.00

	
May 16, 2011

	  	
Overland Park, Kansas

 

FOR VALUE RECEIVED, Flint Telecom Group, Inc. a Nevada corporation with offices at 7500 College Blvd., Suite 500, Overland Park, KS, 66210 (hereinafter referred to as the “Payor” or the “Company”), agrees to pay to the order of Tangiers Investors, LP, a Delaware limited partnership with offices at 402 W Broadway Ste. 400 San Diego, California 92101 (hereinafter referred to as the “Payee” or “Tangiers”), on the Maturity Date set forth in Article “3” of this Convertible Note (the “Note”), unless earlier accelerated in accordance with the terms of this Note, the principal sum of twenty five thousand dollars ($25,000) with interest on the aforesaid amount as set forth in Article “2” of this Note.

 

1. Funding.

 

(A)           This Note was purchased for $25,000 in cash by Tangiers from the previous note holder, David Dunne, on May 16, 2011.

 

  

  

  

 

2. Interest.

 

(A) Interest on the unpaid principal balance of this Note shall be calculated commencing upon the Closing Date and shall be at the rate of nine and nine tenths percent (9.9%) per annum with accrued and unpaid interest being payable on the Maturity Date.

 

(B) If an Event of Default occurs pursuant to Article “9” of this Note, this Note shall be immediately due and payable and interest shall accrue at the rate of 20%. The Payor acknowledges that it would be extremely difficult or impracticable to determine the Payee’s actual damages and costs resulting from a default and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty.

 

(C) It is the intent of the Payee and the Payor in the execution of this Note that the loan evidenced hereby comply with the restrictions of applicable state usury laws.  If, for any reason, it should be determined that any usury law is applicable (which the parties do not believe to be the case), the Payor and the Payee stipulate and agree that (i) the interest (or any other consideration pursuant to this Note) pursuant to this Note or in any other instrument evidencing or securing the indebtedness evidenced herein shall be limited to the maximum permitted by such law, (ii) none of the terms and provisions contained herein shall ever be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by any state laws which are applicable, (iii) the obligation of the Payor shall be reduced to the maximum rate permitted to be charged by any state laws which are applicable, and (iv) the Payee shall not collect monies which would otherwise increase the effective interest rate on this Note to a rate in excess of the maximum rate permitted to be charged by any such applicable state law.  Any sums collected which are in excess of such maximum rate shall be credited to the payment of any other sums due hereunder.  If no sums are due hereunder, then such excess shall be returned to the Payor.

 

3. Maturity/Prepayment.

 

(A) Subject to payment pursuant to Article “2” of this Note, all unpaid principal and any accrued and unpaid interest shall be due and payable on February 12, 2012 (the “Maturity Date”).

 

(B) This Note may be prepaid only pursuant to the following schedule: within ninety (90) days after the Closing Date, this Note may be prepaid for 150% of the principal amount plus accrued interest. Between ninety one (91) and one hundred and eighty (180) days after the Closing Date, this Note may be prepaid for 175% of the principal amount plus accrued interest. After one hundred and eighty (180) days after the Closing Date until February 12, 2012, this Note may not be prepaid without the prior written consent of the Payee which consent shall be in the Payee’s sole and absolute discretion.

 

4. Conversion.

 

  

  

  

 

(A) The Payee may elect to convert all or part of the principal of this Convertible Note and any accrued and unpaid interest at any time or times before February 12, 2012. The conversion price shall be fifty (50%) percent of the lowest trading price during the seven (7) trading days prior to conversion, subject to adjustment pursuant to this Article “4” of this Note (the “Conversion Price”); provided, however, if an Event of Default pursuant to Article “9” of this Note occurs, this Note shall be subject to an interest rate of twenty (20%) percent and the Conversion Price formula shall be reduced to forty percent (40%) of the lowest trading price during the seven (7) trading days prior to conversion; provided, however, that in no event shall the Payee be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Payee and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Payor subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Payee and its affiliates of more than 4.99% of the outstanding shares of Common Stock.  For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso.

