ADDENDUM TO PROMISSORY NOTE CONVERSION AGREEMENT
Exhibit
No. 10.23
ADDENDUM
TO PROMISSORY NOTE CONVERSION AGREEMENT
This
Addendum to Promissory Note Conversion Agreement (“Addendum”) is entered into as
of the 18th day
of June, 2007 by and between Shearson Financial, Inc., a Nevada corporation
(“Shearson”) for purposes of this Addendum, “Shearson” included any predecessors
in interest of Shearson Financial, Inc., and La Jolla Cove Investors, Inc.,
a
California corporation (“LJCI” ).
WHEREAS,
LJCI and Shearson are parties to that certain Promissory Note Conversion
Agreement dated as of January 29, 2007 (“Conversion Agreement”);
and
WHEREAS,
the parties desire to amend the Conversion Agreement in certain
respects.
NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Shearson and LJCI agree as
follows:
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1.
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All
terms used herein and not otherwise defined herein shall have the
definitions set forth in the Conversion
Agreement.
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2.
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The
first recital of the Conversion Agreement is hereby amended and restated
in its entirety as follows:
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“WHEREAS,
LJCI has purchased, and/or will be purchasing, certain Promissory Notes (such
a
“Promissory Note,” and collectively, the “Promissory Notes”) issued by Shearson
to various individuals and/or entities, as set forth in more detail on
Exhibit A attached hereto; and”
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3.
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The
following promissory note shall be added to Exhibit A of the
Conversion Agreement as of the date hereof and shall be incorporated
therein and into the Conversion Agreement by this reference, such
that
such promissory note referenced below shall constitute a Promissory
Note,
as such term is defined in the Conversion
Agreement:
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a.
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Promissory
Note issued by Shearson to BT Venture Fund, I, L.P., a Delaware limited
partnership, dated on or about September 1, 2004 in the principal
amount
of $ 523,750 (the “September 2004 Promissory
Note”).
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4.
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Section
1 of the Conversion Agreement is hereby amended and restated in its
entirety as follows:
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“1. Conversion
Right: Each of LJCI and Shearson agree that each Promissory Note
shall be converted or exchanged (each, a “Conversion”), through one or a series
of such Conversions, up to the full principal balance thereof and any accrued
and unpaid interest thereon, into shares of the common stock of Shearson (the
“Shearson Common Stock”) (calculated as to each such conversion to the nearest
1/100th. Of a
share) The number of shares of Shearson Common Stock into which the Promissory
Notes may be converted is equal to the dollar amount of the Promissory Note,
or
portion thereof, being converted divided by the Conversion Price. The
Conversion Price shall be equal to 82% of the average of the volume weighted
average price of the shares of the Shearson Common Stock during the five trading
days prior tot LJCI’s election to convert. Upon the conversion of the
full principal blanc and all accrued and unpaid interest of each Promissory
Note
into shares of the Shearson Common Stock, as set forth above, no further rights
shall exist under such Promissory Note with respect to the collection of
interest or other amounts under the Promissory Note by the holder
thereof.
For
so
long as Shearson honors the terms of each Conversion Notice delivered by LJCI
to
Shearson and affects each such Conversion as submitted by LJCI within the
applicable time periods set forth in this
Agreement, LJCI shall not otherwise demand cash payment upon any outstanding
sums of principal and accrued and unpaid interest under the Promissory
Notes. In the event that Shearson refuses or otherwise fails to honor
any Conversion Notice submitted to Shearson by LJCI and/or Shearson fails to
effect such Conversion within the applicable time period set forth herein,
LJCI
shall have the right, at LJCI’s sole discretion, to declare any or all amounts,
including outstanding principal and accrued and unpaid interest, under the
Promissory Notes immediately due and payable by Shearson and Shearson shall
deliver such payment for all such outstanding sums owed under the Promissory
Notes to LJCI within five days of LJCI’s demand for payment
thereof.”
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5.
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The
following Section 2(e) is hereby added to the Conversion
Agreement:
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“2.(e)
LJCI may effect a Conversion of all or any portion of any of the Promissory
Notes by telecopying or otherwise delivering to Shearson an executed notice
setting forth the amount and identity of all or any portion of the Promissory
Notes that is to be so converted or exchanged for Shearson Common Stock (the
“Conversion Notice”). No other action on the part of LJCI shall be
required to so effect such Conversion.”
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6.
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Section
4 of the Conversion agreement is hereby amended and restated in its
entirety to read as follows:
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“4.
Certain Conversion Limits: For the period during which LJCI
holds any of the Promissory Notes, if and to the extent that, on any date,
the
holding by LJCI of the Promissory Notes would result in LJCI being deemed the
beneficial owner of more than 4.99% of the then Outstanding shares of the common
stock of Shearson, then LJCI shall not have the right, and Shearson shall not
have the obligation, to convert or exchange any portion of the Promissory Notes
as shall cause LJCI to be deemed the beneficial owner of more than 4.99% of
the
then Outstanding shares of the common stock of Shearson. If any court
of competent jurisdiction shall determine that the foregoing limitation is
ineffective to prevent LJCI from being deemed the beneficial owner of more
than
4.99% of the then Outstanding shares of the common stock of Shearson, then
Shearson shall prepay such portion of the Promissory Notes as shall
cause LJCI not be deemed the beneficial owner of more than 4.99% of the then
Outstanding shares of the common stock of Shearson. Upon such
determination by a court of competent jurisdiction, LJCI shall have no interest
in or rights under such portion of the Promissory Notes that is so
prepaid. Such prepayment shall be for cash at a prepayment price of
one hundred and then percent (110%) of the principal amount thereof, thgether
with all accrued and unpaid interest thereon to the date of
prepayment. For purposes of this Section, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act
of
1934, as amended, and the rules and regulations promulgated there
under. “Outstanding” when used with reference to the common stock of
Shearson means, on any date of determination, all issued and outstanding shares
of the common stock of Shearson, and includes all such shares of the common
stock of Shearson issuable in respect of outstanding scrip or any certificates
representing fractional interests in such shares of the common stock of
Shearson; provided, however, that any such shares of the common stock of
Shearson directly or indirectly owned or held by or for the account of Shearson
or any subsidiary of Shearson shall not be deemed “Outstanding” for purposes
hereof.”
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7.
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Except
as specifically amended therein, all other terms and conditions of
the
Conversion agreement shall remain in full force and
effect.
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8.
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This
Addendum may be executed in one or more counterparts, each of which
shall
for all purposes be deemed to be an original and all of which shall
constitute the same document.
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IN
WITNESS WHREEOF, Shearson Financial, Inc. and La Jolla Cove Investors, Inc.,
have caused this Addendum to be signed by its duly authorized officers on the
date first set forth above.
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Shearson
Financial, Inc.
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La
Jolla Cove Investors., Inc.
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By:
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/s/ ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
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By:
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/s/ ▇▇▇▇▇▇
▇▇▇▇
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Name:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
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Name:
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▇▇▇▇▇▇
▇▇▇▇
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Title:
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CEO
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Title:
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Portfolio
Manager
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