Contract
THIS
NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NEITHER THIS NOTE NOR
THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAS BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS. NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE
UPON CONVERSION OF THIS NOTE MAY BE SOLD OR OTHERWISE TRANSFERRED OR PLEDGED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION OR EXCLUSION FROM THE REGISTRATION
REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS.
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No.
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$__________
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8.0%
Convertible Note Due June 30, 2009
Section
1. General.
FOR
VALUE
RECEIVED, IntelliHome, Inc., a Texas corporation (the “Company”),
hereby promises to pay to the order of _____________________, or its registered
assigns (the “Investor”),
the
principal sum of ____________________________ DOLLARS AND ZERO CENTS
($_________), or such lesser amount as shall then equal the outstanding
principal amount hereof, together with interest thereon at a rate equal to
8%
(the “Interest Rate”) per annum, simple interest computed on the basis of the
actual number of days elapsed and a year of 360 days comprised of twelve 30
day
months. Unless earlier redeemed in accordance with Section 2 or converted in
accordance with Section 5, all unpaid principal, together with any then unpaid
and accrued interest and other amounts payable hereunder, shall be due and
payable on the earlier of (i) June 30, 2009 (the “Maturity
Date”);
or
(ii) when such amounts become due and payable as a result of, and following,
an
Event of Default in accordance with Section 3. All payments required to be
made
hereunder, if any, 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. Interest shall accrue on the unpaid balance
of the principal amount of this Note (without any compounding) from and
including the date hereof to, but excluding, the date on which the principal
amount of this Note is paid in full (or converted in accordance with Section
5
hereof) and shall be payable on the Maturity or, at the written election of
the
Investor, quarterly, commencing ninety (90) days after the date hereof and
continuing until the outstanding principal amount hereof shall be paid in
full.
This
is
one of a duly authorized issue of notes (this note being referred to as the
“Note”
and,
collectively, all similar notes issued by the Company pursuant to a Note
Purchase Agreement (the “Purchase
Agreement”),
dated
June 5, 2008, between the Company and the various investors named therein,
being
referred to as the “Notes”)
of the
Company in an anticipated aggregate principal amount of up to US$575,000. All
capitalized terms not otherwise defined herein shall have the meaning set forth
in the Purchase Agreement.
Section
2. Defaults.
The
occurrence of any of the following shall constitute an “Event
of Default”
under
this Note:
(a)
The
Company shall fail to pay (i) when due any principal or interest payment hereof
on the due date hereunder or (ii) any other payment required under the terms
of
this Note on the date due and such payment shall not have been made within
five (5) days of Company’s receipt of Investor’s written notice to Company
of such failure to pay; or
(b) The
Company shall fail to observe or perform any other covenant, obligation,
condition or agreement contained in this Note (other than those specified in
Section 2(a)) and such failure shall continue for ten (10) days after
written notice thereof is delivered to the Company; or
(c) Any
representation, warranty, certificate, or other statement (financial or
otherwise) made or furnished by or on behalf of the Company to the Investor
in
writing in connection with this Note, or as an inducement to the Investor to
purchase this Note, shall be false, incorrect, incomplete or misleading in
any
material respect when made or furnished; or
(d) The
Company shall (i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian of itself or of all or a substantial part
of
its property, (ii) make a general assignment for the benefit of its or any
of its creditors, (iii) be dissolved or liquidated in full or in part,
(iv) commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking possession of
its
property by any official in an involuntary case or other proceeding commenced
against it, or (v) take any action for the purpose of effecting any of the
foregoing; or
(e) Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall
be
commenced and an order for relief entered or such proceeding shall not be
dismissed or discharged within thirty (30) days of
commencement.
Section
3. Rights
Of Investor Upon Default.
Upon
the
occurrence or existence of any Event of Default (other than an Event of Default
referred to in Sections 2(d) or 2(e) hereof) and at any time thereafter during
the continuance of such Event of Default, the Investor may, by written notice
to
the Company, declare all outstanding amounts payable by the Company hereunder
to
be immediately due and payable without presentment, demand, protest or any
other
notice of any kind, all of which are hereby expressly waived, anything contained
herein to the contrary notwithstanding. Upon the occurrence or existence of
any
Event of Default described in Sections 2(d) or 2(e) hereof, immediately and
without notice, all outstanding amounts payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein to the contrary notwithstanding. In addition
to the foregoing remedies, upon the occurrence or existence of any Event of
Default, the Investor may exercise any other right, power or remedy permitted
to
it by law, either by suit in equity or by action at law, or both.