 

(i.) If the Payee does not provide written notice of its intention to convert some or the entire unpaid principal and any accrued and unpaid interest due, Payor shall pay the amount due on the Maturity Date.

 

(ii.) If all or part of this Note is converted pursuant to Paragraph “A” of this Article “4” of this Note, the shares shall be delivered to the Payee within three (3) business days after the date upon which the Payor receives a Conversion Notice (such third (3rd) business day the “Conversion Share Due Date”), in the form attached hereto as Exhibit “A”; provided, however,  that a Conversion Notice delivered after 4:00 o’clock P.M. EST on any business day shall be deemed to be delivered on the next following business day. Delivery shall be made electronically via the DWAC/FAST system. If the Company is not approved for DWAC/FAST on the Conversion Share Due Date, a physical certificate representing the shares may be delivered to the Payee in the form attached hereto as Exhibit “A” via overnight express mail.  If the Shares are not delivered to Tangiers or its broker within three (3) business days after the receipt of the Conversion Notice, the Company shall pay an additional amount of one thousand dollars ($1,000) per calendar day for each day that delivery of the unrestricted stock certificate is delayed; provided, however, that receipt of the restricted certificate after 1:00 p.m. local time shall be deemed to be receipt on the next following business day. The Company acknowledges that it would be extremely difficult or impracticable to determine Tangiers’ actual damages and costs resulting from the delay in making delivery of the Sharese and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty.

 

  

  

  

 

(iii.) If all or part of this Note is converted pursuant to Paragraph “A” of this Article “4” of this Note, all shares delivered to the Payee shall be free-trading if the shares are issued after six (6) months after the date of this Note.  If any shares delivered to the Payee are not free-trading, on November 12, 2012, at its own cost, the Company shall cause its counsel to issue an opinion letter to the Company’s transfer agent, or its successor (the “Transfer Agent”), that the said shares may be sold or transferred without restriction or limitation in reliance on Rule 144 promulgated under the Securities Act of 1933, as amended, and direct the Transfer Agent to replace such shares with a certificate that does not contain a restrictive legend. After the receipt by the Transfer Agent of the certificate representing such shares from Tangiers (or its broker) requesting the issuance of an unrestricted certificate, the Company shall cooperate fully with the Transfer Agent. If the newly issued unrestricted stock is not delivered to Tangiers or its broker within three (3) business days after the receipt of the restricted shares, the Company shall pay an additional amount of one thousand dollars ($1,000) per calendar day for each day that delivery of the unrestricted stock certificate is delayed; provided, however, that receipt of the restricted certificate after 1:00 p.m. local time shall be deemed to be receipt on the next following business day. The Company acknowledges that it would be extremely difficult or impracticable to determine Tangiers’ actual damages and costs resulting from the delay in making delivery of the unrestricted stock certificate and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty.

 

(B) The Payor shall pay any and all stock transfer fees and the cost of any legal opinions needed.  No fractions of shares or scrip representing fractions of shares will be issued upon conversion, but the number of shares issued shall be rounded to the nearest whole share, based upon the total number of shares of Common Stock to be issued to the Payee.  The date upon which a Conversion Notice is received by the Payor shall be deemed to be the date upon which the Payee has delivered the conversion notice duly executed, to the Payor; provided, however, that a Conversion Notice delivered after 1:00 o’clock P.M. on any business day shall be deemed to be delivered on the next following business day.  Upon receipt of the Shares for the full conversion and/or payment of this Note, the Payee shall deliver this Note to the Payor marked “cancelled.”

 

(C) If the Payor fails to deliver shares timely pursuant to this Article “4” of this Note, the Payor shall pay to the Payee an additional amount of shares equal in number to one (1%) percent of the number of shares of Common Stock required to be issued per calendar day for each calendar day that the shares are delayed after the Conversion Share Due Date.  The Payor acknowledges that it would be extremely difficult or impracticable to determine the Payee’s actual damages and costs resulting from the delay in delivering the Shares on or prior to the Conversion Share Due Date and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty.

