Exhibit 10.2
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED OR PLEDGED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS, OR
IF THE PROPOSED TRANSFER MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OR REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE
SECURITIES LAWS.
THIS NOTE IS SUBJECT TO THE TERMS AND PROVISIONS OF THE NOTE PURCHASE
AGREEMENT BETWEEN UNITED HERITAGE CORPORATION AND THE PURCHASER SIGNATORY
THERETO DATED AS OF __________________, 2004, AS AMENDED FROM TIME TO TIME, AND
IS ENTITLED TO THE BENEFITS THEREOF.
UNITED HERITAGE CORPORATION
CONVERTIBLE PROMISSORY NOTE
---------------------------
Cleburne, Texas
$________________________________ May __, 2004
Section 5. GENERAL.
For value received, UNITED HERITAGE CORPORATION a Utah corporation
(including any successor thereto (by way of merger, consolidation, sale or
otherwise), the "PAYOR"), hereby promises to pay to the order of
_____________________________, or its/his/her successors or assigns (the
"PAYEE"), the Redemption Price (as defined below), on March 15, 2007 (the
"MATURITY DATE"). All payments hereunder shall be made in such coin or currency
of the United States of America as at the time of payment shall be legal tender
therein for the payment of public and private debts. The Payor shall pay no
interest on the unpaid balance of the principal amount of this Note until
repayment or conversion. Unless converted pursuant to SECTION 2 hereof, the
Redemption Price shall be payable by wire transfer of immediately available
funds to the account of the Payee or by certified or official bank check payable
to the Payee mailed to the Payee at the address of the Payee as set forth on the
records of the Payor or such other address as shall be designated in writing by
the Payee to the Payor. The "REDEMPTION PRICE" shall equal the principal amount
of this Note or such greater or lesser principal amount that may be outstanding
hereunder at the time of such calculation.
This Note is being issued pursuant to the Note Purchase Agreement of even
date herewith (the "PURCHASE AGREEMENT") between the Payor and the Payee, as
amended from time to time. Capitalized terms used and not otherwise defined
herein have the meanings ascribed thereto in the Purchase Agreement.
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Section 6. CONVERSION.
Prior to the Maturity Date, the Payee shall have the right and option,
exercisable in its sole discretion to convert the outstanding principal amount
due hereunder into that number of shares of Common Stock equal to the quotient
obtained by dividing (A) the outstanding principal amount of this Note by (B)
$0.50. Additionally, upon conversion, the Payee shall receive a warrant (the
"Warrant") to purchase two shares of the Payor's Common Stock for every one
share of Common Stock converted hereunder, such Warrant providing for exercise
prices of $0.75 per share for half of the shares underlying the Warrant and
$1.00 per share for the remaining shares underlying the Warrant. Such shares of
Common Stock will have registration rights pursuant to the Purchase Agreement.
The Payee shall only have the right to convert pursuant to this Section, if the
Payor's shareholders approve at the Payor's Annual Meeting to be held on March
23, 2004, or such other date determined by the Company's Board of Directors, the
issuance by the Payor of Common Stock equal to 20% or more of the Common Stock
outstanding before the issuance for less than the greater of book or market
value of the stock.
Section 7. EXTENSION OF MATURITY.
Should the principal amount of or interest on this Note become due and
payable on other than a business day, the Maturity Date thereof shall be
extended to the next succeeding business day, and, in the case of principal,
interest shall be payable thereon at the rate per annum herein specified during
such extension. For the purposes of the preceding sentence, a business day shall
be any day that is not a Saturday, Sunday, or legal holiday in the State of
California.
Section 8. AMENDMENTS AND WAIVERS.
No provision of this Note may be amended or waived except as provided in
the Purchase Agreement.
Section 9. GOVERNING LAW.
This Note is made and delivered in, and shall be governed by and construed
in accordance with the laws of, the State of California (without giving effect
to principles of conflicts of laws).
Section 10. NOTICES.
The terms and provisions of SECTION 9 of the Purchase Agreement are
expressly incorporated into this Note.
*************
IN WITNESS WHEREOF, the Payor has duly executed and delivered this Note as
of the date first written above.
UNITED HERITAGE CORPORATION,
a Utah corporation
By: ________________________________
Xxxxxx Xxxx
Title: President
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