2
Section
4. Conversion.
(a) Investor
Conversion.
At any
time on or after the Full Funding Date, and from time to time prior to the
Maturity Date, the Investor may, at its sole and exclusive option, convert
all
or any part of the principal and interest outstanding under this Note into
fully
paid and nonassessable shares of Common Stock of the Company at a conversion
price per share of Common Stock equal to $0.005, subject to adjustment as
provided in Section 5 hereof (the “Conversion
Price”).
(b) Mechanics
and Effect Of Conversion.
No
fractional shares of Common Stock shall be issued upon conversion of this Note.
Upon the conversion of the entire principal outstanding under this Note, in
lieu
of issuing any fractional shares to the Investors, the Company shall pay to
the
Investor the amount of outstanding principal that is not so converted. On
partial conversion of this Note, the Company shall issue to the Investor (i)
the
shares of Common Stock into which a portion of this Note is converted and (ii)
a
new convertible promissory note having identical terms to this Note, except
that
the principal amount thereof shall equal to the difference between (A) the
principal amount of this Note immediately prior to such conversion minus (B)
the
portion of such principal amount converted into Common Stock. Upon conversion
of
this Note pursuant to this Section 4, the Investor shall surrender this Note,
duly endorsed, at the principal office of the Company. At its expense, the
Company shall, as soon as practicable thereafter, issue and deliver to the
Investor at such principal office a certificate or certificates for the number
of shares of Common Stock, to which the Investor shall be entitled upon such
conversion (bearing such legends as are required by applicable state and federal
securities laws in the opinion of counsel to the Company), together with any
other securities and property to which the Investor is entitled upon such
conversion under the terms of this Note.
(c) Reservation
of Stock Issuable Upon Conversion.
The
Company shall at all times reserve and keep available out of its authorized
but
unissued shares of capital stock of the Company, solely for the purpose of
effecting the conversion of this Note, such number of its shares of capital
stock of the Company as shall from time to time be sufficient to effect the
conversion of this Note; and if at any time the number of authorized but
unissued shares of capital stock of the Company shall not be sufficient to
effect the conversion of this Note, the Company hereby covenants and agrees
to
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of capital stock to such number
of shares as shall be sufficient for such purpose.
3
(d) Payment
of Expenses and Taxes on Conversion.
The
Company shall pay all expenses, taxes and other charges payable in connection
with the preparation, execution, issuance and delivery of stock certificates
and
new promissory notes pursuant to this Section 4 hereof, except that, in the
event such stock certificates or new promissory notes shall be registered in
a
name or names other than the name of the holder of this Note, funds sufficient
to pay all stock transfer fees, which shall be payable upon the execution and
delivery of such stock certificate or certificates or new promissory notes,
shall be paid by the holder hereof to the Company at the time of delivering
this
Note to the Company upon conversion.
Section
5. Conversion
Price Adjustments.
(a) Adjustments
For Stock Splits and Combinations.
If the
Company shall at any time or from time to time after the date of original
issuance of this Note (the “Date
of Original Issue”)
effect
a stock split or subdivision of the outstanding Common Stock, the Conversion
Price in effect immediately before that subdivision shall be proportionately
decreased, and, conversely, if the Company shall at any time or from time to
time after the Date of Original Issue combine the outstanding shares of Common
Stock (including by way of reverse stock split) into a smaller number of shares,
the Conversion Price in effect immediately before the combination shall be
proportionately increased. Any adjustment under this Section 5(a) shall become
effective at the close of business on the date the stock split, subdivision
or
combination becomes effective.
(b) Adjustments
For Common Stock Dividends and Distributions.
If the
Company at any time or from time to time after the Date of Original Issue
issues, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable solely in
additional shares of Common Stock, the Conversion Price that is then in effect
shall be decreased as of the time of such issuance or, in the event such record
date is fixed, as of the close of business on such record date, by multiplying
the Conversion Price by a fraction (i) the numerator of which is the total
number of shares of Common Stock issued and outstanding immediately prior to
the
time of such issuance or the close of business on such record date, and (ii)
the
denominator of which is the sum of the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date plus the number of shares of Common Stock
issuable in payment of such dividend or distribution; provided, however, that
if
such record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Conversion Price
shall be recomputed accordingly as of the close of business on such record
date
and thereafter the Conversion Price shall be adjusted pursuant to this Section
5(b) to reflect the actual payment of such dividend or
distribution.
