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LAWS. THIS NOTE MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL ACCEPTABLE TO ___________, INC., THAT SUCH REGISTRATION IS NOT REQUIRED. ____________, INC. UNSECURED CONVERTIBLE PROMISSORY NOTE No. __ $_________ ______, 2011
For value received, _________, Inc. (the ³Company´), hereby promises to pay to the order of ______________, or its registered assigns (hereinafter together with successors in title and assigns referred to as the ³Holder´), the principal sum of ____________________Hundred Thousand Dollars ($_00,000.00), together with interest from the date hereof on the principal amount outstanding from time to time, as specified below. This Unsecured Convertible Promissory Note (this ³Note´) is one in a series of Unsecured Convertible Promissory Notes (collectively, the ³Notes´) issued by the Company pursuant to that certain Note Purchase Agreement, dated as of ______, 2011, by and among the Company, the Holder and the other parties thereto (the ³Purchase Agreement´). This Note and the other Notes shall rank pari passu as to the payment of principal and interest. The Holder agrees that any payment or prepayments to the Holder and the holders of the other Notes, whether principal, interest or otherwise, shall be made pro rata among the Holder and the holders of the other Notes based upon the aggregate unpaid principal amount of this Note and the other Notes. By accepting this Note, the Holder agrees that if the Holder obtains any payments (whether voluntary, involuntary, by prepayment, set-off or otherwise) in excess of the Holder¶s pro rata share of payments received by all of the holders of the Notes, the Holder shall hold in trust all such excess payments for the benefit of the holders of the other Notes and shall pay such amounts held in trust to such other holders upon demand by such holders. All payments of principal and interest shall be in lawful money of the United States of America. Capitalized terms used herein but undefined shall have the meanings ascribed to them in the Purchase Agreement. 1. Interest. This Note shall bear interest at an annual rate of __ percent (_%), compounded annually. Interest shall be computed on the basis of a 365-day year and on the actual number of days elapsed.
2. Conversion of the Notes. This Note and any amounts due hereunder shall be convertible into Conversion Shares or Common Stock, as the case may be, in accordance with the terms of Section 1.2 of the Purchase Agreement. As promptly as practicable after the conversion of this Note, the Company at its expense shall issue and deliver to the holder of this Note, upon surrender of the Note, a certificate or certificates for the number of full Conversion Shares issuable upon such conversion. 3. Amount Due; Maturity Date. Subject to the conversion provisions referenced above, the principal amount of this Note together with accrued interest (the sum of such principal and accrued interest being hereinafter referred to as the ³Amount Due´) shall be payable by the Company (a) _______, 201_ or (b) upon an Event of Default in accordance with Section 4 below (in each case, the ³Maturity Date´). The Amount Due may not be prepaid in whole or in part without the prior written consent of the Holder. 4. Default.
(a) This Note shall, at the election of the Requisite Note Holders, become immediately due and payable, upon notice and demand by the Requisite Note Holders, upon the occurrence of any of the following events of default (individually, an ³Event of Default´ and collectively, ³Events of Default´): (i) failure to pay the principal or interest on the Note when due and such failure remains uncured for thirty (30) days; or (ii) the Company shall become insolvent, admit that it cannot pay all of its obligations, and as a result shall be the subject of any bankruptcy or other voluntary or involuntary proceeding, in or out of court, for the adjustment of debtor-creditor relationships and such proceeding is not dismissed within ninety (90) days; (b) Upon the occurrence of an Event of Default, the Holder shall have then, or at any time thereafter, all of the rights and remedies afforded by the Uniform Commercial Code as from time to time in effect in the State of California or afforded by other applicable law. 5. No Set-Off. All payments by the Company under this Note shall be made without set-off or counterclaim and be without any deduction or withholding for any taxes or fees of any nature, unless the obligation to make such deduction or withholding is imposed by law. 6. Collection Expenses. If this Note is not paid in accordance with its terms, the Company shall pay to the Holder, in addition to principal and accrued interest thereon, all costs of collection of this Note, including but not limited to reasonable attorneys¶ fees, court costs and other costs for the enforcement of payment of this Note. 7. Waivers. The Company hereby expressly and irrevocably waives presentment, demand, protest, notice of protest and all other notices in connection with this Note. No delay or extension on the part of the Holder in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note, and a waiver of any right on any one occasion shall not operate as a waiver of such right on any future occasion.
(a) Transfers; Successors and Assigns. This Note, and the obligations and rights of the Company hereunder, shall be binding upon and inure to the benefit of the Company, the holder of this Note, and their respective heirs, successors and assigns; provided, however, that the Company may not transfer or assign its obligations hereunder, by operation of law or otherwise, without the consent of the Requisite Note Holders. This Note maybe be transferred only upon its surrender to the Company for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. Thereupon, this Note shall be reissued to, and registered in the name of the transferee, or a new Note for like principal amount and interest shall be issued to, and registered in the name of the transferee. Interest and principal shall be paid solely to the registered holder of the Note. (b) Changes. Changes in or additions to this Note may be made or compliance with any term, covenant, agreement, condition or provision set forth herein may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively), upon written consent of the Company and the Requisite Note Holders. (c) Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed facsimile or email if sent during normal business hours of the recipient, if not so confirmed, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid or (iv) three (3) days after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the following addresses (or at such other addresses as shall be specified by notice given in accordance with this Section 8(c)): If to the Company: _________, Inc. __________ Attention: President If to Holder: At the address below the Holder¶s name as set forth on the Schedule of Investors attached to the Purchase Agreement. 9. Enforceability. In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, then such provision(s) only shall be deemed null and void and shall not affect any other provision of this Note, and the remaining provisions of this Note shall remain operative and in full force and effect and in no way shall be affected, prejudiced or disturbed thereby.
10. Governing Law. This Note and the obligations of the Company hereunder shall be governed by and interpreted in accordance with Sections 7.2 and 7.3 of the Purchase Agreement. IN WITNESS WHEREOF, this Note has been duly executed on behalf of the undersigned on the day and in the year first written above.
________, INC. By: Name: Title:
Agreed and accepted: By: _____________________ Name: __________________
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