Contract
THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED
OF IN
THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE MAKER OF AN OPINION OF
COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE MAKER
THAT THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE
SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION
UNDER THE ACT AND SUCH STATE SECURITIES LAWS.
NOVINT
TECHNOLOGIES, INC.
FORM
OF
DUE
____________, 2011
$_____________Issue
Date: ________, 2008
For
value
received, Novint Technologies, Inc., a Delaware corporation (the "Maker")
with
the address 0000 Xxxxxxxx Xxxx XX, Xxxxxxxxxxx, Xxx Xxxxxx, 00000, Albuquerque,
New Mexico hereby promises to pay to the order of ____________________ (together
with its successors, representatives, and permitted assigns, the "Holder"),
in
accordance with the terms hereinafter provided, the principal amount of
__________________ ($____________) or such lesser amount as it actually advanced
by Holder to the Maker, together with interest thereon.
All
payments under or pursuant to this Note shall be made in United States Dollars
in immediately available funds to the Holder at
the
address of the Holder first set forth above or at such other place as the
Holder
may designate from time to time in writing to the Maker or by wire transfer
of
funds to the Holder's account, instructions for which are attached hereto
as
“Exhibit A”. The
outstanding principal balance of this Note and all accrued but unpaid interest
shall be due and payable on __________, 2011 (date that is third anniversary
of
Issue Date) (the "Maturity
Date")
or at
such earlier time as provided herein. Principal and interest hereunder may
be
converted into shares of the Maker’s common stock (the “Common
Stock”)
on the
terms and conditions set forth herein.
ARTICLE
I
Section
1.1 Interest.
The principal amount of this Note shall accrue interest commencing ____________,
2009 (date that is the first anniversary of the Issue Date) at the rate of
seven
percent (7.0%) per annum on the unpaid principal amount of this Note, which
interest shall be calculated to accrue monthly. For clarity, no interest
shall
accrue prior to ______________, 2009 (date that is the first anniversary
of the
Issue Date).
Section
1.2 Payment
of Principal and Interest. Principal and Interest shall be payable in full
on the Maturity Date. Notwithstanding Maker may prepay principal or interest
from time to time without premium or penalty. All payments received shall
be
applied first to outstanding interest and then to the principal amount of
this
Note.
Section
1.3 Payment
on Non-Business Days. Whenever any payment to be made shall be due on a
Saturday, Sunday or a public holiday under the laws of the State of California,
such payment may be due on the next succeeding business day.
Section
1.4 Replacement.
Upon receipt of a duly executed, notarized and unsecured written statement
from
the Holder with respect to the loss, theft or destruction of this Note (or
any
replacement hereof) and a standard indemnity, or, in the case of a mutilation
of
this Note, upon surrender and cancellation of such Note, the Maker shall
issue a
new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed
or
mutilated Note.
ARTICLE
II
EVENTS
OF DEFAULT; REMEDIES
Section
2.1 Events
of Default. The occurrence of any of the following events shall be an
“Event
of Default”
under
this Note:
(a) the
Maker
shall fail to make the principal and interest payments when due and such
default
is not fully cured within ten (10) business days after the occurrence thereof;
or
(b) the
suspension from listing, without subsequent listing on any one of, or the
failure of the Common Stock of Maker to be listed on at least one of the
OTC
Bulletin Board, the American Stock Exchange, the Nasdaq National Market,
the
Nasdaq SmallCap Market or The New York Stock Exchange, Inc. for a period
of five
(5) consecutive trading days; or
(c) the
Maker’s notice to the Holder, including by way of public announcement, at any
time, of its inability to comply or its intention not to comply with proper
requests for conversion of this Note into shares of Common Stock of the Maker;
or
(d) the
Maker
shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or
of all
or a substantial part of its property or assets, (ii) make a general assignment
for the benefit of its creditors, (iii) commence a voluntary case under the
United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition
seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors'
rights generally which is not dismissed within 30 days, (v) acquiesce in
writing
to any petition filed against it in an involuntary case under United States
Bankruptcy Code (as now or hereafter in effect) or under the comparable laws
of
any jurisdiction (foreign or domestic) which is not dismissed within 60 days,
(vi) issue a notice of bankruptcy or winding down of its operations or issue
a
press release regarding same, or (vii) take any action under the laws of
any
jurisdiction (foreign or domestic) analogous to any of the foregoing; or
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(e) a
proceeding or case shall be commenced in respect of the Maker, without its
application or consent, in any court of competent jurisdiction, seeking (i)
the
liquidation, reorganization, moratorium, dissolution, winding up, or composition
or readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial part
of its
assets in connection with the liquidation or dissolution of the Maker or
(iii)
similar relief in respect of it under any law providing for the relief of
debtors, and such proceeding or case described in clause (i), (ii) or (iii)
shall continue undismissed, or unstayed and in effect, for a period of thirty
(30) days or any order for relief shall be entered in an involuntary case
under
United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic) against the Maker
or
action under the laws of any jurisdiction (foreign or domestic) analogous
to any
of the foregoing shall be taken with respect to the Maker and shall continue
undismissed, or unstayed and in effect for a period of thirty (30) days.