(c) Adjustments
For Other Dividends and Distributions.
If the
Company at any time or from time to time after the Date of Original Issue
issues, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities
of
the Company other than shares of Common Stock or in other property, in each
such
event provision shall be made so that the Investor shall receive upon conversion
hereof, in addition to the number of shares of Common Stock receivable hereupon,
the amount of securities of the Company or other property which such Investor
would have received had this Note been converted into Common Stock on the date
of such event and had it thereafter, during the period from the date of such
event to and including the conversion date, retained such securities or other
property receivable by it as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 5 with respect
to
the rights of the Investor or with respect to such other securities or other
property by their terms. As used herein, the term “other property” does not
include cash.
4
(d) Adjustments
For Reclassification, Exchange and Substitution.
If at
any time or from time to time after the Date of Original Issue, the Common
Stock
issuable upon the conversion of this Note is changed into the same or a
different number of shares of any class or series of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets provided for elsewhere in this Section 5),
then
in any such event the Investor shall have the right thereafter to convert this
Note into the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other change by
holders of the number of shares of Common Stock into which this Note could
have
been converted immediately prior to such recapitalization, reclassification
or
change, all subject to further adjustment as provided herein or with respect
to
such other securities or property by the terms thereof.
(e) Certificate
of Adjustment.
In each
case of an adjustment or readjustment of the Conversion Price for the number
of
shares of Common Stock or other securities issuable upon conversion of this
Note, the Company, at its own expense, shall cause its Treasurer to compute
such
adjustment or readjustment in accordance with the provisions hereof and prepare
a certificate showing such adjustment or readjustment, and shall mail such
certificate, by first class mail, postage prepaid, to the Investor at the
Investor's address as shown in the Company's books. The certificate shall set
forth such adjustment or readjustment, showing in detail the facts upon which
such adjustment or readjustment is based.
(f) Notice
of Record Date.
Upon
(i) the establishment by the Company of a record of the holders of any class
of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution, or (ii) any capital
reorganization of the Company, any reclassification or recapitalization of
the
capital stock of the Company, any merger or consolidation of the Company with
or
into any other Company, or any transfer of all or substantially all the assets
of the Company to any other person or any voluntary or involuntary dissolution,
liquidation or winding up of the Company, the Company shall mail to the Investor
at least 20 days prior to the record date specified therein a notice specifying
(A) the date on which any such record is to be taken for the purpose of such
dividend or distribution and a description of such dividend or distribution,
(B)
the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective, and (C) the date, if any, that is to be fixed as to when
the
holders of record of Common Stock (or other securities), shall be entitled
to
exchange their shares of Common Stock (or other securities), for securities
or
other property deliverable upon such reorganization, reclassification transfer,
consolidation, merger, dissolution, liquidation or winding up.
(g) No
Impairment.
The
Company shall not amend its Articles of Incorporation or participate in any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or
sale of securities or any other voluntary action for the purpose of avoiding
or
seeking to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but shall at all times in good
faith assist in carrying out all such action as may be reasonably necessary
or
appropriate in order to protect the conversion rights of the Investor against
dilution or other impairment as provided herein.
5
Section
6. Defenses.
The
obligations of the Company under this Note shall not be subject to reduction,
limitation, impairment, termination, defense, set-off, counterclaim or
recoupment for any reason.
Section
7. Exchange
or Replacement of Notes.
(a) The
Investor may, at its option, in person or by duly authorized attorney, surrender
this Note for exchange, at the principal business office of the Company, and
receive in exchange therefore, a new Note in the same principal amount as the
unpaid principal amount of this Note and bearing interest at the same annual
rate as this Note, each such new Note to be dated as of the date of this Note
and to be in such principal amount as remains unpaid and payable to such person
or persons, or order, as the Investor may designate in writing.
(b) Upon
receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction, or mutilation of this Note and (in the case of loss, theft or
destruction) of an indemnity reasonably satisfactory to it, and upon surrender
and cancellation of this Note, if mutilated, the Company will deliver a new
Note
of like tenor in lieu of this Note. Any Note delivered in accordance with the
provisions of this Section 7 shall be dated as of the date of this
Note.
