Promissory Note between VelaTel Global Communications, Inc. and Kevin J. Morrell Revocable Trust (February 24, 2012)
VelaTel Global Communications, Inc. agrees to repay the Kevin J. Morrell Revocable Trust $684,210.52 plus 10% annual interest, with the full amount due in one year. The lender deducts a 5% fee before disbursing $650,000 to VelaTel, but interest accrues on the full principal. VelaTel may repay early without penalty. If VelaTel adds a stock conversion feature to a related note with another lender, this note will be amended to match. Legal fees and collection costs may apply if VelaTel defaults.
PROMISSORY NOTE
| $ 684,210.52 | Date: February 24, 2012 |
FOR VALUE RECEIVED, VelaTel Global Communications, Inc. (“Borrower”) promises to pay to the order of Kevin J. Morrell Revocable Trust (“Lender”) the sum of Six Hundred Eighty-Four Thousand Two Hundred Ten and 52/100 U.S. Dollars (“Principal Amount”), together with interest at the rate of 10% per annum from the date hereof.
From the Principal Amount, Lender shall deduct prior to disbursement 5% of the Principal Amount as a loan set-up fee and as compensation for Lender’s due diligence in connection with this Note (“Holdback”). The Holdback shall nonetheless be included in the Principal Amount upon which interest shall accrue. The amount Lender shall disburse to Borrower is $650,000.00
The entire Principal Amount, together with all interest accrued and unpaid, shall be due and payable on the first anniversary from the date hereof (“Maturity Date”). Borrower may prepay this Note in whole or in part prior to the Maturity Date without penalty. Any partial payments shall be applied first to costs of collection incident to any event of default, then to interest accrued but unpaid, then to reduction of the Principal Amount. All interest on this Note shall be computed on the basis of a 360-day year comprised of twelve 30-day months.
Should this Note be placed in the hands of an attorney for collection, Borrower promises to pay such reasonable attorney fees and other costs of collection as Lender may incur, whether or not suit is brought. Borrower hereby waives demand, presentment, notice of dishonor, diligence in collecting, grace and notice of protest.
Contemporaneously with the execution of this Note, Borrower is maker on a Note with Isaac Organization, Inc. (“Isaac Note”). The Isaac Note provides that Borrower and Isaac agree to add a conversion feature granting Isaac an option to convert all or a portion of the balance of principal and interest due under the Isaac Note to shares of Borrower’s Series A common stock (“Shares”). The details of the conversion feature will be agreed to between the Parties when Borrower has additional authorized Shares available for issuance. Upon such amendment or substitution of the Isaac Note, Borrower agrees to amend or substitute this Note with a Note containing identical conversion features to the amended or substituted Isaac Note.
VELATEL GLOBAL COMMUNICATIONS, INC.
By /s/ George Alvarez
George Alvarez, its Chief Executive Officer
