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Ex-10.33
Form of the Convertible Promissory Note issued April 1999
EXHIBIT 10.33
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR
TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT IS IN
EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE.
THIS PROMISSORY NOTE IS SUBJECT TO TRANSFERABILITY RESTRICTIONS PURSUANT TO
SECTION 7 HEREIN AND SHALL NOT BE TRANSFERRED BY THE COMPANY UNLESS THE HOLDER
HEREOF COMPLIES THERE WITH. ANY ATTEMPTED TRANSFER OF SECURITIES NOT IN
COMPLIANCE WITH SUCH SECTION 7 SHALL BE NULL AND VOID.
TELEGEN CORPORATION
Convertible Promissory Note
US $100,000 Foster City, California
April 9, 1999
FOR VALUE RECEIVED, TELEGEN CORPORATION, a California corporation (together
with its successors and assigns, the "Company"), promises to pay to the order of
Bernard Brown (the "Holder"), (i) an amount (the "Face Value") of US $100,000
plus (ii) simple interest on the unpaid balance at the time such interest is
due. Interest on this Note shall be paid at a rate equal to Ten Percent (10%)
per annum and shall be payable five years from the date hereof. Payment of all
amounts due hereunder shall be made by wire transfer, subject to approval of the
US Bankruptcy Court for the Northern District of California (the "Court").
The following is a statement of the rights of the Holder and the conditions
to which this Note is subject, to which the Holder, by acceptance of this Note,
hereby agrees:
1. REPAYMENT OBLIGATION
(a) REPAYMENT. The Company shall be required to repay all
principal and any outstanding interest on this Note in full five (5) year
from the date hereof (the "Repayment Obligation"). The Company shall not be
entitled to prepay any portion of the principal or interest at any time
before this Note is due in full, except with the written approval of the
Holder and upon the approval of the Court.
(b) ADJUSTMENT IN NOTE'S FACE VALUE. Upon any prepayment by the
Company of this Note, the Company will on its books and records reduce the
face value of this Note and send notice of such change to the Holder hereof.
To the extent the Note's face value is greater than zero on the Company's
books and records, the Company will upon request by the Holder hereof,
deliver a new Note of like tenor in the principal amount remaining on such
Note.
2. CONVERSION
(a) CONVERSION. Upon confirmation of a Plan of Reorganization by
the Court, the Holder shall have the option, in lieu of repayment in cash, to
convert, in whole or in part, any portion of the outstanding principal
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or interest on the Note (a "Portion") to the Company's post-reorganization
common stock by (i) surrender of this Note, together with (ii) an executed
Notice of Conversion, substantially in the form of EXHIBIT A attached hereto, at
the Company's Principal Executive Office. The number of shares of Common Stock
into which any Portion may be converted shall be determined by dividing the
dollar amount of such Portion by 50% of the average of the five day closing
prices of the Company's common stock as reported on the OTC Bulletin Board prior
to April 9, 1999 (the "Conversion Price"). No fractional shares or scrip
representing fractions of shares will be issued on conversion, and the number of
shares issued shall be rounded up to the nearest whole share and adjusted for
any splits that may have occurred prior to conversion. The shares of Common
Stock issued or issuable upon conversion of this Note are referred to herein as
the "Shares."
(b) ISSUANCE OF SECURITIES ON CONVERSION. Conversion of this Note,
in whole or in part, shall occur if the Holder elects to convert under
Section 2(a) above. As soon as practicable after conversion of all or part of
this Note, the Company, at its expense, will cause to be issued, in the name
of the Holder, or to such persons as the Holder may designate, and delivered
to the Holder's registered address, a certificate or certificates for the
total number of shares of the Company's capital stock to which the Holder
shall be entitled on such conversion. Such Shares issued pursuant to
Conversion shall be free trading shares, as defined in 11 USC Sec. 1145
(a)(1)(A) of the US Bankruptcy Code.
3. NOTICES. Any notice, request, or other communications required or
permitted hereunder shall be in writing and shall deemed to have been duly given
if sent by facsimile, or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier or personal delivery, addressed (a)
if to the Holder, to it at the last known address appearing on the books of the
Company maintained for such purpose, or (b) if to the Company, to it at 204 East
Second Avenue, Suite 256, San Mateo, California 94401, attention: Chief
Executive Officer, telephone (650) 261-9400, facsimile (650) 261-9468. Any party
hereto may by notice so given change its address for future notice hereunder.
All such notices will be deemed to have been given (i) upon confirmation of
delivery, if sent by facsimile or (ii) upon delivery, if sent by courier or
personal delivery.
