THE HUMAN EXPERIENCE, INC. CONVERTIBLE PROMISSORY NOTE

Transcription

1 THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS. ACCORDINGLY, THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN OPINION OF COUNSEL SATISFACTORY TO THE BORROWER THAT SUCH REGISTRATION IS NOT REQUIRED OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT. THE HUMAN EXPERIENCE, INC. CONVERTIBLE PROMISSORY NOTE $[ ] [ ] [ ], 2016 FOR VALUE RECEIVED, The Human Experience, Inc., a Delaware corporation ( Borrower ), hereby unconditionally promises to pay to the order of [ ] or its assigns ( Creditor ), in lawful money of the United States of America, the principal sum of $[ ], together with interest thereon, payable on the dates and in the manner set forth below. This Convertible Promissory Note (this Note ) is one of a series of promissory notes issued pursuant to a Convertible Note Purchase Agreement dated October 30, 2016 (the "Note Purchase Agreement") evidencing indebtedness incurred by Borrower thereunder (collectively, the Notes ). 1. Principal. Unless this Note is converted pursuant to Section 4 below, the entire principal amount of this Note shall mature and be due and payable on, 2018 (the Maturity Date ). 2. Interest. The outstanding principal amount of this Note shall accrue simple interest from the date of this Note until the Maturity Date at the rate of 6.0% per annum. Unless this Note is converted pursuant to Section 4, accrued interest shall be payable on the Maturity Date or earlier prepayment of this Note. After the Maturity Date, accrued interest shall be payable upon demand. 3. Place, Manner and Application of Payments. All amounts payable hereunder shall be payable to Creditor at its address set forth below in Section 14 or such other address as Creditor specifies to Borrower in writing in immediately available United States funds. All payments on this Note shall be applied first to costs of collection (if any), then to accrued interest, and thereafter to the outstanding principal balance hereof. 4. Conversion Upon Qualified Financing. The entire unpaid principal amount of this Note and all accrued and unpaid interest thereon shall automatically convert on a dollar-for-

2 dollar basis into the equity securities ( Equity Securities ) sold by Borrower in any financing prior to the Maturity in which Borrower receives not less than $700,000 of proceeds (including any principal amount of Notes (but not any accrued interest) converted in connection with such financing) (a Qualified Financing ) at a conversion price equal to 65% of the purchase price paid for the securities issued in the Qualified Financing. Such conversion shall be deemed to occur under this Section 4(a) concurrently with the closing of the Qualified Financing, without regard to whether the Creditor has then delivered this Note (or the Lost Note Documentation (as defined below) where applicable) to the Borrower. The issuance of the Equity Securities upon conversion of this Note shall be upon the terms and subject to the conditions applicable in the Financing, and the Lender will be required to become a party to all stock purchase and investor rights agreements and be accorded the same rights and privileges and be subject to the same restrictions and obligations, as apply to other parties subscribing for Equity Securities in such Financing. Lost Note Documentation means documentation satisfactory to the Borrower with regard to a lost or stolen Note, including, if required by the Borrower, an affidavit of lost note and an indemnification agreement by Creditor in favor of the Borrower with respect to such lost or stolen Note. 5. Fractional Shares. No fractional shares shall be issued upon conversion of this Note. 6. Default and Remedies. Upon the occurrence and during the continuance of any of the following events (each an Event of Default ), the holders of a majority in principal amount of the outstanding Notes may declare the unpaid principal amount of this Note and all accrued and unpaid interest thereon to be immediately due and payable (except that such acceleration shall be automatic in the case of the Event of Default described in clause (d) below): (a) Borrower s failure to pay any principal or accrued interest as and when due in accordance with the terms of this Note; (b) The sale (other than in the ordinary course of Borrower s business) of any material portion of Borrower s assets, or the uninsured loss of any material portion of Borrower s assets; (c) Default in the payment or performance of any obligation, beyond any applicable cure period, owed by Borrower to any Creditor; or (d) The dissolution or termination of existence of Borrower; the appointment of a receiver of all or any part of the property of Borrower; a general assignment for the benefit of creditors by Borrower; the commencement by Borrower of a voluntary proceeding under any bankruptcy or insolvency laws; or Borrower consents to or becomes subject to the appointment of, or the levy, attachment or taking possession by, a receiver, liquidator, trustee, custodian or other similar official for the Borrower or any material portion of its assets; or the commencement of any involuntary proceeding under any bankruptcy or insolvency laws