 

  

  

  

 

(D) If, upon Tangiers’ request to convert all or part of this Note pursuant to this Article “4” of this Note, the shares are not available by reason of the Payor not having enough authorized and unissued shares to issue the shares to Tangiers, the Payor shall take all necessary action to increase the number of authorized shares of the Company’s Common Stock to satisfy Tangiers’ request to convert all or part of this Note.

 

(E) In order to preserve the conversion rights of the Payee, the conversion rate is subject to adjustment if certain events occur, including, but not limited to, any of the events that are set forth below:

 

(i.) The issuance of any previously authorized or newly authorized shares (common or any other securities convertible into common) of the Payor for less than the conversion price per share at the time of conversion pursuant to this Article “4” of this Note;

 

(ii.) A recapitalization of the outstanding shares of the Payor which has the effect of changing the percentage of shares which this Note may be converted into in relation to the total number of outstanding shares;

 

(iii.) The payment of any stock dividends;

 

(iv.) The distribution to any holders of shares of the Payor’s securities, evidences of indebtedness of the Payor or assets (excluding cash dividends paid from retained earnings);

 

(v.) The issuance after the date hereof of any stock options, warrants or other rights to acquire shares in the Payor at a price less than the current market value of such shares; and

 

(vi.) Any capital reorganization by the Payor, any reclassification or recapitalization of the Payor’s capital stock, or any transfer of all or substantially all the assets of the Payor to or consolidation or merger of the Payor with or into any other Person.

 

(F) Upon the occurrence of any of the above events (any of such events is hereinafter referred to as a “Dilution Event”), then, in such event, the Payor will immediately take whatever measures are necessary to insure that the percentage interest in the Payor which the Note may be converted into would not be increased or reduced.  Any adjustment which is required by this Paragraph “F” of this Article “4” of this Note shall be deemed effective retroactive to the date of the Dilution Event.  The provisions of this Paragraph “F” of this Article “4” of this Note shall be applicable to any Dilution Event which occurs at any time after the date of this Note.  If any of the Dilution Events occur, the Payor will mail or cause to be mailed a notice pursuant to Paragraph “C” of Article “19,” to the Payee of this Note specifying the Dilution Event(s) which has occurred.

 

(G) As long as this Note is outstanding and no Event of Default has occurred, neither Tangiers nor its affiliates shall at any time engage in any short sale of, or sell put options or similar instruments with respect to, the Company’s stock.

 

  

  

  

 

5. Opinions. 

 

(A) The Payor shall, at its cost, provide the appropriate opinion letters to be issued by the Payor’s counsel to Transfer Agent in compliance with the provisions of Rule 144 promulgated by the Securities and Exchange Commission pursuant to §4(1) of the Securities Act of 1933, as amended, with respect to the transfer or sale of the shares, if such transfer or sale is permissible under Rule 144 and so long as Payee fills out and executes a Shareholders’ Representation Letter with each Notice of Conversion request, the form of which is attached hereto as Exhibit 5(A). If the Payor fails to provide or approve legal opinions within five (5) business days after receipt of notice of said transfer or sale pursuant to this Article “5,” the Payor agrees to pay the Payee one thousand dollars ($1,000) per day for each day that said opinions or approvals are delayed.  The Payor acknowledges that it would be extremely difficult or impracticable to determine the Payee’s actual damages and costs resulting from the delay in providing opinions or approvals for said sale(s) of securities and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty.

 

(B) Upon execution of this Note, the Payor shall deliver to Payee the Irrevocable Transfer Agent Instructions, in the form attached hereto as Exhibit “B”.