4. TRANSFERABILITY. With respect to any offer, sale or other
disposition of this Note or any portion thereof, the Holder will give written
notice to the Company prior thereto, describing briefly the manner of the
proposed disposition, and, if requested by the Company, a written opinion of
the Holder's counsel to the effect that such offer, sale or other
distribution may be effected without registration or qualification with any
federal or state law then in effect or necessary compliance with any other
transferability restrictions resulting thereto. Promptly upon receiving such
written notice and reasonably satisfactory opinion, if so requested, the
Company, as promptly as practicable, shall notify the Holder that the Holder
may sell or otherwise dispose of this Note. Subject to compliance with
applicable state and federal law and the terms of the notice delivered to the
Company, the Holder may transfer this Note or any portion thereof only by
surrendering it to the Company with a duly executed Assignment Form,
substantially in the form attached hereto as EXHIBIT B, whereupon the Company
will cancel such Note and execute and deliver one or more new Notes in the
names and amounts specified in such instrument and, if the Holder's entire
interest in such Note is not being assigned, in the name of the Holder for
the balance of such interest, unless otherwise specified in the Assignment
Form. If a determination has been made pursuant to this Section 4 that the
opinion of counsel for the Holder is not reasonably satisfactory to the
Company, the Company shall so notify the Holder promptly after such
determination has been made. Any attempted transfer of the Note not in
compliance with this Section 4 shall be null and void.
5. ASSIGNMENT. The rights and obligations of the Company and the
Holder shall be binding upon and benefit to the successors, assigns, heirs,
administrators, and transferees of the parties. The Company may not assign
its rights and obligations hereunder without the written consent of the
Holder and the approval of the Court.
6. AMENDMENT. This Agreement and Note may not be modified or amended
except by the written agreement of the parties and the approval of the US
Bankruptcy Court.
7. INTEGRATION: NO SHAREHOLDER RIGHTS. This Agreement and Note constitute
the full and entire understanding and agreement between the parties hereto with
regard to the subject matter hereof, and supersede any prior or contemporaneous
understandings, agreements or representations between them that relate to the
subject matter. Nothing contained in this Note shall be construed as conferring
upon the Holder or any other person the right to vote or to consent or to
receive notice as a shareholder in respect of meetings of shareholders for the
election of directors of the Company or any other matters or any rights
whatsoever as a shareholder of the
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Company; and no dividends or interest shall be payable or accrued in respect of
this Note or the interest represented hereby or the Shares obtainable hereunder
until, and only to the extent that, this Note shall have been converted.
8. CALIFORNIA LAW. This Note and the obligations of the Company and
the Holder hereunder shall be governed by and construed in accordance with
the laws of the State of California and applicable provisions of the US
Bankruptcy Code, as amended.
9. COURT APPROVAL. This Note is subject to approval by the Court and
shall not be legally binding upon the Holder or the Company until and unless
approved by the Court.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly
authorized representative on the date first above written.
Telegen Corporation
By:
/s/ JESSICA L. STEVENS
-----------------------------
Jessica L. Stevens
President/CEO
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EXHIBIT A
NOTICE OF EXERCISE FORM
(To be executed only upon partial or full conversion of
the attached Note pursuant to the terms and conditions
of Section 2 of the Note)
The undersigned registered Holder of the attached Note hereby irrevocably
converts in face value to Common Stock of Telegen Corporation at the Conversion
Price and on the terms and conditions specified in the attached Note.
The undersigned requests that a certificate (or certificates in denominations of
shares) for ____________________ shares of Common Stock of Telegen Corporation,
representing indebtedness of $ _____________________ , hereby be issued in the
name of and delivered to (circle one) (a) the undersigned or (b) _____________
_____________________whose address is _____________________________________and,
if such shares of Common Stock shall not include all the shares of Common Stock
issuable as provided in the attached Note, that a new Note of like tenor for the
number of shares of Common Stock of Telegen Corporation not being purchased
hereunder be issued in the name of and delivered to (circle one) (a) the
undersigned or (b) _________________whose address is _________________________.
Dated:_________________________________
By:
________________________________
(Signature of Registered Holder)
Title:
________________________________
NOTICE: The signature to this Notice of Exercise must correspond with the name
as written upon the face of the attached Note in every particular,
without alteration or enlargement or any change whatever.
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EXHIBIT B
ASSIGNMENT FORM
(To be executed only upon the assignment of the
attached Note pursuant to the terms and conditions of
Section 4 of the Note)
FOR VALUE RECEIVED, the undersigned registered Holder of the attached Note
hereby sells, assigns and transfers unto ______________________________________,
whose address is ___________________________________ all of the rights of the
undersigned under the attached Note, with respect to US $_________ of
indebtedness of Telegen Corporation and, if the entire Note is not being
transferred, then a new Note of like tenor for the amount of indebtedness of
Telegen Corporation not being transferred hereunder shall be issued in the name
of and delivered to the undersigned, and does hereby irrevocably constitute and
appoint _________________attorney to register such transfer on the books of
Telegen Corporation maintained for the purpose, with full power of substitution
in the premises.
Dated:_________________________________
By:
________________________________
(Signature of Registered Holder)
Title:
________________________________
NOTICE: The signature to this Notice of Exercise must correspond with the name
as written upon the face of the attached Note in every particular,
without alteration or enlargement or any change whatever.
