Exhibit 10.17


 


THIS 10% CONVERTIBLE NOTE DUE
AUGUST 15, 2008 HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS.


 


10%
CONVERTIBLE NOTE DUE 2008


 


CN-2


 


	
  Principal Amount:

  	
  $250,000.00

  	
   

  	
  July 25, 2005

  



 


FOR VALUE
RECEIVED, WorldWater & Power Corp., a Delaware corporation (“Issuer”), hereby promises to pay to
the order of The Water Fund, LP and its
successors and assigns (the “Holder”),
at such address as the Holder may designate in writing to Issuer, the principal
sum of Two Hundred Fifty Thousand dollars ($250,000.00) plus all accrued
interest owing hereunder in lawful money of the United States of America on or
before the Maturity Date (as defined below) and to pay all accrued interest on
each Interest Payment Date (as defined below), unless and until this 10%
Convertible Note Due 2008 (the “Note”) is
converted by the Holder as set forth herein. 
For purposes of this Note, “Maturity Date”
shall mean the earliest to occur of: (i) the giving of an Acceleration Notice
(as defined in Section 6)
by the Holder in accordance with Section 6
hereof; (ii) the occurrence of an Insolvency Event (as defined in Section 6); and (iii) August 15, 2008.


 


The Holder may, from time to time, convert
the principal amount of this Note, or any portion thereof, into Common Stock,
as more particularly set forth in Section
8 hereof.


 


Section
1.  Interest.


 


(a)           Interest shall
accrue on the unpaid principal amount of this Note at the rate of ten percent
(10%) per annum (the “Interest Rate”)
and shall be due and payable semi-annually on each of January and
July (the “Interest Payment
Dates”), beginning January,
2006, provided
that the amount of such semi-annual interest payment shall be adjusted to
reflect any reduction in the outstanding principal balance due hereunder or any
change in the Interest Rate as provided herein.  Interest shall be computed on the basis of a
calendar year for the actual number of days elapsed.  Issuer shall pay such accrued interest to the
Holder on each Interest Payment Date, at the election of the Issuer, (i) in cash,
by wire transfer to an account designated by the Holder, or (ii) in shares of
Common Stock having an aggregate Market Price (as defined below) as of such


 





















 


Interest Payment
Date equal to the aggregate interest accrued hereunder but unpaid through such
Interest Payment Date.


 


“Market Price” of a
share of Common Stock as of a particular date (the “Valuation Date”) shall mean the
following: (v) if the Common Stock is then listed on a national stock exchange,
the average closing price of one share of Common Stock for the most recent ten
(10) trading sessions during which the Common Stock has traded; (w) if the
Common Stock is then included in The Nasdaq Stock Market, Inc. (“Nasdaq”), the closing price of one
share of Common Stock for the most recent ten (10) trading sessions during
which the Common Stock has traded; (x) if the Common Stock is then included in
the Over-the-Counter Bulletin Board, the average closing price of one share of
Common Stock for the most recent ten (10) trading sessions during which the
Common Stock has traded; (y) if the Common Stock is then included in the “pink
sheets”, the average closing price of one share of Common Stock in the most
recent ten (10) trading sessions during which the Common Stock has traded; or
(z) if the Common Stock is not then listed on a national stock exchange or
quoted on Nasdaq or the Over-the-Counter Bulletin Board or in the “pink sheets”,
the Market Price of one share of Common Stock as of the Valuation Date shall be
determined in good faith by the Board of Directors of Issuer (the “Board”) and the Holder.  The Board shall respond promptly in writing
to an inquiry by the Holder as to the Market Price of a share of Common
Stock.  In the event that the Board and
the Holder are unable to agree upon the Market Price in respect of subpart (z)
of this subsection (a),
Issuer and the Holder shall jointly select an appraiser who is experienced in
such matters.  The decision of such
appraiser shall be final and conclusive, and the cost of such appraiser shall
be borne by Issuer.


 


Section 2. 
Payment of Principal.  Issuer
shall duly and punctually pay or cause to be paid the principal, plus all
accrued interest thereon, with respect to this Note on the Maturity Date in
immediately available funds by wire transfer to an account designated by the
Holder.


