EXHIBIT 10.1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED,
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED OR DISPOSED OF UNLESS AND UNTIL THIS
NOTE IS REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
PROMISSORY NOTE
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$1,000,000.00 August 15, 2006
For value received, Airgate Technologies, a Texas Corporation
("AIRGATE"), and The X-Change Corporation, a Nevada corporation ("X-CHANGE", and
collectively with Airgate, "BORROWERS"), jointly and severally promise to pay to
the order of Melissa CR 364 Ltd., a Texas limited Partnership ("LENDER") at 416
CR 364 Melissa, TX 75454, or at such other address as Lender shall from time to
time specify in writing, the principal sum of One Million AND NO/100 DOLLARS
($1,000,000.00) (the "MAXIMUM AMOUNT"), or so much thereof as may be advanced by
Lender pursuant to the terms hereunder, in legal and lawful money of the United
States of America, with interest on the outstanding principal from the date
advanced until paid at the rate set out below. Interest shall be computed on a
per annum basis of a year of 360 days, and for the actual number of days
elapsed. All payments to Lender under this Note shall be without offset.
1. LOAN; ADVANCES.
(a) LOAN. Subject to Borrowers' compliance with the terms of
this Note, Lender agrees to make loan advances (each such advance, a
"LOAN" and collectively, the "LOANS") to Airgate or on behalf of
Airgate from time to time in immediately available funds, in the amount
determined pursuant to Section 1(b), until a Maximum amount of One
Million ($1,000,000.00) Dollars has been reached. Notwithstanding
anything contained herein to the contrary, Lender shall not be
obligated to make a Loan requested under Section 1(b) if the
outstanding principal amount of all Loans made by Lender, after giving
effect to the proposed Loan requested by Borrower, shall exceed the
Maximum Amount. At the date of the execution of this promissory note
the initial advance covering all previous notes due from borrower is
acknowledged to be Seven Hundred Fifty Eight Thousand and Eighty Five
and no/100 dollars ($758,085.00). This amount includes any and all
interest due on the previous notes which was due through August 1,
2006.
(b) REQUEST FOR LOAN. Airgate shall provide X-Change and
Lender with a request for each draw. Subject to Borrowers compliance
with the terms of this Note, Lender agrees to make a Loan equal to the
amount of each draw by wire transfer or check in immediately available
funds no later than five (5) days following Lender's receipt of such
request.
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(c) RECORDATION OF AMOUNT OF ADVANCES. In the absence of
manifest error, the books and records of Lender shall be conclusive and
binding upon Borrowers as to the principal balance of the Loan
outstanding at any time and the amount of accrued interest thereon.
2. INTEREST RATE. Interest on the outstanding and unpaid principal
balance hereof shall be computed at a per annum rate equal to the lesser of (a)
10.00%, or (b) the Maximum Legal Rate (as defined below). In no event will the
interest rate stated herein be an amount less than the Applicable Federal Rate
(the "AFR") proscribed by the Internal Revenue Service for this Note to have
adequate stated interest for debt instruments of the same nature and term as
this Note. Notwithstanding anything herein to the contrary, should the interest
rate stated herein be insufficient to meet the required AFR, then such interest
rate will be adjusted accordingly retroactive to the date of this Note. If this
Note has already been repaid in full, then an additional interest amount will be
computed in accordance with the immediately preceding sentence and immediately
paid by Borrowers, along with interest on the amount of such additional interest
through the date of payment at a rate per annum equal to the then existing
interest rate on this Note.
3. PAYMENT OF LOAN AND INTEREST. Borrowers hereby unconditionally
promise to pay to Lender the then unpaid principal amount, together with all
unpaid accrued interest, of the Loans as follows:
(a) This Note is due and payable as follows, to-wit: Interest
only for a period of 24 months when the entire balance shall be due and
payable. The first such payment due and payable on the 1st day of
November, 2006, and a like installment shall be due and payable on the
same day of each succeeding quarter thereafter until the total
principal of $ any outstanding amount up to the maximum loan amount is
paid in full. If each payment is not paid on time, the remaining
balance will be subject to the maximum amount of interest permitted by
the Laws of the State of Texas.