Section
8. Attorneys’
and Collection Fees.
Should
the indebtedness evidenced by this Note or any part hereof be collected at
law
or in equity or in bankruptcy, receivership or other court proceedings, the
Company agrees to pay, in addition to the principal and interest due and payable
hereon, all costs of collection, including reasonable attorneys’ fees and
expenses, incurred by the Investor in collecting or enforcing this
Note.
Section
9. Waivers.
The
Company hereby waives presentment, demand for payment, notice of dishonor,
notice of protest and all other notices or demands in connection with the
delivery, acceptance, performance or default of this Note. No delay by the
Investor in exercising any power or right hereunder shall operate as a waiver
of
any power or right, nor shall any single or partial exercise of any power or
right preclude other or further exercise thereof, or the exercise thereof,
or
the exercise of any other power or right hereunder or otherwise; and no waiver
whatsoever or modification of the terms hereof shall be valid unless set forth
in writing by the Investor and then only to the extent set forth
therein.
Section
10. Amendments.
This
Note
may not be amended without the express written consent of both the Company
and
the Investor.
6
Section
11. 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 Texas (without giving effect to principles of
conflicts of laws of the State of Texas or any other state). Any action to
enforce the terms of this Note shall be exclusively brought in the state and/or
federal courts in Xxxxxx County, Texas.
Section
12. Successors
and Assigns.
The
rights and obligations of the Company and the Investor under this Note shall
be
binding upon and benefit the successors, assigns, heirs, administrators and
transferees of the parties. Notwithstanding the foregoing, neither this Note
nor
any of the rights, interests or obligations hereunder may be assigned, by
operation of law or otherwise, in whole or in part, by the Company, without
the
prior written consent of the Investor
Section
13. Notices.
All
notices, requests, demands and other communications to any party hereunder
shall
be in writing (including facsimile or similar writing) and shall be given to
such party at its address or facsimile number set forth below or such other
address or facsimile number as such party may hereafter specify by notice to
the
other parties listed below:
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(a)
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If to the Company:
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0000
Xxxxx Xx., Xxxxx 000
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Katy,
Texas 77493
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Telephone:
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000-000-0000
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Facsimile:
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000-000-0000
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| (b) | If to the Investor: At the address shown on the signature page | ||
Each
such
notice, request or other communication shall be effective (i) upon receipt
(provided, however, that notices received on a Saturday, Sunday or legal holiday
or after 5:00 p.m. on any other day will be deemed to have been received on
the
next business day), if given by legible facsimile transmission with proof from
sender of confirmation of receipt, or (ii) if given by any other means, when
delivered at the address specified in this Section 13.
Section
14. No
Rights of Stockholders.
Except
as
otherwise provided herein, this Note shall not entitle the Investor to any
of
the rights of a stockholder of the Company, including without limitation, the
right to vote, to receive dividends and other distributions, or to receive
any
notice of, or to attend, meetings of stockholders or any other proceedings
of
the Company, unless and to the extent converted into shares of Common Stock
in
accordance with the terms hereof.
Section
15. Entire
Agreement.
This
Note
and the Purchase Agreement constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereto and
thereof.
7
Section
16. Headings.
The
headings used in this Note are used for convenience only and are not to be
considered in construing or interpreting this Note.
IN
WITNESS WHEREOF,
the
Company has caused this Note to be duly executed by its duly authorized officer
as of the date indicated below.
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Date:
June __, 2008
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By:
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Name:
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Xxxx
Xxxxxxx
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Title:
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President
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Note
No. _____________________
Amount: $____________________
Investor
Name: _____________________
Address: _____________________
_____________________
8
ANNEX
A
CONVERSION
NOTICE
(To
be
Executed by the Registered Holder
in
order
to Convert the Note)
The
undersigned hereby irrevocably elects to convert the above Note No. _____ into
shares of Common Stock, $0.001 par value per share, of IntelliHome, Inc.
according to the provisions hereof, as of the date written below.
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Date
of Conversion Notice
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Principal
Amount of Note to be Converted
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Conversion
Price
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Number
of Shares to be Issued Upon Conversion
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Signature
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Name
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Address
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