 


Section
3.  Subordination. 
All payment obligations of each the Issuer and/or any of its
subsidiaries to the CAMOFI
Master LDC (the “Senior Lender”), howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent or now or hereafter
existing, or due or to become due are referred to as “Senior Liabilities”. 
Any and all loans made by Holder to the Issuer and/or any of its subsidiaries,
together with all other obligations of the Issuer and/or any of its
subsidiaries to Holder (in each case, including any interest, fees or penalties
related thereto), howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent or now or hereafter existing, or due or to
become due are referred to as “Junior Liabilities”.  It is expressly
understood and agreed that the term “Senior Liabilities”, as used in this
Agreement, shall include, without limitation, any and all interest, fees and
penalties accruing on any of the Senior Liabilities.


 


Except as Senior Lender may expressly
consent in writing, the payment of the Junior Liabilities shall be postponed
and subordinated to the payment in full of all Senior Liabilities. Furthermore,
no payments or other distributions whatsoever in respect of any Junior
Liabilities shall be made if Issuer is in default of any of its obligations to
Senior Lender; provided, however, that Issuer shall be permitted to make and
will make interest payments on Junior Liabilities so long as Issuer is not in
default of any of its obligations to Senior Lender.


 


In the event of any dissolution, winding up, liquidation, readjustment,
reorganization or other similar proceedings relating to the Issuer and/or any
of its subsidiaries or to its creditors, as such, or


 


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to its property (whether voluntary or involuntary, partial or complete,
and whether in bankruptcy, insolvency or receivership, or upon an assignment
for the benefit of creditors, or any other marshalling of the assets and
liabilities of the Issuer and/or any of its subsidiaries, or any sale of all or
substantially all of the assets of the Company and/or any of its Subsidiaries,
or otherwise), the Senior Liabilities shall first be paid in full before Holder
shall be entitled to receive and to retain any payment or distribution in
respect of any Junior Liability.


 


Holder will not without the prior written consent of the Senior
Lender:  (a) attempt to enforce or collect any Junior Liability or any
rights in respect of any Junior Liability; or (b) commence, or join with
any other creditor in commencing, any bankruptcy, reorganization or insolvency
proceedings with respect to the Issuer and/or any of its subsidiaries.


 


Section 4. 
Mutilated, Defaced, Destroyed, Lost And Stolen Notes.


 


(a)           If
this Note shall become mutilated, defaced or be apparently destroyed, lost or
stolen, Issuer shall execute and deliver a new Note, bearing a number not
contemporaneously outstanding, in exchange and substitution for this Note.


 


(b)           Every
substitute Note issued pursuant to this Section
4 by virtue of the fact that any Note is apparently destroyed,
lost, stolen or mutilated shall constitute an additional contractual obligation
of Issuer, whether or not the apparently destroyed, lost, stolen or mutilated
Note shall be at any time enforceable by anyone, and shall be entitled to all
the benefits of (but shall be subject to all the limitations of rights set
forth in) this Note equally and proportionately with any and all other Notes
duly authenticated and delivered by Issuer.


 


(c)           All Notes surrendered for payment,
conversion, registration of transfer or exchange shall be delivered to Issuer
for cancellation, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Note.  Issuer shall destroy canceled Notes held by
it and deliver a certificate of destruction to the Holder, unless otherwise
required.  If Issuer shall acquire any of
the Notes, such acquisition alone shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless and until
such indebtedness is satisfied in full.


 


Section
5.  Prepayment.  Issuer shall not
prepay this Note, in whole or in part, without the prior, written consent of
Holder.