(b) To induce the lender to enter into this loan, the
borrower's have pledged 100% of the outstanding stock in AirGATE
Technologies Inc, a Texas Corporation (AGTI), doing business at 710
Century Blvd, Allen, TX 75013. Lender agrees that the AGTI stock will
be returned The X-Change Corporation when this note is paid in full.
(c) At the sole discretion of lender the principal amount and
any accrued interest that is due and payable on this note may be
converted into restricted common stock of The X-Change Corporation, at
any time during the term of this note. The conversion rate shall be at
50% of the closing price of The X-Change Corporation common stock on
August 11, 2006. Said closing price was $1.65.
4. ADJUSTMENT UPON REORGANIZATION OF COMPANY. In case of any capital
reorganization, conversion, reclassification or recapitalization of the Common
Stock or in case X-Change consolidates or merges with or into, or transfers or
leases all or substantially all its assets to, any other person or entity, upon
consummation of any such transaction the payment obligations of Borrowers
contained in SECTION 3 shall become payable in the kind and amount of
securities, cash or other assets that the holder of Shares receives as
consideration for such transaction, or as a result of its ownership of the
Shares in connection with such transaction.
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5. OPTIONAL PREPAYMENT. Borrowers reserve the right to prepay, prior to
maturity, all or any part of the principal of this Note without penalty. Any
prepayments shall be applied first to accrued interest and then to principal.
6. REPRESENTATIONS AND WARRANTIES OF X-CHANGE. X-Change hereby
represents and warrants to Lender that, the statements contained in the
following paragraphs of this Section 6 are all true and correct as of the date
hereof:
(a) X-Change is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada and has all
requisite corporate power and authority to carry on its business as now
conducted.
(b) X-Change has all requisite legal and corporate power to
enter into, execute and deliver this Note. This Note is a valid and
binding obligation of X-Change, enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
moratorium, and other laws of general application affecting the
enforcement of creditors' rights.
(c) All corporate and legal action on the part of X-Change,
its officers, directors and shareholders necessary for the execution
and delivery of this Note and the performance of X-Change's obligations
hereunder have been taken.
(d) No consent, approval, order or authorization of, or
designation, registration, declaration or filing with, any federal,
state, local or other governmental authority on the part of X-Change is
required in connection with the valid execution and delivery of this
Note.
7. REPRESENTATIONS AND WARRANTIES OF AIRGATE. Airgate hereby represents
and warrants to Lender that, the statements contained in the following
paragraphs of this Section 7 are all true and correct as of the date hereof:
(a) Airgate has all requisite legal power to enter into,
execute and deliver this Note. This Note is a valid and binding
obligation of Airgate, enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency, moratorium, and
other laws of general application affecting the enforcement of
creditors' rights.
(b) No consent, approval, order or authorization of, or
designation, registration, declaration or filing with, any federal,
state, local or other governmental authority on the part of Airgate is
required in connection with the valid execution and delivery of this
Note.
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8. REPRESENTATIONS AND WARRANTIES OF LENDER. Lender represents and
warrants to Borrowers as of the date hereof as follows:
(a) This Note is made with Lender in reliance upon Lender's
representation to Borrowers, evidenced by Lender's execution of this
Note, that Lender is acquiring the Note for investment for Lender's own
account, not as nominee or agent, for investment and not with a view
to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act or the laws
of the State of Texas. Lender has the full right, power, authority and
capacity to enter into and perform this Note and the Note will
constitute a valid and binding obligation upon Lender, except as the
same may be limited by bankruptcy, insolvency, moratorium, and other
laws of general application affecting the enforcement of creditors'
rights.
(b) Lender (i) has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and
risks of Lender's prospective investment in the Note; (ii) has the
ability to bear the economic risks of Lender's prospective investment;
(iii) has had all questions which have been asked by Lender
satisfactorily answered by each Borrower; (iv) has not been offered the
Note by any form of advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any such media. Lender represents and
warrants that it is an "accredited investor" within the meaning of Rule
501(a) of Regulation D of the Securities Act; and (v) has acquired this
Note for investment purposes and not with a view toward the
distribution or sale hereof.