 

6. Registration.

 

 (A)           If the Payor shall at any time when Payee has not received a stock certificate evidencing the shares without a restrictive legend, seek to register or qualify any of its capital stock or the securities holdings of any of its controlling shareholders, on each such occasion it shall include all of the Payee’s shares pursuant to Article “4” of this Note in such registration or qualification at the Payor’s expense.  The Payor shall keep the registration effective until such time as the Payee has sold its shares.

 

(B)           All expenses in connection with preparing and filing any registration statement under Paragraph “A” of this Article “6” of this Note (and any registration or qualification under the securities or “Blue Sky” laws of states in which the offering will be made under such registration statement) shall be borne in full by the Payor.

 

7. Affirmative Covenants of the Payor.

 

Unless and until this Note has been fully satisfied by payment or conversion, the Payor shall:

 

(A) Increase the number of shares of the Company if the shares are not available by reason of the Payor not having enough authorized and unissued shares to issue the shares to Tangiers upon Payee’s request to convert all or part of this Note pursuant to Article “4” of this Note.

 

(B) Use the loan proceeds for working capital of the Company, provided, however that the Payor shall not use any portion of the loan proceeds to pay any debts or compensation to the management of the Company.

 

.

 

  

  

  

 

(C) Promptly pay and discharge all lawful taxes, assessments and governmental charges or levies imposed upon the Payor or upon its business income and profits; or upon any of its property, before the same shall become in default, as well as all lawful claims for labor, materials and supplies which, if unpaid, might become a lien or charge upon such properties or any part thereof; provided however, that the Payor shall not be required to pay and discharge any such tax, assessment, charge, levy or claim as long as the validity thereof shall be contested in good faith by the Payor, or where the failure to so pay would not have a material adverse effect on the Payor;

 

(D) Promptly notify the Payee of the commencement of all proceedings and investigations by or before and/or the receipt of any notices from, any governmental or non-governmental body including, but not limited to, any court or arbitrator, against or in any way materially affecting any of the Payor’s properties, assets or business;

 

(E) Promptly notify the Payee of any material change in the Payor’s business, assets, liabilities, condition (financial or otherwise), results of operations or business prospects;

 

(F) Promptly notify the Payor of any default or any event which, with the passage of time or giving of notice or both, would constitute a default under any agreement to which the Payor is a party or by which the Payor or any of the Payor’s properties may be bound;

 

(G) At all times reasonably maintain, preserve, protect and keep its property used in the conduct of its business in good repair, working order and condition, normal wear and tear excepted, except where the failure to comply would not have a material adverse effect on the Payor;

 

(H) To the extent necessary for the operation of its business, keep adequately insured by reputable insurers, all property of a character usually insured by similar corporations and carry such other insurance as is usually carried by similar corporations, except where the failure to obtain insurance would not have a material adverse effect on the Payor;

 

(I) Promptly notify the Payee of any delay in the Payor’s performance of any of its obligations to any secured lender and of any assertion of any claims by any secured lender of the Payor;

 

(J) Promptly notify the Payee of the occurrence of any Event of Default (as defined in Article “9” of this Note);

 

(K) Remain current in its filings pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”); (i) continuously remain a reporting company under the Exchange Act; and (ii) file with the SEC in a timely manner all reports, statements and other materials required to be filed by it to remain a reporting company under the Exchange Act;

 

(L) The Common Stock of the Payor shall continuously be listed on the Over the Counter Bulletin Board (the “OTCBB”) or  a stock exchange;

 

(M) Continue to be a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction and qualified to do business in any jurisdiction where such qualification is required; and

 

  

  

  

 

(N) At all times keep true and correct books, records and accounts. The Payee expressly agrees to maintain any and all material, non-public information provided by the Payor pursuant to this Article 7 of this Note, in confidence within the meaning of Regulation FD promulgated by the U.S. Securities and Exchange Commission and shall not purchase or sell the Payor’s common stock on the basis of such information until such information has been publicly disclosed.

