Exhibit 10.1
 
CONVERTIBLE PROMISSORY NOTE
$______
 
 
FOR VALUE RECEIVED, OriginOil, Inc., a Nevada corporation, (the “Borrower”) with
approximately 23,305,510 shares of common stock issued and outstanding, promises
to pay to ___________, a ________________, or its assignees (the “Lender”) the
Principal Sum along with the Interest and any other fees according to the terms
herein (this “Note”). This Note shall become effective on ____________ (the
“Effective Date”).
 
The Principal Sum is _____________($________) plus accrued and unpaid interest.
 
1.         Maturity Date. The Maturity Date is six (6) months from the Effective
Date, and is the date upon which the Principal Sum of this Note and unpaid
interest and fees (the “Note Amount”) shall be due and payable.
 
2.         Interest. This Note shall bear interest at the rate of Ten Percent
(10%) per year.
 
3.         Conversion.  The  Lender  has  the  right,  at  any  time  after  the  Effective  Date,  at  its
election, to convert all or part of the Note Amount into shares of fully paid
and non-assessable shares of common stock of the Borrower (the “Common Stock”).
The conversion price shall be the lesser of (a) $0.50 per share of Common Stock
or (b) Fifty Percent (50%) of the lowest trade price of Common Stock recorded on
any trade day after the Effective Date (the “Conversion Price”). The Conversion
Price shall be subject to a conversion floor price described in Section 4 of
this Note. The conversion formula shall be as follows: Number of shares
receivable upon conversion equals the dollar conversion amount divided by the
Conversion Price. A conversion notice (the “Conversion Notice”) may be delivered
to Borrower by method of Lender’s choice (including but not limited to email,
facsimile, mail, overnight courier, or personal delivery), and all conversions
shall be cashless and not require further payment from the Lender. If no
objection is delivered from the Borrower to the Lender, with respect to any
variable or calculation of the Conversion Notice within 24 hours of delivery of
the Conversion Notice, the Borrower shall have been thereafter deemed to have
irrevocably confirmed and irrevocably ratified such notice of conversion and
waived any objection thereto. The Borrower shall deliver the shares of Common
Stock from any conversion to the Lender (in any name directed by the Lender)
within three (3) business days of Conversion Notice delivery. The Conversion
Price shall be subject to equitable adjustments for stock splits, stock
dividends or rights offerings by the Borrower relating to the Borrower’s
securities or the securities of any subsidiary of the Borrower, combinations,
recapitalization, reclassifications, extraordinary distributions and similar
events.
 
4.         Conversion Floor. The Borrower has the right to enforce a conversion
floor price of  $0.40 per share (the “Conversion Floor Price”). If Borrower
receives a Conversion Notice in which the Conversion Price is less than the
Conversion Floor Price and elects to enforce the Conversion Floor Price, then
the Lender will incur a conversion loss, which the Borrower must make whole by
paying the amount of the conversion loss by cash payment, and any such cash
payment  must  be  made  by  the  third  day  from  the  time  of  the  Conversion  Notice.  The
conversion loss shall be defined as follows:

 
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 Conversion Loss = [(High trade price on the day of conversion) x (Number of
shares that would have been issued if there was no floor)] – [(High trade price
on the day of conversion) x (number of shares being issued with the floor)].

 
In the event that any Borrower default occurs among any of the agreements
between the Borrower and Lender, inclusive of the terms of conversion, the terms
of this Section 4 shall automatically and permanently terminate.
 
In the event that the Borrower either (a) issues stock at any price in any type
of issuance or sale including but not limited to sale, conversion, exchange, and
compensation to any party (including the Lender) below the Conversion Floor
Price, or (b) if the Borrower enters into any agreement that may in the future
provide for such issuance at any price, in any type of issuance or sale
including but not limited to sale, conversion, exchange, and compensation to any
party (including the Lender) below the Conversion Floor Price, then the terms of
this Section 4 shall automatically and permanently terminate. In the event that
the Borrower enters into any agreement that provides for a floorless conversion,
or floorless convertible, or floorless exchangeable security, then the terms of
this Section 4 shall automatically and permanently terminate.
 