9. EVENTS OF DEFAULT. Without notice or demand (which are hereby
waived), the entire unpaid principal balance of and all accrued interest on this
Note shall immediately become due and payable at the option of the holder hereof
upon the occurrence of any one or more of the following events of default
(individually or collectively, herein called an "EVENT OF DEFAULT"):
(a) Borrowers shall fail to make any payment, return, forfeit
or transfer any Shares, or issue any Common Stock on the date by which
such payment, return, forfeiture, transfer or issuance is due pursuant
to the terms provided herein (whether due at stated maturity, on
demand, upon acceleration or otherwise) and such failure shall not be
remedied within ten (10) days after the occurrence thereof;
(b) Any representation or warranty made by any Borrower in
this Note or in any certificate or document furnished in connection
with this Note or therewith shall prove to have been untrue or
incorrect in any material respect when made;
(c) Any Borrower shall fail or neglect to perform, keep or
observe any covenant contained in this Note and such default shall not
be remedied within thirty (30) days after such Borrower learns of such
failure to comply, whether by its own discovery or through notice from
Lender (other than a breach caused solely by a violation by Lender of
its obligations under this Note); or
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(d) Any Borrower shall (i) become insolvent within the meaning
of the Bankruptcy Code of the United States, as amended, (ii) admit in
writing its or his inability to pay or otherwise fail to pay its or his
debts generally as they become due, (iii) voluntarily seek, consent to,
or acquiesce in the benefit or benefits of any Debtor Relief Law
(meaning the Bankruptcy Code of the United States, as amended, and all
other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar
debtor relief laws from time to time in effect affecting the rights of
creditors generally), or (iv) be made the subject of any proceeding
provided for by any Debtor Relief Law that could suspend or otherwise
affect any of the rights of the holder hereof.
10. REMEDIES UPON AN EVENT OF DEFAULT. Upon the occurrence of an Event
of Default, the holder of this Note may (a) offset against this Note any sum or
sums owed by the holder hereof to any Borrower, and (b) proceed to protect and
enforce its rights either by suit in equity and/or by action at law, or by other
appropriate proceedings, whether for the specific performance of any covenant or
agreement contained in this Note or any document or instrument executed and
delivered by any Borrower in connection with this Note or in aid of the exercise
of any power or right granted by this Note or any document or instrument
executed and delivered by any Borrower in connection with or securing this Note
or to enforce any other legal or equitable right of the holder of this Note.
11. DEFAULT RATE. Following the occurrence and during the continuance
of an Event of Default, all unpaid principal and interest shall bear interest at
a rate per annum equal to the lesser of (a) the Maximum Legal Rate, or (b)
eighteen percent (18%).
12. NO USURY INTENDED; USURY SAVINGS CLAUSE. In no event shall interest
contracted for, charged or received hereunder, plus any other charges in
connection herewith which constitute interest, exceed the maximum interest
permitted by applicable law (the "MAXIMUM LEGAL RATE"). The amounts of such
interest or other charges previously paid to the holder of the Note in excess of
the amounts permitted by applicable law shall be applied by the holder of the
Note to reduce the principal of the indebtedness evidenced by the Note, or, at
the option of the holder of the Note, be refunded. To the extent permitted by
applicable law, determination of the legal maximum amount of interest shall at
all times be made by amortizing, prorating, allocating and spreading in equal
parts during the period of the full stated term of the loan and indebtedness,
all interest at any time contracted for, charged or received from any Borrower
hereof in connection with the loan and indebtedness evidenced hereby, so that
the actual rate of interest on account of such indebtedness is uniform
throughout the term hereof.
13. GOVERNING LAW. This Note shall be governed by and construed in
accordance with the domestic laws of the State of Texas without giving effect to
any choice or conflict of law provision or rule (whether of the State of Texas
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Texas. Any legal action or proceeding with
respect to this Note may be brought in any Texas state or federal court sitting
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in Dallas County, Texas, and, by execution and delivery of this Note, each
Borrower and Lender hereby accept for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each
Borrower hereby irrevocably waives any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions.
14. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing and shall be deemed duly given (a)
when sent if by confirmed facsimile; (b) the next business day if by overnight
delivery; or (c) five business days after the date when sent if by registered or
certified mail, return receipt requested, postage prepaid, and addressed to the
intended recipient as set forth below:
IF TO BORROWERS: COPY TO:
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710 Century Parkway Baker & McKenzie LLP
Allen, Texas 75013 2001 Ross Avenue, Suite 2300
Attention: Michael Sheriff Dallas, TX 75201
Telephone: (972) 747-0051 Attention: W. Crews Lott
Facsimile: (972) 359-6334 Telephone: (214) 978-3000
Facsimile: (214) 978-3099
IF TO LENDER:
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Melissa 364 Ltd.
416 CR 364
Melissa, TX 75454
Telephone: (972) 837-4272
15. CAPTIONS. The captions in this Note are inserted for convenience
only and are not to be used to limit the terms herein.
16. CUMULATIVE RIGHTS. No delay on the part of the holder of this Note
in the exercise of any power or right under this Note, or under any document or
instrument executed in connection herewith, shall operate as a waiver thereof,
nor shall a single or partial exercise of any other power or right. Enforcement
by the holder of this Note of any security for the payment hereof shall not
constitute any election by it of remedies so as to preclude the exercise of any
other remedy available to it.
17. WAIVER. Each Borrower, and each surety, endorser, guarantor, and
other party ever liable for the payment of any sum of money payable on this
Note, jointly and severally waives (in each case only after the occurrence and
during the continuation of an Event of Default) demand, presentment, protest,
notice of protest, notice of intent to accelerate, notice of acceleration and
any and all lack of diligence or delay in collection or the filing of suit
hereon which may occur; and agrees that its liability on this Note shall not be
affected by any renewal or extension in the time of payment hereof, by any
indulgences, or by any release or change in any security for the payment of this
Note.
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18. SEVERABILITY. If any provision of this Note shall be held to be
unenforceable by a court of competent jurisdiction, such provision shall be
severed from this Note and the remainder of this Note shall continue in full
force and effect.
19. NO THIRD PARTY BENEFICIARIES. This Note shall not confer any rights
or remedies upon any person other than the parties and their respective
successors and permitted assigns.
20. JOINT AND SEVERAL OBLIGATIONS. Notwithstanding anything herein to
the contrary, the indebtedness evidenced by this Note and all other obligations
hereunder are joint and several obligations of Borrowers, and Lender may seek
payment in full of any amounts due hereunder from any Borrower. Each Borrower
agrees that his joint and several obligations hereunder shall be absolute and
unconditional and shall not be discharged until all obligations hereunder have
been paid in full.
21. COUNTERPARTS. This Note may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
22. ASSIGNMENT. This Note, or any portion hereof, may not be assigned
by any Borrower or by Lender without the consent of each other Borrower and
Lender, and any such assignment made without such consent will be void.
23. ATTORNEYS' FEES AND COSTS. Borrowers jointly and severally agree to
pay Lender's reasonable attorneys' fees and costs incurred in collecting or
attempting to collect this Note, whether by suit or otherwise.
24. PREVIOUS ADVANCES. Each Borrower and Lender acknowledge and agree
that Lender has previously advanced Loans equal to $758,085 in the aggregate
prior to the date hereof, and that such Loans shall be deemed to be Loans
advanced hereunder and shall be payable pursuant to the terms hereof.
25. NO ORAL AGREEMENTS. THIS NOTE CONSTITUTES A WRITTEN LOAN AGREEMENT
AND REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
26. FURTHER ASSURANCES. Borrowers shall, from time to time at the
request of Lender, do all further acts and things as may in the reasonable
opinion of Lender be necessary or advisable to effectuate the transaction and
other matters contemplated hereby, including, without limitation, in connection
with the transfer of shares of Common Stock.
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INTENTIONALLY LEFT BLANK
BORROWERS:
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THE X-CHANGE CORPORATION,
a Nevada corporation
By:
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Name:Michael Sheriff
Title:President and CEO
AirGATE Technologies, Inc.
a Texas corporation
By:
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Name:Michael Sheriff
Title:President and CEO
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LENDER:
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By:
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Name: Melissa CR 364
Ltd., a Texas Limited
Partnership
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