 


Section
6.  Events of Default;
Acceleration of Maturity. If one or more of the following events
(the “Events of Default” and each an “Event of Default”) (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred:


 


(a)           a
default in the payment of all or any part of the principal or interest due
under this Note or any other 2008 Note as and when the same shall become due
and payable, at maturity, on an Interest Payment Date, by declaration as
permitted hereunder or thereunder, upon acceleration or otherwise; or


 


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(b)           a failure or
inability at any time, for any reason, to have authorized and reserved for
issuance a sufficient number of shares of Common Stock to satisfy the
conversion of this Note, all of the other 2008 Notes and all Warrants owned by
Holder, in each case based upon the conversion price then in effect for such
Note, other 2008 Notes and Warrants; or


 


(c)           Issuer shall have applied for or
consented to the appointment of a custodian, receiver, trustee or liquidator,
or other court-appointed fiduciary of all or a substantial part of its
properties; or a custodian, receiver, trustee or liquidator or other
court-appointed fiduciary shall have been appointed with the consent of Issuer;
or Issuer is generally not paying its debts as they become due by means of
available assets or is insolvent, or has made a general assignment for the
benefits of its creditors; or Issuer files a voluntary petition in bankruptcy,
or a petition or an answer seeking reorganization or an arrangement with its
creditors or seeking to take advantage of any insolvency law, or an answer
admitting the material allegations of a petition in any bankruptcy,
reorganization or insolvency proceeding or has taken action for the purpose of
effecting any of the foregoing; or if, within sixty (60) days after the
commencement of any proceeding against Issuer seeking any reorganization,
rehabilitation, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the Federal bankruptcy code or similar
order under future similar legislation, the appointment of any trustee,
receiver, custodian, liquidator, or other court-appointed fiduciary of Issuer
or of all or any substantial part of its properties or assets, such order or
appointment shall not have been vacated or stayed on appeal or if, within sixty
(60) days after the expiration of any such stay, such order or appointment
shall not have been vacated (all such events, collectively “Insolvency Events”); or


 


(d)           any material
representation, warranty or certification made by Issuer in the Purchase
Agreement any other Transaction Document or any representation, warranty or
certification in any certificate, financial statement or other document
delivered to Holder hereunder or thereunder, shall prove to have been incorrect
in any material respect when made; or then, in each and every such case (other
than an Event of Default specified in Section
6(c) hereof), the Holder by written notice to Issuer (the
“Acceleration Notice”) may declare the principal of and
any accrued interest on this Note and all other 2008 Notes owned by the Holder
to be due and payable immediately, and, upon any such declaration, the same
shall become immediately due and payable. 
If an Event of Default specified in Section
6(c) is declared, the principal of and any accrued interest on
this Note and all other 2008 Notes owned by the Holder shall become and be
immediately due and payable without any declaration or other action or notice
on the part of the Holder.


 


Section
7.  Remedies Upon Event of Default. If any
Event of Default occurs, the full principal amount of this Note, together with
interest and other amounts owing in respect thereof, to the date of
acceleration shall become, at the Holder’s election, immediately due and
payable in cash.   Commencing 5 days
after the occurrence of any Event of Default that results in the eventual
acceleration of this Note, the interest rate on this Note shall accrue at the
rate of 18% per annum, or such lower maximum amount of interest permitted to be
charged under applicable law.  All Notes
for which the full payment shall have been paid in accordance herewith shall
promptly be surrendered to or as directed by the Company.  The Holder need not provide and the Company
hereby waives any presentment, demand, protest or other notice of any kind, and
the Holder 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. 
Such declaration


 


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may be rescinded
and annulled by Holder at any time prior to payment hereunder and the Holder
shall have all rights as a Note holder until such time, if any, as the full
payment under this Section shall have been received by it.  No such rescission or annulment shall affect
any subsequent Event of Default or impair any right consequent thereon.


 