Section
2.2 Remedies
Upon An Event of Default. If an Event of Default shall have occurred and
shall be continuing, the Holder of this Note may at any time at its option,
declare the entire unpaid principal balance of this Note due and payable,
and
thereupon, the same shall be accelerated and so due and payable, without
presentment, demand, protest, or notice, all of which are hereby expressly
unconditionally and irrevocably waived by the Maker; provided, however, that
upon the occurrence of an Event of Default described in (i) Sections 2.1
(d) or
(e), the outstanding principal balance hereunder shall be automatically due
and
payable; or demand that the principal amount of this Note then outstanding
shall
be converted into shares of Common Stock at a Conversion Price per share
calculated pursuant to Sections 3.1 hereof; or exercise or otherwise enforce
any
one or more of the Holder's rights, powers, privileges, remedies and interests
under this Note or applicable law.
ARTICLE
III
CONVERSION
Section
3.1 Conversion
Option. At any time during the term of this Note, the principal amount of
this Note shall be convertible (in whole or in part), at the option of the
Holder (the “Conversion
Option”),
into
such number of fully paid and non-assessable shares of Common Stock (the
"Conversion
Rate")
as is
determined by dividing (x) that portion of the outstanding principal balance
under this Note as of such date that the Holder elects to convert by (y)
the
Conversion Price (as defined in Section 3.2(a) hereof) then in effect on
the
date on which the Holder faxes a notice of conversion (the “Conversion
Notice”),
duly
executed, to the Maker (the “Voluntary
Conversion Date”).
The
Holder shall deliver this Note to the Maker at such time that this Note is
fully
converted. With respect to partial conversions of this Note, the Maker shall
keep written records of the amount of this Note converted as of each Conversion
Date. Upon conversion, Holder will also receive warrants to purchase Common
Stock at an exercise price of $1.50 per share (“Additional
Warrants”).
The
number of shares of Common Stock underlying the Additional Warrants shall
equal
one-half (½) the principal amount converted, rounded down to the nearest whole
number. The Additional Warrants shall be exercisable for a term of five (5)
years at an exercise price of $1.50. Accrued interest may, at the option
of the
Maker, be paid in cash or common stock and warrants in accordance with the
conversion terms in this Section 3.1. At the option of the Company, the interest
accrued, if any, under this Note shall be convertible at the time of conversion
of the principal into Common Stock at the conversion price of $1.00 per share,
or may be paid in cash to the Holder.
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Section
3.2 Conversion
Price.
(a) The
term
"Conversion
Price"
shall
mean $1.00 per share of Common Stock.
(b) Issue
Taxes.
The
Maker shall pay any and all issue and other taxes, excluding federal, state
or
local income taxes, that may be payable in respect of any issue or delivery
of
shares of Common Stock on conversion of this Note pursuant thereto; provided,
however,
that
the Maker shall not be obligated to pay any transfer taxes resulting from
any
transfer requested by the Holder in connection with any such
conversion.
(c) Fractional
Shares.
No
fractional shares of Common Stock shall be issued upon conversion of this Note.
