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EXHIBIT 10.60
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF PRINCIPAL HEREOF OR INTEREST HEREON
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION (TOGETHER, THE
"SECURITIES LAWS") AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ENCUMBERED IN THE ABSENCE OF COMPLIANCE
WITH SUCH SECURITIES LAWS AND UNTIL THE ISSUER THEREOF SHALL HAVE
RECEIVED AN OPINION FROM COUNSEL ACCEPTABLE TO IT THAT THE PROPOSED
DISPOSITION WILL NOT VIOLATE ANY APPLICABLE SECURITIES
LAWS.
CONVERTIBLE NOTE
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Principal Amount: $__ 50,000_ __________
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August 13
, 2007
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FOR VALUE RECEIVED
, Hydrogen Power, Inc, a Delaware corporation
(the “Company”), hereby promises to pay to the
order of __ Gulfstream Financial Corp.,
LLC ________________
(“Holder”), the principal sum of _____
fifty thousand_ _________________________________ AND NO/100 DOLLARS ($_
50,000_ _______.00),
together with accrued interest on the unpaid principal balance
thereof at the rate of Ten percent (10.0%) per annum , calculated on the basis
of actual days elapsed in a year of 360 days.
Article 1
Payments
1.1
Principal and Interest . Except in the event of a conversion
of this Note in accordance with Article 2, or the prepayment
of this Note, the principal balance shall be due and payable on the
earlier of an equity financing completed by the Company or 180 days
from the above date. Any payments received shall be applied first
to any other charges due under this Note and thereafter to the
payment of the principal balance of this Note. In lieu of cash,
Holder agrees to receive all payments of interest under this Note
in shares of Common Stock (as defined herein) issued at the
Interest Conversion Price determined under
Article 2.
1.2
Manner of Payment . All payments of principal and interest
shall be made at such place as Holder shall designate to the
Company in writing. If any payment of principal or interest on this
Note is due on a day that is not a Business Day, such payment shall
be due on the next succeeding Business Day, and such extension of
time shall not be taken into account in calculating the amount of
interest payable under this Note. “Business Day” means
any day other than a Saturday, Sunday or legal holiday in the State
of Washington.
1.3
Prepayment . This Note may be prepaid, in whole or in part,
by the Company at any time and from time to time, without premium
or penalty. At Holder’s option, any payments on this Note
shall be applied first to pay Holder for all costs of collection of
any kind, including reasonable attorneys’ fees and expenses,
and thereafter to the payment of principal.
1.4
Warrant . The company will issue a warrant to the Holder to
purchase the Company’s Common Stock in an amount equal to the
principal amount of the Note. The exercise price of the warrant
will be equal the closing price of the Company’s Common Stock
on August 11, 2007 and will expire August 13, 2010.
Article 2
Conversion
2.1
Conversion . At Holder’s option, Holder shall have the
right at any time during the Conversion Period (as defined below)
to convert this Note, in accordance with the provisions of Section
2.2, in whole or in part, into fully paid and nonassessable shares
of the Company’s common stock, par value $.01 per share (the
“Common Stock”). The number of shares of Common Stock
into which this Note may be converted (“Conversion
Shares”) shall be determined by dividing the outstanding
principal amount of this Note to be converted, by the 25% discount
to the 10 day average closing price of the Company’s Common
Stock (the “Conversion Price”). The number of
shares of the Company’s Common Stock into which the interest
on this Note is to be converted shall be determined by dividing the
amount of interest due every 30 days by a 15% discount to the 10
day average closing price of such 30 day period (the
“Interest Conversion Price”). For all purposes of this
Note, the “Conversion Period” shall mean that period
from the Date of this Note to 180 days following the date of this
Note.
2.2
Method of Conversion . To convert this Note, Holder must
deliver a conversion notice substantially in the form attached
hereto as Annex A during the Conversion Period. No
fractional shares of Common Stock shall be issued upon conversion
of this Note. In lieu of any fractional share to which Holder would
otherwise be entitled upon conversion of this Note, the Company
will pay to Holder in cash the amount of the unconverted principal
balance of this Note that would otherwise be converted into such
fractional share. Upon the conversion of this Note, Holder shall
surrender this Note, duly endorsed, at the Company’s
principal office, and the Company shall, at its expense and as soon
as practicable thereafter, issue and deliver to Holder at such
principal office one or more certificates for the number of shares
of Common Stock to which Holder is entitled (bearing such legends
as are required by applicable state and federal securities laws in
the opinion of counsel to the Company), together with a check
payable to Holder for any cash amounts payable as described herein.
Any conversion of this Note shall be deemed to have been made
immediately prior to the close of business on the date of this
Note’s surrender, and the person or persons entitled to
receive Common Stock upon such conversion shall be treated for all
purposes as the record holder or holders of such Common Stock as of
such date. Upon this Note’s conversion, the Company will be
forever released from all of its obligations and liabilities
hereunder with regard to that portion of the principal amount being
converted, including without limitation the obligation to pay such
portion of the principal amount and accrued interest. If this Note
is converted in part only, the Company shall execute and deliver to
Holder a new unsecured promissory note in the principal amount
equal to the unconverted portion of this Note.
Article 3
Conversion Price Adjustments
3.1
Adjustment for Stock Splits or Combinations . In the event
of: (i) the payment of dividends on any of Company’s capital
stock payable in Common Stock or securities convertible into or
exercisable for Common Stock (“Common Stock
Equivalents”); (ii) the subdivision of the Company’s
outstanding shares of Common Stock into a greater number of shares;
or (iii) the combination of the Company’s outstanding shares
of Common Stock, by reclassification or otherwise; then, the
quotient (rounded to the nearest full cent) obtained by dividing
(a) the number of shares of Common Stock outstanding immediately
prior to such event, multiplied by the then-existing Conversion
Price, by (b) the total number of shares of Common Stock
outstanding immediately after such event, shall be the adjusted
Conversion Price per share.
2
3.2
Notice of Adjustment . Upon any adjustment of the Conversion
Price, the Company shall give written notice thereof within 30
days, by first-class mail, postage prepaid, addressed to Holder as
shown on the Company’s books, which notice shall state the
adjusted Conversion Price and set forth in reasonable detail the
method of calculation and the facts upon which such calculation is
based.
3.3
Effect of Reorganization, Reclassification, Merger, Etc. If
at any time the Company: (i) reorganizes its capital stock
(other than by the issuance of shares of Common Stock in
subdivision of outstanding shares of Common Stock, and other than
by a share combination, as provided for in Section 3.1), (ii)
consolidates or merges with another corporation, or any sells,
conveys, leases or otherwise transfers all or substantially all of
its property to any other corporation, which transaction is
effected in a manner such that the holders of Common Stock shall be
entitled to receive cash, stock, securities or assets with respect
to or in exchange for Common Stock, or (iii) pays a dividend or
makes any other distribution upon any class of its capital stock,
which dividend or distribut
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