 

8. Negative Covenants of the Payor.

 

Unless and until this Note has been paid in full, the Payor shall not:

 

(A)           Conduct its business in any manner other than in the ordinary course;

 

(B)           Make any change in its Certificate of Incorporation or Bylaws which will adversely affect the Payor’s ability to perform its obligations hereunder;

 

(C)           Declare or pay any dividend or make any other payment or distribution to its stockholders, or purchase or redeem any of its securities;

 

(D)           Sell, liquidate, or otherwise dispose of any of its assets, other than in the ordinary course of business;

 

(E)           Enter into any agreement or merger, reorganization or consolidation of the Payor with or into another entity or entities, regardless of whether the Payor is the surviving entity;

 

(F)           Increase the compensation payable or to become payable by the Payor to any officer and/or director or any of the immediate family of any officer and/or director including, but not limited to, the following: any spouse, parent, spouse of a parent, mother-in-law, father-in-law, child, spouse of a child, sibling, spouse of a sibling, grandparent, spouse of a grandparent or any issue of the foregoing; and

 

(G)           Pay back loans (not including reimbursement of expenses incurred in discharge of employment duties) to officers, directors and affiliates of the Payor (not including obligations originating in acquisitions) and their related parties until all principal and accrued interest has been paid in full satisfaction of this Note.

 

9. Events of Default.

 

The term “Event of Default” as used herein shall mean the occurrence of any one or more of these following events:

 

(A) The failure of the Payor to make payment of Principal and/or interest on the Maturity Date;

 

(B) The breach by the Payor of any other provisions of this Note other than failure to make payment on the Maturity Date and after the Payee has given the Payor two (2) business days written notice of such default pursuant to Paragraph “(C)” of Article “19” of this Note;

 

(C) The filing by the Payor of a petition in bankruptcy;

 

(D) The making of an assignment by the Payor for the benefit of its creditors;

 

(E) Consent by the Payor to the appointment of, or possession by, a custodian for itself or for all or substantially all of its property;

 

  

  

  

 

(F) The filing of a petition in bankruptcy against the Payor with the consent of the Payor;

 

(G) The filing of a petition in bankruptcy against the Payor without the consent of the Payor, and the failure to have such petition dismissed within ten (10) days from the date upon which such petition is filed;

 

(H) Notwithstanding the ten (10) day provision in Paragraph “(G)” of this Article “9” of this Note, on a petition in bankruptcy filed against Payor, Payor is adjudicated bankrupt prior to the expiration of ten (10) days; and

 

(I) The entry by a court of competent jurisdiction of a final non-appealable order, judgment or decree appointing, without the consent of the Payor, a receiver, trustee or custodian for the Payor or for all or substantially all of the property or assets of the Payor.

 

(J) Any failure by the Company to deliver the shares due to Tangiers upon conversion of all or a part of this Note pursuant to Article “4” of this Note

 

10. Remedies Upon Default.

 

(A)           Upon the occurrence of an Event of Default and any time thereafter while such Event of Default is continuing, the entire unpaid principal balance which is due pursuant to this Note shall, at the Payee’s option, be accelerated and become and be immediately due and payable along with unpaid interest and late fees without presentment, demand, protest or further notice of any kind, all of which are expressly waived by the Payor, except as set forth in Paragraphs “(A)” and “(B)” of this Article “10” of this Note.

 

 (B)           Upon the occurrence of an Event of Default and any time thereafter while such Event of Default is continuing, the Payor shall pay to the Payee an interest rate of 20% and the Conversion Price formula shall be reduced to 40% of the average of the three (3) lowest trading prices during the ten (10) trading days prior to conversion. In addition, the Payor shall pay to Payee an additional amount of five hundred dollars ($500) per calendar day for each day that payment is delayed. The Payor acknowledges that it would be extremely difficult or impracticable to determine the Payee’s actual damages and costs resulting from the delay in making payment on the Maturity Date and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs and do not constitute a penalty.