5.         Conversion Delays. If Borrower fails to deliver shares in accordance
with the timeframe stated in Section 3, the Lender, at any time prior to selling
all of those shares, may rescind any portion, in whole or in part, of that
particular conversion attributable to the unsold shares and have the rescinded
conversion amount returned to the Principal Sum with the rescinded
conversion  shares  returned  to  the  Borrower  (under  the  Lender’s  and  the  Borrower’s
expectations that any returned conversion amounts shall tack back to the
original date of this Note). In addition, for each conversion, in the event that
shares are not delivered by the fourth business day (inclusive of the day of
conversion), a penalty of $2,000 per day shall be assessed for each day after
the third business day (inclusive of the day of the conversion) until share
delivery is made; and such penalty shall be added to the Principal Sum of this
Note (under the Lender’s and the Borrower’s expectations that any penalty
amounts shall tack back to the original date of this Note).
 
6.         Limitation of Conversions. In no event shall the Lender be entitled
to convert any portion of this Note in excess of that portion of this Note upon
conversion of which the sum of (1) the number of shares of Common Stock
beneficially owned by the Lender and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of this Note or the unexercised or unconverted portion of
any other security of the Borrower subject to a limitation on conversion or
exercise analogous to the limitations contained herein) and (2) the number of
shares of Common Stock issuable upon the conversion of the portion of this Note
with respect to which the determination of this proviso is being made, would
result in beneficial ownership by the Lender and its affiliates of more than
4.99% of the outstanding shares of Common Stock. For purposes of the proviso of
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise
provided in clause (1) of such proviso,

 
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provided, further, however, that the limitations on conversion may be waived by
the Lender upon, at the election of the Lender, not less than 61 days prior
notice to the Borrower, and the provisions of the conversion limitation shall
continue to apply until such 61st day (or such later date, as determined by the
Lender, as may be specified in such notice of waiver).
 
7.         Payment. The Borrower may not prepay this Note prior to the Maturity
Date. Within six (6) days prior to the Maturity Date, Borrower shall provide
Lender with a written notice to pay the Note Amount on the Maturity
Date.  Within three (3) days of receiving written notice, the Lender shall elect
to either (a) accept payment of the Note Amount or (b) convert any part of the
Note Amount into shares of Common Stock. If the Lender elects to convert part of
the Note Amount into shares of Common Stock, then the Borrower shall pay the
remaining balance of the Note Amount by the Maturity Date.
 
8.        Piggyback Registration Rights. The Borrower shall include on the next
registration statement the Borrower files with SEC (or on the subsequent
registration statement if such registration statement is withdrawn) all shares
of Common Stock issuable upon conversion of this Note unless such shares of
Common Stock are eligible for resale under Rule 144. Failure to do so shall
result in liquidated damages of Twenty Five Percent (25%) of the outstanding
principal balance of this Note being immediately due and payable to the Lender
at its election in the form of cash payment or addition to the balance of this
Note.
 
9.         Terms of Other Financings.  So long as this Note, or other
convertible note transactions currently in effect between the Lender and
Borrower, are outstanding (the “Outstanding Notes”), upon any issuance
(including this Note) by the Borrower or any of its subsidiaries of any security
with any term more favorable to the holder of such security or with a term in
favor of the holder of such security that was not similarly provided to the
Lender in the Outstanding Notes, then such additional or more favorable term
shall, at Lender’s option, become a part of any or all of the Outstanding Notes
with the Lender. The Borrower shall promptly notify the Lender of any additional
or more favorable terms and respond promptly to Lender’s periodic inquiry about
any favorable additional terms. The types of terms contained in another security
that may be more favorable to the holder of such security include, but are not
limited to, terms addressing conversion discounts, conversion price, conversion
look back periods, interest rates, original issue discounts, loan default fees,
stock sale price, private placement price per share, and warrant coverage. For
purposes of clarification, the issuance of any common stock resulting from the
conversion of another security, whether issued and outstanding before or after
the Effective Date, at a net effective price per share below the Conversion
Price shall result in an adjustment of the Conversion Price to such lower price
per share.
 
10.       Lender’s Representations. The Lender hereby represents and warrants to
the Borrower that (i) it is an “accredited investor” as such term is defined in
Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as
amended (the “Securities Act”), (ii) it understands that this Note and the
shares of Common Stock underlying this Note (collectively, the “Securities”)
have not been registered under the Securities Act by reason of a claimed
exemption under the provisions of the Securities Act that depends, in part, upon
the Lender’s investment intention; in this connection, the Lender hereby
represents that it is purchasing the Securities for the Lender’s own account for
investment and not with a view toward the resale or

 

 

 
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distribution to others, (iii) the Lender, if an entity, further represents that
it was not formed for the purpose of purchasing the Securities, (iv) the Lender
acknowledges that the issuance of this Note has not been reviewed by the United
States Securities and Exchange Commission (the “SEC”) nor any state regulatory
authority since the issuance of this Note is intended to be exempt from the
registration requirements of Section 4(2) of the Securities Act and Rule 506 of
Regulation D, and (v) the Lender acknowledges receipt and careful review of this
Note, the Borrower’s filings with the SEC (including without limitation, any
risk factors included in the Borrower’s most recent Annual Report on Form 10-K),
and any documents which may have been made available upon request as reflected
therein, and hereby represents that it has been
furnished  by  the  Borrower  with  all  information  regarding  the  Borrower,  the  terms  and
conditions of the purchase and any additional information that the Lender has
requested or desired to know, and has been afforded the opportunity to ask
questions of and receive answers from duly authorized officers or other
representatives of the Borrower concerning the Borrower and the terms and
conditions of the purchase.
 
11.       Borrower’s Representations.  The Borrower is duly organized, validly
existing and in
good  standing  under  the  laws  of  the  jurisdiction  of  its  organization  with  full  power  and
authority to own, lease, license and use its properties and assets and to carry
out the business in which it proposes to engage.  The Borrower has the requisite
corporate power and authority to execute, deliver and perform its obligations
under this Note and to issue and sell this Note. All necessary proceedings of
the Borrower have been duly taken to authorize the execution, delivery, and
performance of this Note.  When this Note is executed and delivered by the
Borrower, it will constitute the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with their terms, except
as such enforceability may be limited by general principles of equity or to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
 
12.       Default. The following are events of default under this Note: (i) the
Borrower shall fail to pay any principal under this Note when due and payable
(or payable by conversion) thereunder; or (ii) the Borrower shall fail to pay
any interest or any other amount under this Note when due and payable (or
payable by conversion) thereunder; or (iii) a receiver, trustee or other similar
official shall be appointed over the Borrower or a material part of its assets
and such appointment shall remain uncontested for twenty (20) days or shall not
be dismissed or discharged within sixty (60) days; or (iv) the Borrower shall
become insolvent or generally fails to pay, or admits in writing its inability
to pay, its debts as they become due, subject to applicable grace periods, if
any; or (v) the Borrower shall make a general assignment for the benefit of
creditors; or (vi) the Borrower shall file a petition for relief under any
bankruptcy, insolvency or similar law (domestic or foreign); or (vii) an
involuntary proceeding shall be commenced or filed against the Borrower; or
(viii) the Borrower shall lose its status as “DTC Eligible” or the Borrower’s
shareholders shall lose the ability to deposit (either electronically or by
physical certificates, or otherwise) shares into the DTC System; or (ix) the
Borrower shall become delinquent in its filing requirements as a fully-reporting
issuer registered with the SEC.
 

 
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13.       Remedies. In the event of any default, the Note Amount shall become
immediately due and payable at the Mandatory Default Amount. The Mandatory
Default Amount shall be 150%of the Note Amount. Commencing five (5) days after
the occurrence of any event of default that results in the eventual acceleration
of this Note, the interest rate on the Mandatory Default Amount shall accrue at
a default interest rate equal to the lesser of ten percent (10%) per annum or
the maximum rate permitted under applicable law. In connection with such
acceleration described herein, the Lender need not provide, and the Borrower
hereby waives, any presentment, demand, protest or other notice of any kind, and
the Lender may immediately and without expiration of any grace period enforce
any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. While the Mandatory Default Amount is
outstanding and default interest is accruing, the Lender shall have all rights
as a holder of this Note until such time as the Lender receives full payment
pursuant to this paragraph, or has converted all the remaining Mandatory Default
Amount and any other outstanding fees and interest into Common Stock under the
terms of this Note. Nothing herein shall limit Lender’s right to pursue any
other remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Borrower’s failure to timely deliver certificates representing
shares of Common Stock upon conversion of this Note as required pursuant to the
terms hereof.
 
14.       No Shorting. Lender agrees that so long as this Note from Borrower to
Lender remains outstanding, the Lender shall not enter into or effect “short
sales” of the Common Stock or hedging transaction which establishes a net short
position with respect to the Common Stock of the Borrower. The Borrower
acknowledges and agrees that upon delivery of a Conversion Notice by the Lender,
the Lender immediately owns the shares of Common Stock described in the
Conversion Notice and any sale of those shares issuable under such Conversion
Notice would not be considered short sales.
 