Section
8.  Conversion.  The
Holder may, at any time on or prior to the Maturity Date, convert all or
any portion of the principal then outstanding under this Note into fully paid
and non-assessable shares of Issuer’s Common Stock, $0.001 par value (the “Common Stock”), at the Conversion
Price.  Such conversion shall be effected
by the Holder giving a written “Notice of Conversion”
(in substantially the form annexed hereto as Exhibit A)
(which notice shall specify the outstanding principal which is being converted
and the number of shares of Common Stock to be received upon such conversion)
and this Note (or a reasonably acceptable affidavit of loss with respect to
same) to Issuer for cancellation and issuance of the number of shares of Common
Stock (or such other securities issuable upon conversion of this Note) into
which this Note is being converted.  All
accrued but unpaid interest upon conversion of principal amounts due hereunder
shall be paid immediately by Issuer to Holder upon such conversion, and, at the
election of Holder, shall be paid (x) in cash or (y) in shares of Common Stock
having a Market Price equal to the aggregate amount of such accrued but unpaid
interest.  Within fifteen (15) Business
Days after a Notice of Conversion is deemed to have been given by Holder
hereunder, Issuer shall issue a certificate to Holder representing a number of
shares of Common Stock (or such other securities issuable upon conversion of
this Note) issuable upon conversion of this Note in accordance with the Holder’s
Notice of Conversion equal to the principal amount (and, if applicable,
interest) being converted divided by the then effective Conversion Price.  In the event this Note is being converted in
part, Issuer shall promptly deliver to the Holder a replacement Note
representing the unconverted portion of this Note.  Upon conversion of this Note, only whole
shares of Common Stock (or any other securities issuable upon conversion of
this Note) shall be issued.  Any
remainder due hereunder which is insufficient to purchase a whole share of
Common Stock (or any other securities issuable upon conversion of this Note)
shall be paid by Issuer in cash.  The
Conversion Price is $0.18 (the “Conversion Price”) per share.


 


(a)           Adjustments
to Conversion Price.


 


(i)            Subdivision
or Combination of Common Stock. In case Issuer shall at any time
subdivide (by any stock split, stock dividend or otherwise) its outstanding
shares of Common Stock into a greater number of shares, the Conversion Price in
effect immediately prior to such subdivision shall be proportionately reduced,
and, conversely, in case the outstanding shares of Common Stock shall be
combined into a smaller number of shares, the Conversion Price in effect
immediately prior to such combination shall be proportionately increased.  In the case of any such subdivision, no
further adjustment shall be made pursuant to this Section 8(a) solely by reason thereof.


 


(ii)           Reorganization
or Reclassification. If any capital reorganization or
reclassification of the capital stock of Issuer (other than in connection with
a merger or reorganization in which Issuer is not the surviving entity) shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities, properties or assets


 


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(including cash)
with respect to or in exchange for Common Stock, then, as a condition of such
reorganization or reclassification, lawful and adequate provisions shall be
made whereby the Holder shall thereupon have the right to receive upon the
conversion of this Note, upon the terms and conditions specified herein and in
lieu of the shares of Common Stock immediately theretofore receivable upon the
conversion of this Note, such shares of stock, securities, properties or assets
(including cash) as may be issued or payable with respect to or in exchange for
the shares of Common Stock immediately theretofore receivable upon such
conversion had such reorganization or reclassification not taken place, and in
any such case appropriate provisions shall be made with respect to the rights
and interests of the Holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the Conversion Price) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
conversion rights.


 


(b)           Due
Issuance of Shares Upon Conversion. Issuer covenants and agrees that
all shares of Common Stock or any such other securities which may be issued
upon any whole or partial conversion of this Note will, upon issuance, be
validly issued, fully paid and non-assessable and free from all taxes, liens
and charges with respect to the issue thereof.


 


(c)           Issue
Tax. The issuance of certificates for shares of Common Stock upon
conversion of this Note shall be made without charge to the Holder for any
issuance tax in respect thereof, provided that Issuer shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the
Holder.


 


(d)           Closing
of Books. Issuer will at no time close its transfer books against
the transfer of any shares of Common Stock issued or
issuable upon the conversion of the Note in any manner which interferes with
the timely conversion of such Note, except as may otherwise be required to
comply with applicable securities laws.


 


Section 9.  Registration Rights.  The holder of this Note is entitled to
the benefit of certain registration rights in respect of the shares issued upon
conversion of this Note as provided in Registration Rights Agreement dated as
of the date of this agreement, and any subsequent holder hereof shall be
entitled to such rights.


 


Section 10. 
Miscellaneous.


 


(a)           Amendments.
The term “Note” shall mean
this instrument as originally executed or, if later amended or supplemented,
then, as so amended or supplemented. 
This Note may only be amended by a written agreement executed by Issuer
and the Holder.