In lieu of any fractional shares to which the Holder would otherwise be
entitled, the Maker shall pay cash equal to the product of such fraction
multiplied by the average of the did and ask prices of the Common Stock for
the
five (5) consecutive trading days immediately preceding the Conversion Date.
(d) Reservation
of Common Stock.
The
Maker shall at all times when this Note shall be outstanding, reserve and
keep
available out of its authorized but unissued Common Stock, such number of
shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of this Note.
(e) -Regulatory
Compliance.
If any
shares of Common Stock to be reserved for the purpose of conversion of this
Note
require registration or listing with or approval of any governmental authority,
stock exchange or other regulatory body under any federal or state law or
regulation or otherwise before such shares may be validly issued or delivered
upon conversion, the Maker shall, at its sole cost and expense, in good faith
and as expeditiously as possible, endeavor to secure such registration, listing
or approval, as the case may be.
ARTICLE
IV
MISCELLANEOUS
Section
4.1 Notices.
Any notice, demand, request, waiver or other communication required or permitted
to be given hereunder shall be in writing and shall be effective (a) upon
hand
delivery, telecopy or facsimile at the address or number designated in the
Subscription Agreement (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the third business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The Maker will give written notice to the Holder at least
ten
(10) days prior to the date on which the Maker takes a record (x) with respect
to any dividend or distribution upon the Common Stock, or (y) with respect
to
any pro rata subscription offer to holders of Common Stock.
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Section
4.2 Governing
Law. This Note shall be governed by and construed in accordance with the
laws of the State of New Mexico without regard to principles of conflicts
of
law.
Section
4.3 Headings.
Article and section headings in this Note are included herein for purposes
of
convenience of reference only and shall not constitute a part of this Note
for
any other purpose.
Section
4.4 Remedies,
Characterizations. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note, at law or
in
equity (including, without limitation, a decree of specific performance and/or
other injunctive relief), no remedy contained herein shall be deemed a waiver
of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a holder's right to pursue actual damages for any failure by
the
Maker to comply with the terms of this Note.
Section
4.5 Binding
Effect. The obligations of the Maker and the Holder set forth herein shall
be binding upon the successors and assigns of each such party, whether or
not
such successors or assigns are permitted by the terms hereof.
Section
4.6 Amendments.
This Note may not be modified or amended in any manner except in writing
executed by the Maker and the Holder.
Section
4.7 Compliance
with Securities Laws. The Holder of this Note acknowledges that this Note is
being acquired solely for the Holder's own account and not as a nominee for
any
other party, and for investment, and that the Holder shall not offer, sell
or
otherwise dispose of this Note. This Note and any Note issued in substitution
or
replacement therefor shall be stamped or imprinted with a legend in
substantially the following form:
"THIS
NOTE
AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL
IN
THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE MAKER THAT THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE MAY BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS."
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Section
4.8 Parties
in Interest. This Note shall be binding upon, inure to the benefit of and be
enforceable by the Maker, the Holder and their respective successors and
permitted assigns.
Section
4.9 Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in
the exercise of any power, right or privilege hereunder shall operate as
a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.
NOVINT
TECHNOLOGIES, INC.
By:
______________________________
Name:
Title:
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EXHIBIT
A
WIRE
INSTRUCTIONS
Payee:
________________________________________________________
Bank:
________________________________________________________
Address:
_____________________________________________________
______________________________________________________
Bank
No.:
_____________________________________________________
Account
No.: __________________________________________________
Account
Name: _________________________________________________
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FORM
OF
NOTICE
OF
CONVERSION
(To
be
Executed by the Holder in order to Convert the Note)
The
undersigned hereby irrevocably elects to convert $ ________________ of the
principal amount of the above Note into shares of Common Stock of NOVINT
TECHNOLOGIES, INC. (the “Maker”)
according to the conditions hereof, as of the date written below.
Date
of
Conversion
_________________________________________________________
Conversion
Price __________________________________________________
Number
of
shares of Common Stock beneficially owned or deemed beneficially owned by
the
Holder
on
the Date of Conversion: _________________________
Signature___________________________________________________________________
[Name]
Address:__________________________________________________________________
_______________________________________________________________________
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