THIS NOTE
HEREOF HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ SECURITIES ACT ”), OR ANY
APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW FOR
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED UNLESS IT HAS BEEN SO REGISTERED OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
CONVERTIBLE PROMISSORY
NOTE
Principal
Amount: $_______ Issue
Date: August ___, 2008
FOR VALUE RECEIVED , the undersigned , Sunburst Acquisitions
III, Inc. , a Colorado corporation (the “
Borrower ” or the “ Company
”), hereby promises to pay to the order of ___________
(together with each of their said heirs, personal
representatives, successors and assigns, and any such bearer, being
hereinafter referred to collectively as the “
Holder ”), on or before July 31, 2010 (the
“ Maturity Date ”), the principal sum of
________________________ Dollars ($_____) (this “
Note ” or the “ Loan
”). For purposes of this Note,
“Borrower” shall mean all successors in interest and
assignees, including, without limitation, pursuant to a merger,
consolidation, reorganization, recapitalization or other similar
restructuring event (collectively, a “
Reorganization ”), and all endorsers, sureties
and guarantors and any other person liable or to become liable with
respect to the Loan.
1. Additional
Consideration. In lieu of interest and as
additional consideration for this Note, Borrower shall issue to
Holder _____________ (__________) shares of the Borrower’s
common stock to be delivered to the Holder no later than thirty
(30) business days after the Issue Date of this Note.
2. Payment of
Principal.
The
Borrower shall pay the Holder any outstanding principal of this
Note on the Maturity Date, provided however that the Borrower may
pay the Holder prior to the Maturity Date in the event of a
Subsequent Financing as set forth in Section 3 below or in
accordance with Section 4 below.
3. Optional
Conversion. If upon the closing of the
Borrower’s next equity financing in which the Borrower sells
newly-issued shares of its equity securities or securities
convertible into equity securities, of one or more series (the
“Equity Securities”), the Borrower receives gross cash
proceeds of $1,000,000 or more (excluding the conversion of this
Note or other similar convertible notes or other securities) (the
“Subsequent Financing”) on or before the Maturity Date,
the Holder may elect to (i) convert the outstanding principal of
this Note into validly issued, fully paid and non-assessable shares
of Equity Securities of the same kind issued in the Subsequent
Financing (the “Subsequent Financing Securities”) at a
conversion price equal to 75% of the per share or unit purchase
price of the Subsequent Financing Securities (the
“Conversion”), or (ii) receive payment in cash of the
outstanding amount due under this Note (the “Cash
Payment”). The Holder shall notify the Borrower of
its election to either proceed with the Conversion or the Cash
Payment by providing written notice in the form of Exhibit A to
this Note, via electronic mail to a representative of the
Borrower. If the Holder elects the Conversion, the
Borrower shall issue to the Holder, within ten (10) days following
the closing of the Subsequent Financing, Subsequent Financing
Securities that are identical in all respects to the securities
issued by the Company in the Subsequent Financing and the Holder
shall have all the rights and benefits (including the benefits of
any representations and warranties, preemptive rights, rights of
first offer, co-sale rights and other similar rights) accorded to
the purchasers of the Subsequent Financing Securities, except any
thereof as are conditioned upon the holding of a minimum percentage
ownership in the Company. The Borrower shall not issue fractional
shares but shall pay to the Holder in cash the dollar equivalent of
any fractional shares on the closing date of the Subsequent
Financing. However, in the event that the Company does
not have the required number of shares of common stock authorized
to effectuate a conversion as contemplated in this section, then
such shares that are to be issued in accordance with such
conversion shall only be issued upon the Company filing the
required Certificate of Amendment to increase the authorized shares
of common stock of the Company.
4. Prepayment.
Borrower shall pay the entire outstanding principal
balance under this Note, (the “ Indebtedness
”), at anytime, in the Borrower’s sole discretion, on
or before the Maturity Date without penalty. The
Borrower shall give at least a 5 day notice to the Holder prior to
such repayment.
5. Acknowledgement
by the Holder . The Holder hereby represents and
warrants to the Borrower that the Holder has sufficient knowledge
and experience of financial and business matters so that the Holder
is able to evaluate the merits and risks of purchasing this Note
and the Holder has had substantial experience in previous private
and public purchases of securities. The Holder is an
“accredited investor” as that term is defined in Rule
501 of Regulation D under the Securities Act.
6. Event of
Default . Any of the following shall constitute an
“ Event of Default ” under this Note, and
shall give rise to the remedies provided in Section 6
herein:
|
|
The failure by
the Borrower to pay the Indebtedness or otherwise to satisfy when
due, as contemplated in Section 2, or comply with the
obligations set forth in Section 3 ;
|
|
|
The failure by
the Borrower to timely file and keep current periodic reports with
the SEC;
|
|
|
If the
Borrower: (i) makes a general assignment for the
benefit of creditors; (ii) is adjudicated a bankrupt or
insolvent; (iii) files a voluntary petition in bankruptcy;
(iv) takes advantage, as against its creditors, of any bankruptcy
law or statute of the United States of America or any state or
subdivision thereof now or hereafter in effect; (v) has a
petition or proceeding filed against it under any provision of any
bankruptcy or
|