 

11. Non-Exclusive Remedy.

 

Any remedy that is set forth in this Note is not exclusive of any other remedies provided for herein, in the accompanying documents or that are provided by law.

 

12. Liability Upon Default.

 

The liability of the Payor upon default shall be unconditional and shall not be in any manner affected by any indulgence whatsoever granted or consented to by the Payee including, but not limited to, any extension of time, renewal, waiver or other modification.

 

  

  

  

 

13. Exercise of Remedy Upon Default.

 

No failure on the part of the Payee to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

 

14. Collection Costs.

 

Payor shall pay or otherwise reimburse to Payee all legal fees, costs and expenses incurred by Payee in any manner in connection with this Note, including, but not limited to, any administration, negotiations, disputes, litigation or collection pursuant to the terms and conditions of this Note and agrees to pay interest thereupon at the rate of two percent (2%) per month from the date paid or incurred by Payee until such expenses are actually paid by the Payor.  Such obligation shall be binding upon Payor regardless of whether or not any legal action has been commenced or is ever commenced.

 

15. Full Recourse.

 

Anything in this Note to the contrary notwithstanding, the Payor hereunder shall be liable on this Note for the full amount of the principal, interest and all obligations pursuant to this Note.

 

16. No Defenses or Set-Off.

 

Payor acknowledges and agrees that there are, and shall be, no claims, defenses, set-offs, equities, or counterclaims, whether legal or equitable, available to it or any other person or entity affiliated with it or against the enforcement of this Note, including, but not limited to, any such defenses, set-offs, equities, claims, counterclaims, or others legal or equitable defenses or claims including, but not limited to, the statute of limitations, which arise out of this Note, the obligation of the Payor to repay this Note, as the case may be, or in the course of dealings between the Payor and the Payee and any representatives or affiliates thereof, and any such defenses, set-offs, equities, counterclaims or other claims, legal or equitable, available to Payor, or any entity affiliated with Payor, whether known or unknown, arising out of this Note, the administration of this Note are hereby forever waived, released and discharged.

 

17. Indemnity.

 

Payor agrees to indemnify and hold harmless the Payee, its officers, directors, heirs, executors, administrators, personal representatives, successors and assigns, from any and all claims, actions, suits, demands, costs or liability of any kind relating to the making of this Note, the administration of this Note and any business relations and/or other dealings with the Payor and each of them with respect to the subject matter hereof, it being understood and agreed that such indemnification and agreement to hold harmless are a material inducement to the Payee to secure its consent to this Note.

 

  

  

  

 

18. Replacement of Note.

 

Upon receipt of evidence satisfactory to the Payor of the loss, theft, destruction or mutilation of the Note, and if requested in the case of any such loss, theft or destruction, upon delivery of an indemnity bond or other agreement or security reasonably satisfactory to the Payor, or, in the case of any such mutilation, upon surrender and cancellation of such Note, the Payor will issue a new Note, of like tenor and amount and dated the date of issuance of the original Note, in lieu of such lost, stolen, destroyed or mutilated Note.

 

19. Miscellaneous.

 

(A) Headings.  Headings contained in this Note are for reference purposes only and shall not affect in any way the meaning or interpretation of this Note.

 

(B) Enforceability.  If any provision which is contained in this Note should, for any reason, be held to be invalid or unenforceable in any respect under the laws of any jurisdiction, such invalidity or unenforceability shall not affect any other provision of this Note and this Note shall be construed as if such invalid or unenforceable provision had not been contained herein.

 

(C) Notices.  Any notice or other communication required or permitted hereunder shall be sufficiently given if sent by certified mail, postage prepaid, return receipt requested addressed as follows:

 

To the Payee:                                                        Tangiers Investors, LP

402 W Broadway Ste. 400

San Diego, California 92101

Attn:  Michael Sobeck

 

To the Payor:                                                         Flint Telecom Group, Inc.

