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THIS
NOTE AND THE SECURITIES ISSUABLE UPON ITS CONVERSION HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT IS
AVAILABLE.
No.
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SMART
ENERGY SOLUTIONS, INC.
5%
Convertible Promissory Note Due May 30, 2008
| U.S. $500,000 |
April __, 2008
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Smart
Energy Solutions, Inc., a Nevada corporation (the
“Company” or the “Maker”), for value
received, hereby promises to pay to _______, or registered
assigns, the principal sum of five-hundred thousand U.S.
dollars ($500,000) plus all accrued but unpaid interest on May
30, 2008 (the “Maturity Date”). Interest shall be
computed on the basis of a 365-day year from the date hereof
on the unpaid balance of such principal amount from time to
time outstanding at the rate of five percent (5%) per annum,
such interest to be due and payable in full on the Maturity
Date.
This
Note shall become immediately due and payable without notice
or demand upon the occurrence at any time of any of the
following events of default (individually, an “Event of
Default” and collectively, “Events of
Default”):
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1.
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default
in the payment or performance of this or any other liability or
obligation of the Maker to the holder, including the payment when
due of any principal, premium or interest under this
Note;
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2.
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the
liquidation, termination of existence, dissolution, insolvency or
business failure of the Maker, or the appointment of a receiver or
custodian for the Maker or any part of its property if such
appointment is not terminated or dismissed within sixty (60) days;
or
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3.
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the
institution by or against the Maker or any indorser or guarantor of
this Note of any proceedings under the United States Bankruptcy
Code or any other federal or state bankruptcy, reorganization,
receivership, insolvency or other similar law affecting the rights
of creditors generally or the making by the Maker or any indorser
or guarantor of this Note of a composition or an assignment or
trust mortgage for the benefit of creditors.
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Upon
the occurrence of an Event of Default, the holder shall have
then, or at any time thereafter, all of the rights and
remedies afforded by the Uniform Commercial Code as from time
to time in effect in the State of New Jersey or afforded by
other applicable law.
Every
amount overdue under this Note shall bear interest from and
after the date on which such amount first became overdue at an
annual rate which is five (5) percentage points above the rate
per year specified in the first paragraph of this Note. Such
interest on overdue amounts under this Note shall be payable
on demand and shall accrue and be compounded monthly until the
obligation of the Maker with respect to the payment of such
interest has been discharged (whether before or after
judgment).
In
no event shall any interest charged, collected or reserved
under this Note exceed the maximum rate then permitted by
applicable law and if any such payment is paid by the Maker,
then such excess sum shall be credited by the holder as a
payment of principal.
All
payments by the Maker under this Note shall be made without
set-off or counterclaim and be free and clear and without any
deduction or withholding for any taxes or fees of any nature
whatever, unless the obligation to make such deduction or
withholding is imposed by law. The Maker shall pay and save
the holder harmless from all liabilities with respect to or
resulting from any delay or omission to make any such
deduction or withholding required by law.
Whenever
any amount is paid under this Note, all or part of the amount
paid may be applied to principal, premium or interest in such
order and manner as shall be determined by the holder in its
discretion.
No
reference in this Note to any guaranty or other document shall
impair the obligation of the Maker, which is absolute and
unconditional, to pay all amounts under this Note strictly in
accordance with the terms of this Note.
The
Maker agrees to pay on demand all costs of collection,
including reasonable attorneys’ fees, incurred by the
holder in enforcing the obligations of the Maker under this
Note.
No
delay or omission on the part of the holder in exercising any
right under this Note shall operate as a waiver of such right
or of any other right of such holder, nor shall any delay,
omission or waiver on any one occasion be deemed a bar to or
waiver of the same or any other right on any future occasion.
The Maker and every indorser or guarantor of this Note
regardless of the time, order or place of signing waives
presentment, demand, protest and notices of every kind and
assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange
or release of collateral, and to the addition or release of
any other party or person primarily or secondarily
liable.
1.
Conversion .
Upon the earlier of (i) May 30, 2008, and (ii) the consummation of
the Company’s offering (the “Offering”) pursuant
to the Placement Agent Agreement, dated April 4, 2008, between the
Company and EKN Financial Services, Inc., the outstanding principal
and all accrued and unpaid interest under this Note shall be
converted into fully-paid and non-assessable shares of the
Company’s common stock, $0.001 par value (the “Common
Stock”), and Common Stock purchase warrants, each entitling
the holder to purchase one share of Common Stock at an exercise
price equal to the purchase price of the Common Stock sold in the
Offering at any time on or before the fifth anniversary of the date
of this Note. The number of shares of Common Stock that shall be
issued upon conversion of this Note shall
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