Exhibit 10.5

 

 

THE SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE OFFERED, SOLD TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

 

FOCUS UNIVERSAL INC.

UNSECURED CONVERTIBLE PROMISSORY NOTE

 

 

  Note No. 2017-01            $420,000 Dated: June 30, 2017     

 

 

1.       PRINCIPAL. For value received, Focus Universal Inc., a Nevada
corporation headquartered at 829 Lawson Street, City of Industry, CA 91748 (the
“Company”), hereby promises to pay to the order of Haitao Zhang, or his assigns
(the “Noteholder” and, collectively with the Company, the “Parties”), in lawful
money of the United States of America, and in immediately payable funds, the
principal sum of $420,000 (the “Obligation”). The principal hereof and any
unpaid accrued interest thereon shall be due and payable on the date which is
three years from the date of this Note (the “Maturity Date”).

 

2.       INTEREST. Interest on the unpaid principal amount of the Obligation
outstanding from time to time shall accrue at the annualized rate of 10% until
the Maturity Date and thereafter at an annualized default rate of 12%.
Computations of interest shall be made on the basis of a 365-day year, and the
actual number of days elapsed (the “Interest”).

 

3.       PAYMENTS. The Company hereby promises to pay to the Noteholder, in
lawful money of the United States of America, and in immediately payable funds,
the Obligation. The principal hereof and any unpaid accrued interest thereon
shall be due and payable on the Maturity Date (unless such payment date is
accelerated as provided in Section 8 hereof). Payment of all amounts due
hereunder shall be made at the address of the Noteholder provided for on the
signature page of this Note.

 

4.       PREPAYMENT. Company shall be entitled to prepay this Note prior to the
Maturity Date without premium or penalty.

 

5.       CONVERSION. This Note is convertible at the option of the Noteholder,
in his, her or its sole discretion, in whole or in part, at any time prior to
the Maturity Date into shares of common stock of the Company (the “Note Shares”)
at a conversion price equal to $1.75 per share (the “Conversion Price”).
Noteholder shall deliver to the Company a written Election to Convert, a form of
which is attached hereto. As soon as reasonably practicable after receipt of the
written Election to Convert, the Company shall issue and cause to be delivered
with all reasonable dispatch to or upon the written order of the Noteholder, and
in such name or names as the Noteholder may designate, a certificate or
certificates for the full number of Note Shares so purchased upon conversion of
the Note. Such certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a holder of record of such securities as of the date of delivery of the Election
to Convert, notwithstanding that the certificate or certificates representing
such securities shall not actually have been delivered or that the stock
transfer books of the Company shall then be closed. The Note shall be
convertible, at the election of the Noteholders, either in full or from time to
time in part and, in the event that the Note is converted in respect of less
than all of the Note Shares specified therein at any time prior to the Maturity
Date, a new Note evidencing the remaining portion of the indebtedness shall be
issued by the Company to the Noteholder.

 

 

 

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6.       APPLICATIONS OF PAYMENTS. Payments received by Noteholder pursuant to
the terms hereof shall be applied in the following manner: first, to the payment
of all expenses, charges, late payment fees, costs and fees incurred by or
payable to Noteholder and for which Company is obligated pursuant to the terms
of this Note, second, to the payment of all interest accrued to the date of such
payment; and third, to the payment of principal.

 

7.       DEFAULT. The occurrence of any one of the following events shall
constitute an Event of Default:

 

(a)       The non-payment, when due, of any principal or interest pursuant to
this Note;

 

(b)       The material breach of any representation or warranty in this Note or
in the Subscription Agreement or in any other agreement that may be entered into
by and between the Noteholder and the Company prior to the repayment of the
Note. In the event the Noteholder becomes aware of a breach as described in this
Section 7(b), the Noteholder shall notify the Company in writing of such breach
and the Company shall have 30 calendar days from the receipt of such notice to
cure the alleged breach;