15.       Assignability. The Borrower may not assign this Note. This Note shall
be binding upon the Borrower and its successors and shall inure to the benefit
of the Lender and its successors and assigns and may be assigned by the Lender
to anyone of its choosing without Borrower’s approval subject to applicable
securities laws.
 
16.       Governing
 Law.  This  Note  shall  be  governed  by,  and  construed  and  enforced  in
accordance with, the laws of the State of Nevada, without regard to the conflict
of laws principles thereof. Any action brought by either party against the other
concerning the
transactions  contemplated  by  this  Agreement  shall  be  brought  only  in  the  state  courts  of
Nevada or in the federal courts located in Clark County, in the State of Nevada.
Both parties and the individuals signing this Agreement agree to submit to the
jurisdiction of such courts.
 
17.       Delivery of Process by the Lender to the Borrower. In the event of any
action or proceeding by the Lender against the Borrower, and only by the Lender
against the Borrower, service of copies of summons and/or complaint and/or any
other process which may be served in any such action or proceeding may be made
by the Lender via U.S. Mail, overnight delivery service such as FedEx or UPS,
email, fax, or process server, or by mailing or otherwise delivering a copy of
such process to the Borrower at its last known attorney as set forth in its most
recent SEC filing.

 
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18.       Attorney Fees. In the event any attorney is employed by either party
to this Note with regard to any legal or equitable action, arbitration or other
proceeding brought by such party for the enforcement of this Note or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Note, the prevailing party in such proceeding shall be
entitled to recover from the other party reasonable attorneys' fees and other
costs and expenses incurred, in addition to any other relief to which the
prevailing party may be entitled.
 
19.       Transfer Agent Instructions. In the event that an opinion of counsel,
such as but not limited to a Rule 144 opinion, is needed for any matter related
to this Note or the Common Stock the Lender has the right to have any such
opinion provided by its counsel. If the Lender chooses to have its counsel
provide such opinion, then the Lender shall provide the Borrower with written
notice. Within three (3) business days of receiving written notice, the Borrower
shall instruct its transfer agent to rely upon opinions from the Lender’s
counsel (the “Transfer Agent Reliance Letter”). A penalty of $2,000 per day
shall be assessed for each day after the third business day (inclusive of the
day of request) until the Transfer Agent Reliance Letter is delivered. If the
Lender requests that the Borrower’s counsel issue an opinion, then the Borrower
shall cause the issuance of the requested opinion within three (3) business
days. A penalty of $2,000 per day shall be assessed for each day after the third
business day (inclusive of the day of request) until the requested opinion is
delivered. The Lender and the Borrower agree that all penalty amounts shall be
added to the Principal Sum of this Note and shall tack back to the Effective
Date of this Note, with respect to the holding period under Rule 144. In the
event that the Borrower proposes to replace its transfer agent, the Borrower
shall provide, prior to the effective date of such replacement, a fully executed
Irrevocable Transfer Agent Reliance Letter in a form as initially delivered
pursuant to this Note. The Borrower warrants that it will not direct its
transfer agent not to transfer or delay, impair, and/or hinder its transfer
agent in transferring (or issuing)(electronically or in certificated form) any
certificate for the Securities to be issued to the Lender and it will not fail
to remove (or directs its transfer agent not to remove or impairs, delays,
and/or hinders its transfer agent from removing) any restrictive legend (or to
withdraw any stop transfer instructions in respect thereof) on any certificate
for the Securities when required by this Note. The Borrower acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Lender, by vitiating the intent and purpose of the transactions contemplated
hereby. Accordingly, the Borrower acknowledges that the remedy at law for a
breach of its obligations under this Note may be inadequate and agrees, in the
event of a breach or threatened breach by the Borrower of these provisions, that
the Lender shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate transfer, without the
necessity of showing economic loss and without any bond or other security being
required.
 
20        Notices. Any notice required or permitted hereunder (including
Conversion Notices) must be in writing and either personally served, sent by
facsimile or email transmission, or sent by overnight courier. Notices shall be
deemed effectively delivered at the time of transmission if by facsimile or
email, and if by overnight courier the business day after such notice is
deposited with the courier service for delivery.

 
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IN WITNESS WHEREOF, the authorized agents of the Borrower and the Lender have
caused this Note to be duly executed as of the Effective Date.
 

OriginOil, Inc. (the “Borrower”)  
 
 
 
            By:  /s/
 
 
 
 
 
 
Riggs Eckelberry
          Chief Executive Officer                        
(the "Lender")
 
 
 
 
 
 
        By:            

 

 
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