7500 College Blvd., Suite 500

                 Overland Park, KS 66210

or in each case to such other address as shall have last been furnished by like notice.  If the method of notice set forth in this Paragraph “(C)” of this Article “19” of this Note is impossible for any reason, notice shall be in writing and personally delivered to the aforesaid addresses.  Each notice or communication shall be deemed to have been given as of the date so mailed or delivered as the case may be.

 

  

  

  

 

(D) Litigation.  This Note shall in all respects be construed, governed, applied and enforced in accordance with the laws of the State of California applicable to contracts made and to be performed therein, without giving effect to the principles of conflicts of law.  The parties hereby consent to and irrevocably and exclusively submit to personal jurisdiction over each of them by the courts of the State of California in any action or proceeding, irrevocably waive trial by jury and personal service of any and all process and specifically consent that in any such action or proceeding, any service of process may be effectuated upon any of them by certified mail, return receipt requested, in accordance with Paragraph "(C)" of this Article “19” of this Note.  If the Payee commences legal action to interpret or enforce any of the terms of this Note, the Payor shall pay all legal fees in full and costs incurred by the Payee with respect to such action. If the parties dispute any term or condition of this Note, Payor shall pay all legal fees of Payee actually incurred within five (5) business days of receipt of the legal bill of Payee’s counsel.

 

(E)  Costs. This section purposely left blank

 

(F) Assignment.  This Note may not be assigned or transferred by the Payor.

 

(G) Construction.  Each of the parties hereto hereby further acknowledges and agrees that (i) each has had significant input in the development of this Note and (ii) this Note shall not, therefore, be construed more strictly against any party responsible for its drafting regardless of any presumption or rule requiring construction against the party who drafted this Note.

 

(H) Entire Agreement.  This Note and all documents and instruments referred to herein (i) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and thereof, and (ii) are not intended to confer upon any person other than the parties hereto any rights or remedies hereunder.

 

(I) Further Assurances.  The parties agree to execute any and all such other further instruments and documents, and to take any and all such further actions which are reasonably required to effectuate this Note and the intents and purposes hereof.

 

(J) Binding Agreement.  This Note shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, personal representatives, successors and assigns.

 

(K) Non-Waiver.  Except as otherwise expressly provided herein, no waiver of any covenant, condition, or provision of this Note shall be deemed to have been made unless expressly in writing and signed by the party against whom such waiver is charged; and (i) the failure of any party to insist in any one or more cases upon the performance of any of the provisions, covenants or conditions of this Note or to exercise any option herein contained shall not be construed as a waiver or relinquishment for the future of any such provisions, covenants or conditions, (ii) the acceptance of performance of anything required by this Note to be performed with knowledge of the breach or failure of a covenant, condition or provision hereof shall not be deemed a waiver of such breach or failure, and (iii) no waiver by any party of one breach by another party shall be construed as a waiver of any other or subsequent breach.

 

  

  

  

 

(L) Modifications.  This Note may not be changed, modified, extended, terminated or discharged orally, but only by an agreement in writing, which is signed by the Payor and the Payee of this Note.

 

(M) Exhibits.  All Exhibits annexed or attached to this Note are incorporated into this Note by reference thereto and constitute an integral part of this Note.

 

(N) Severability.  The provisions of this Note shall be deemed separable.  Therefore, if any part of this Note is rendered void, invalid or unenforceable, such rendering shall not affect the validity or enforceability of the remainder of this Note.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

 

IN WITNESS WHEREOF, Payor has executed this Note as of the 16th day of May, 2011.

 

 

Flint Telecom Group, Inc.

 

 

By:              /s/ Vincent Browne______

 

              Vincent Browne, Chief Executive Officer

 

 

Payee has executed this Note solely with

 

respect to Paragraph “G” of Article “4.

 

 

Tangiers Investors, LP

 

By:  /s/ Michael Sobeck

 

       Name: Michael Sobeck

 

      Title: Managing Member

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