 

(c)       The material breach of any covenant or undertaking in this Note or in
the Subscription Agreement, not otherwise provided for in this Section 7. In the
event the Noteholder becomes aware of a breach as described in this Section
7(c), the Noteholder shall notify the Company in writing of such breach and the
Company within shall have 30 calendar days from the receipt of such notice to
cure the alleged breach;

 

(d)       A default shall occur in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any
indebtedness of the Company or an event of default or similar event shall occur
with respect to such indebtedness, if the effect of such default or event
(subject to any required notice and any applicable grace period) would be to
accelerate the maturity of any such indebtedness or to permit the holder or
holders of such indebtedness to cause such indebtedness to become due and
payable prior to its express maturity;

 

(e)       The commencement by the Company of any voluntary proceeding under any
bankruptcy, reorganization, arrangement, insolvency, readjustment or debt,
receivership, dissolution, or liquidation law or statute or any jurisdiction,
whether now or hereafter in effect; or the adjudication of the Company as
insolvent or bankrupt by a decree of a court of competent jurisdiction; or the
petition or application by the Company for, acquiescence in, or consent by the
Company to, the appointment of any receiver or trustee for the Company or for
all or a substantial part of the property of the Company; or the assignment by
the Company for the benefit of creditors; or the written admission of the
Company of its inability to pay its debts as they mature; or

 

(f)       The commencement against the Company of any proceeding relating to the
Company under any bankruptcy, reorganization, arrangement, insolvency,
adjustment of debt, receivership, dissolution or liquidation law or statute or
any jurisdiction, whether now or hereafter in effect, provided, however, that
the commencement of such a proceeding shall not constitute an Event of Default
unless the Company consents to the same or admits in writing the material
allegations of same, or said proceeding shall remain undismissed for 30 calendar
days; or the issuance of any order, judgment or decree for the appointment of a
receiver or trustee for the Company or for all or a substantial part of the
property of the Company, which order, judgment or decree remains undismissed for
30 calendar days; or a warrant of attachment, execution, or similar process
shall be issued against any substantial part of the property of the Company.

 

8.       REMEDIES; LATE PAYMENT PENALTY. Upon the occurrence of any Event of
Default, the Noteholder may, by written notice to the Company, declare all or
any portion of the unpaid principal amount due to Noteholder, together with all
accrued interest thereon, immediately due and payable. The Noteholder may also
proceed against any guarantor of this obligation without waiving any rights
under the terms of this Note.

 

 

 

 

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9.       NOTICES. Notices to be given hereunder shall be in writing and shall be
deemed to have been sufficiently given if delivered personally or sent by
overnight delivery service or by facsimile transmission. Notice shall be deemed
to have been received on the date of personal delivery or facsimile
transmission, or if sent by overnight delivery service, shall be deemed to have
been received on the next delivery day after deposit with the courier or
messenger. The addresses of the Parties are set forth on the signature page of
this Note and a Party shall give written notice of any change of address to the
other Party.

 

10.      GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT GIVING EFFECT TO
THE RULES AND CONFLICTS OF LAW.

 

11.       EXCLUSIVE JURISDICTION AND VENUE. The parties agree that the Courts of
the County of Clark, state of Nevada shall have sole and exclusive jurisdiction
and venue for the resolution of all disputes arising under the terms of this
Agreement and the transactions contemplated herein.

 

12.       ATTORNEYS FEES. If any legal action or any other proceeding, including
action for declaratory relief, is brought for the interpretation or enforcement
of this Agreement, the Prevailing Party shall be entitled to recover reasonable
attorneys’ fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it may be entitled. “Prevailing Party”
shall include without limitation (a) a party who dismisses an action in exchange
for sums allegedly due; (b) the party who receives performance from the other
party of an alleged breach or a desired remedy that is substantially equivalent
to the relief sought in an action or proceeding; or (c) the party determined to
be the prevailing party by an arbitrator or a court of law.

