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US $34,000
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January 8, 2008
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PROMISSORY NOTE FOR VALUE RECEIVED,
the undersigned, Ecology Coatings, Inc., a Nevada corporation (the
“The Maker”), promises to pay to the order of Seven
Industries, Ltd. (the “Holder”), the principal amount
of Thirty Four Thousand and 00/100 dollars ($34,000.00), together
with interest thereon as provided below.
ARTICLE I TERMS OF REPAYMENT
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1.
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Interest. The Note shall bear interest (“Interest”)
equal to five (5%) percent per annum on the unpaid principal
balance, computed on a three hundred and sixty-five (365) day
year, during the term of the Note. The Maker shall pay all
Interest. In no event shall the rate of Interest payable on this
Note exceed the maximum rate of interest permitted to be charged
under applicable law.
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2.
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Payments. All payments by the Maker under this Note shall first
be credited against costs and expenses provided for hereunder,
second to the payment of any penalties, third to the payment of
accrued and unpaid interest, if any, and the remainder shall be
credited against principal. All payments due hereunder shall be
payable in legal tender of the United States of America, and in
same day funds delivered to the Holder by cashier’s check,
certified check, or any other means of guaranteed funds to the
mailing address provided below, or at such other place as the
Holder or any holder hereof shall designate in writing for such
purpose from time to time. If a payment hereunder otherwise would
become due and payable on a Saturday, Sunday or legal holiday, the
due date thereof shall be extended to the next succeeding business
day, and Interest, if any, shall be payable thereon during such
extension.
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3.
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Maturity Date. All outstanding principal and interest shall be
payable within fifteen (15) days following receipt of a written
payment demand from the Holder.
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4.
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Pre-Payment Demand. If the Maker completes an
underwritten public offering of its common stock or other form of
security convertible into common stock pursuant to an effective
registration statement under the Securities Act of 1933 (the
“Act”), as amended, or a managed private offering
exempt from registration under Section 4(2) of the Act and
Regulation D promulgated thereunder (collectively, a
“New Offering”) which results in proceeds received by
the Maker net of underwriting discounts and commissions, of at
least One Million and 00/100 dollars ($1,000,000.00) (a
“Pre-Payment Event”), then at the sole and absolute
discretion of the Holder, and upon written demand to the Maker (the
“Pre-Payment Notice”), all amounts owed under this Note
shall become due and payable within fifteen (15) days
following Maker’s receipt of the Pre-Payment Notice.
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5.
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Exemption from Restrictions. It is the intent of the Maker and
the Holder in the execution of this Note that the indebtedness
hereunder be exempt from the restrictions of the usury laws of any
applicable jurisdiction. The Maker and the Holder agree that none
of the terms and provisions contained herein shall be construed to
create a contract for the use, forbearance or detention of money
requiring payment of interest at a rate in excess of the maximum
interest rate permitted to be charged by the laws of any applicable
jurisdiction. In such event, if any holder of this Note shall
collect monies which are deemed to constitute interest which would
otherwise increase the effective interest rate on this Note to a
rate in excess of the maximum rate permitted to be charged by the
laws of any applicable jurisdiction, all such sums deemed to
constitute interest in excess of such maximum rate shall, at the
option of such holder, be credited to the payment of this principal
amount due hereunder or returned to the Maker.
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ARTICLE II COVENANTS
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6.
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Conversion into Common Stock. If the Maker completes a New
Offering, the Maker shall give the Holder the option to convert
this Note, in whole or in part, into Common Stock of the Maker
based on a conversion price equal to the lower of: (a) the
closing bid price per share of the Common Stock on the date first
above written as reported on the Over-The-Counter Bulletin Board,
or if there is not such price on the Effective Date, then the last
bid price on the date nearest preceding the date first above
written, or; (b) the average price at which the Maker sells
its Common Stock in the New Offering (the “Conversion
Price”)(the “Conversion Shares”).
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7.
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Piggyback Registration. If the Conversion Shares and the
Underlying Shares (collectively, the “Shares”) have not
been otherwise registered and at any time the Maker proposes to
file a registration statement, whether or not for sale for the
Maker’s own account, on a form and in a manner that would
also permit registration of shares (other than in connection with a
registration statement on Forms S-4 or S-8 or any similar or
successor form) the Maker shall give to Holder, written notice of
such proposed filing promptly, but in any case at least twenty
(20) days before the anticipated filing. The notice referred
to in the preceding sentence shall offer the holder(s) holding the
Shares the opportunity to register such amount of the Shares as he
may request (a “Piggyback Registration”). Subject to
this Section, the Maker will include in each such Piggyback
Registration (and any related qualification under state blue sky
laws and other compliance filings, and in any underwriting involved
therein) that portion of the Shares with respect to which the Maker
has received written requests for inclusion therein within twenty
(20) days after the written notice from the Maker is given.
The holders holding any portion of the Shares will be permitted to
withdraw all or part of the Shares from a Piggyback Registration at
any time prior to the effective date of such Piggyback
Registration. Notwithstanding the foregoing, the Maker will not be
obligated to effect any registration of shares
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