 


(b)           Binding
Effect; Assignability. This Note shall be binding upon Issuer, its
successors and its assigns, and shall inure to the benefit of Holder, its
successors and its assigns. This Note, and the Common Stock into which this
Note is convertible (together with the rights of the Holder relating to this
Note and such Common Stock) shall be transferable and assignable by the Holder
to any investors in, and officers, directors, members, managers and partners
of, the Holder, and any Affiliate (and each of its officers, directors,
members, managers and partners) or heirs, personal representatives, or
successors, of any of the foregoing; provided that such transfer or


 


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assignment is made
in compliance with the 1933 Act and any applicable state and foreign securities
laws.


 


(c)           Governing
Law; Jurisdiction; Venue. 
This Note and any and all matters arising directly or indirectly
herefrom (“Note Matters”)
shall be governed by and construed and enforced in accordance with the internal
laws of the State of New Jersey applicable to agreements made and to be
performed entirely in such state, without giving effect to the conflict of law
principles thereof.  Each of the parties
hereto hereby (i) irrevocably consents and submits to the sole exclusive
jurisdiction of the United States District Court for the District of New Jersey
and any state court in the State of New Jersey (and of the appropriate
appellate courts from any of the foregoing) in connection with any suit,
arbitration, mediation, action or other proceeding (each a “Proceeding”) directly or indirectly
arising out of or relating to any Note Matter; provided that a party to this
Note shall be entitled to enforce an order or judgment of a such court in any
United States or foreign court having jurisdiction over the other party hereto,
(ii) irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such
Proceeding in any such court or that any such Proceeding which is brought in
any such court has been brought in an inconvenient forum, (iii) waives, to the
fullest extent permitted by law, any immunity from jurisdiction of any such
court or from any legal process therein, and (iv) agrees that service of any
summons, complaint, notice or other process relating to such Proceeding may be
effected in the manner provided for the giving of notice hereunder.


 


(d)           Effect
of Headings. The titles and subtitles used in this Note are used for
convenience only and are not to be considered in construing or interpreting
this Note.


 


(e)           No
Rights As Stockholder. Prior to the conversion of this Note, the
Holder shall not have or exercise any rights as a stockholder of Issuer by
virtue of its ownership of this Note.


 


(f)            Severability.  Any provision of this Note that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.  To the fullest extent permitted by applicable
law, the parties hereby waive any provision of law which renders any provisions
hereof prohibited or unenforceable in any respect.  If it is ever held that any restriction
hereunder is too broad to permit enforcement of such restriction to its fullest
extent, such restriction shall be enforced to the maximum extent permitted by
applicable law.


 


(g)           Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of
any power, right or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privileges. All rights and remedies existing hereunder are cumulative to, and
not exclusive of, any rights or remedies otherwise available.


 


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IN WITNESS WHEREOF, Issuer has caused this Note to be
signed in its name by its duly authorized officer and its corporate seal to be
affixed hereto.


 


	
   

  	
  WORLDWATER CORP.

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
  /s/ QUENTIN T. KELLY

  	
   

  	 

	
   

  	
   

  	
  Name: Quentin T. Kelly

  	
   

  	 

	
   

  	
   

  	
  Title: Chairman and CEO

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  Agreed:

  	
  The Water Fund, LP

  	
   

  	 

	
   

  	
   

  	
  Holder: 

  	
  /s/ NATHAN LEIGHT

  	
   

  
	
   

  	
   

  	
  Nathan Leight

  	 

	
   

  	
   

  	
  Manager, TWC Management Co.,
  LLC

  	 

	
   

  	
   

  	
  General Partner of The Water
  Fund, LP

  	 

								



 


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EXHIBIT
A


 


FORM
OF NOTICE OF CONVERSION


 


Date:         


 


 


The undersigned, pursuant to the provisions set forth in the within
Note, hereby irrevocably elects to subscribe for and purchase              
shares of WorldWater & Power Corp. 
Common Stock as provided in the Note, and makes payment in full
therefore by conversion and application to the extent necessary to pay the
Conversion Price for such shares of $                   
of the principal amount of the Note and interest due thereon as shall be
necessary as provided in the Note.


 


 


	
   

  	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tax ID

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Email

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Phone

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax

  	
   

  	
   

  
						



 


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