 

13.       CONFORMITY WITH LAW. It is the intention of the Company and of the
Noteholder to conform strictly to applicable usury and similar laws.
Accordingly, notwithstanding anything to the contrary in this Note, it is agreed
that the aggregate of all charges which constitute interest under applicable
usury and similar laws that are contract for, chargeable or receivable under or
in respect of this Note, shall under no circumstances exceed the maximum amount
of interest permitted by such laws, and any excess, whether occasioned by
acceleration or maturity of this Note or otherwise, shall be canceled
automatically, and if theretofore paid, shall be either refunded to the Company
or credited on the principal amount of this Note.

 

14.       MISCELLANEOUS.

 

(a)       Every provision of this Note is intended to be severable. In the event
any term or provision hereof is declared by a court of competent jurisdiction,
to be illegal or invalid for any reason whatsoever, such illegality or
invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable.

 

(b)       No failure or delay on the part of Noteholder or any other holder of
this Note to exercise any right, power or privilege under this Note and no
course of dealing between the Parties shall impair such right, power or
privilege or operate as a waiver of any default or an acquiescence therein, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein expressly provided are
cumulative to, and not exclusive of, any rights or remedies, which Noteholder
would otherwise have. No notice to or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of Noteholder to any other or
further action in any circumstances without notice or demand.

 

(c)       The Company and any endorser of this Note hereby consent to renewals
and extensions of time at or after the maturity hereof, without notice, and
hereby waive diligence, presentment, protest, demand and notice of every kind.

 

 

 

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(d)       The Company may not assign its rights or obligations hereunder without
prior written consent of Noteholder. Subject to compliance with applicable
federal and state securities laws, Noteholder may assign all or any portion of
this Note without the prior consent of The Company. Upon surrender of the Note,
The Company shall execute and deliver one or more substitute notes in such
denominations and of a like aggregate unpaid principal amount or other amount
issued to Noteholder and/or to Noteholder’s designated transferee or
transferees. Noteholder may furnish any information in the possession of
Noteholder concerning The Company, or any of its respective subsidiaries, from
time to time to assignees and participants (including prospective assignees and
participants).

 

 

 

(SIGNATURE PAGE IMMEDIATELY FOLLOWS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the Company has caused this Note to be executed by its
officers thereunto duly authorized as of the date first written above.

 

  FOCUS UNIVERSAL INC.   A Nevada Corporation         /s/ Descheng Wang   BY:
Desheng Wang   ITS: Chief Executive Officer       ADDRESS: 829 Lawson Street,  
                      City of Industry, CA 91748

 

 

 

  NOTEHOLDER:           /s/ Haitao Zhang       By: Haitao Zhang       ADDRESS:
3688 Burnt Pine Drive                        Jacksonville, FL 32224          
JOINTLY WITH:           /s/ Man Chen       By: Man Chen       ADDRESS: 3688
Burnt Pine Drive                         Jacksonville, FL 32224

 

 

[SIGNATURE PAGE TO NOTE]

 

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FORM OF ELECTION TO CONVERT

 

The undersigned, the holder of the attached Note, hereby irrevocably elects to
exercise their right to convert $_____________ of the Note into shares of common
stock of Focus Universal Inc. and requests that the certificates for such
securities be issued in the name of, and delivered to,
__________________________________________, whose address is
_____________________________________________________________________________.

 

 

 

Dated: __________________________ SIGNATURE:           __________   (Signature
must conform in all respects to name of Noteholder as specified in the Note)    
      __________________________   (Insert Social Security or Federal Tax I.D.
Number of Noteholder)       IF NOTE IS HELD JOINTLY, BOTH PARTIES MUST SIGN:    
      ___________________________   (Signature must conform in all respects to
name of Noteholder as specified in the Note)          
_____________________________   (Insert Social Security or Federal Tax I.D.
Number of Joint Noteholder)