Contract
THIS
NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), NOR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAS BEEN TAKEN
FOR INVESTMENT PURPOSES ONLY. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH
SECURITIES UNDER THE ACT AND QUALIFICATION UNDER APPLICABLE STATE LAW WITHOUT
AN
OPINION OF COUNSEL SATISFACTORY TO BORROWER THAT SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED.
Walton,
Xxxxxx & Co
NOTE
$24,808.00
August 4, 2006
Dallas, TX
FOR
VALUE RECEIVED,
IElement
Corporation (“Maker”) promises to pay to the order of Walton, Xxxxxx & Co
(the “Lender”), at the offices located at 00000 Xxxxxxx Xxxx Xxx 000, XXX 000 xx
Xxxxxx, XX, the principal sum of Twenty Four Thousand Eight Hundred Eight
Dollars ($24,808.00), together with all accrued interest thereon, upon the
terms
and conditions specified below.
1.
Interest.
Interest
shall accrue and be payable monthly on the balance outstanding under this Note
at the rate of 10.0% per annum, compounded monthly, or at the maximum rate
allowed by law, whichever is lower.
2.
Due
Date.
One half
of the principal balance ($12,404.00) shall become due and payable upon the
Maker securing one million dollars ($1,000,000) in funding via conversion of
Maker’s outstanding warrants into shares of Maker’s common stock. The remaining
principal balance and interest shall become due and payable upon the Maker
securing an additional one million dollars (total of $2,000,000) in funding
via
conversion of Maker’s outstanding warrants into shares of Maker’s common
stock.
3.
Payment.
Payment
shall be made in lawful tender of the United States and shall be applied first
to the payment of principal and then to all accrued and unpaid interest.
Prepayment of the principal balance of this Note, together with all accrued
and
unpaid interest on the portion of principal so prepaid, may be made in whole
or
in part at any time without penalty.
4.
Events
of Acceleration.
The
entire unpaid principal balance of this Note, together with all accrued and
unpaid interest, shall become immediately due and payable prior to the specified
due date of this Note upon the occurrence of one or more of the following
events:
A.
the
expiration of the thirty (30)-day period following the date the Maker ceases
for
any reason to pay its monthly obligations to the Lender; or
B.
the
insolvency of the Maker, the commission of any act of bankruptcy by the Maker,
the execution by the Maker of a general assignment for the benefit of creditors,
the filing by or against the Maker of any petition in bankruptcy or any petition
for relief under the provisions of the Federal bankruptcy act or any other
state
or Federal law for the relief of debtors and the continuation of such petition
without dismissal for a period of thirty (30) days or more, the appointment
of a
receiver or trustee to take possession of any property or assets of the Maker
or
the attachment of or execution against any property or assets of the Maker;
or
C.
an
acquisition of the Company (whether by merger, sale of all or substantially
all
of the Company’s assets or sale of more than fifty percent (50%) of the
Company’s outstanding voting securities) for consideration payable in cash or
freely-tradable securities; provided,
however, that if the Pooling of Interest Method, as described in Accounting
Principles Board Opinion No. 16, is used to account for the acquisition for
financial accounting purposes, then acceleration of this Note shall not occur
until the end of the sixty (60)-day period immediately following the close
of
the applicable transfer restriction period required under Accounting Series
Release Numbers 130 and 135.
5.
Collection.
If
action
is instituted to collect this Note, the Maker promises to pay all costs and
expenses (including reasonable attorney fees) incurred in connection with such
action.
6.
Waiver.
A waiver
of any term of this Note or of any of the obligations secured thereby must
be
made in writing and signed by a duly-authorized officer of the Corporation
and
any such waiver shall be limited to its express terms.
No
delay
by the Corporation in acting with respect to the terms of this Note shall
constitute a waiver of any breach, default, or failure of a condition under
this
Note or the obligations secured thereby.
7.
Construction.
Each
party acknowledges that it had the opportunity to have its legal counsel review
this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Note to favor any party against the
other.
8.
Conflicting
Agreements.
In the
event of any inconsistencies between the terms of this Note and the terms of
any
other document related to the loan evidenced by the Note, the terms of this
Note
shall prevail.
9.
Governing
Law.
This
Note shall be construed in accordance with the laws of the State of Texas
without resort to that State’s conflict-of-laws rules.
IElement
Corporation “MAKER”
August
4,
2006
/s/
Xxxx
Xxxxx
-----------------------
Xxxx
Xxxxx,
Director
& Chief Executive Officer
IElement
Corporation