3 against Borrower which remains undismissed, undischarged or unbonded for a period of sixty days or more; or the entry of an order granting relief in any proceeding against Borrower under any bankruptcy or insolvency laws. 7. Cumulative Rights. Creditor s rights and remedies under this Note shall be cumulative. No delay on the part of Creditor in the exercise of any power or right under this Note or under any other instrument executed pursuant hereto shall operate as a waiver thereof, nor shall a single or partial exercise of any power or right preclude other or further exercise thereof or the exercise of any other power or right. Creditor shall have and be entitled to exercise any and all other rights and remedies that may be available to it at law or in equity. 8. Attorneys Fees and Costs. If Borrower defaults in the payment of principal or interest due on this Note, Creditor shall be entitled to receive and Borrower agrees to pay all costs of collection incurred by Creditor, including without limitation, reasonable attorney s fees for consultation and suit. 9. Equal Treatment of Notes. All of the Notes shall rank pari passu as to the payment of principal and interest. Creditor agrees that any payments or prepayments to the holders of Notes, whether principal, interest or otherwise on account of such Notes, shall be made pro rata among holders of the Notes based upon the aggregate unpaid principal amount of the Notes, except that payments of costs of collection shall be made to the holders incurring such costs. By accepting this Note, Creditor agrees that if Creditor or any other holder of a Note obtains any payments (whether voluntary, involuntary, by prepayment, set-off or otherwise) of principal or interest on this Note or any other Note that exceed such holder s pro rata portion thereof, Creditor or such holder shall purchase from other holders of Notes such participation in such Notes held by them as is necessary to cause all such holders to share the excess payment ratably among each of them as provided in this paragraph. This Note and any term thereof may be amended, waived, discharged or terminated only by a written instrument signed by Borrower and the Creditor. 10. Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Delaware, excluding conflict of law principles (whether of the State of Delaware of any other jurisdiction) that would cause the application of laws of any other jurisdiction. 11. Usury. All agreements between Borrower and Creditor, whether now existing or hereafter arising and whether written or oral, are expressly subject to applicable law and limited so that in no contingency or event whatsoever, whether by acceleration of the maturity of this Note or otherwise, shall the amount paid, or agreed to be paid, to Creditor for the use, forbearance or detention of the money to be loaned hereunder or otherwise, exceed the maximum amount permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision of this Note, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then

4 ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstances Creditor shall ever receive anything of value as interest or deemed interest by applicable law under this Note an amount that would exceed the highest lawful rate, such amount that would be excessive interest shall be applied to the reduction of the principal amount owing under this Note or on account of any other indebtedness of Borrower to Creditor relating to this Note, and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal of this Note, such excess shall be refunded to Borrower. In determining whether or not the interest paid or payable with respect to any indebtedness of Borrower to Creditor, under any specific contingency, exceeds the highest lawful rate, Borrower and Creditor shall, to the maximum extent permitted by applicable law, (i) characterize any non-principal payment as an expense, fee or premium rather than as interest, (ii) amortize, prorate, allocate and spread the total amount of interest throughout the full term of such indebtedness so that the actual rate of interest on account of such indebtedness is uniform throughout the term thereof, and/or (iii) allocate interest between portions of such indebtedness, to the end that no such portion shall bear interest at a rate greater than that permitted by law. The terms and provisions of this paragraph shall control and supersede every other conflicting provision of all agreements between Borrower and Creditor. 12. Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified; or (ii) one (1) business day after deposit with a nationally recognized overnight courier for next day delivery, with verification of receipt. Notices shall be sent to the address provided pursuant to the Note Purchase Agreement. 13. Successors and Assigns. Neither party may assign or delegate its obligations hereunder without the prior written consent of the other party. The provisions of this Note shall be binding upon and shall inure to the benefit of any successors or assigns. This Note may be transferred only upon its surrender to the Borrower for registration of transfer, duly endorsed or accompanied by a duly executed written instrument of transfer in form satisfactory to the Borrower. Thereupon, this Note shall be reissued to, and registered in the name of, the transferee, or a new note for like principal amount and interest shall be issued to, and registered in the name of, the transferee. Interest and principal shall be paid solely to the registered holder of this Note. Such payment shall constitute full discharge of the Borrower s obligation to pay such interest and principal. 14. Severability. In the event any one or more of the provisions contained in this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. [Signature Pages Follow]

5 IN WITNESS WHEREOF, the parties have executed this Convertible Promissory Note as of the date first above written. THE HUMAN EXPERIENCE, INC. By: Charles E. Barrett Chief Executive Officer

6 IN WITNESS WHEREOF, the parties have executed this Convertible Promissory Note as of the date first above written. Creditor NAME OF CREDITOR: By: Name: Title: