Exhibit
10.2
NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER),
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
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Principal
Amount: $______
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Issue Date: September ___, 2009
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Purchase
Price: $______
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SECURED CONVERTIBLE PROMISSORY
NOTE
FOR VALUE RECEIVED, CLEAR SKIES SOLAR, INC., a
Delaware corporation (hereinafter called “ Borrower
”), hereby promises to pay to the order of _________
(the “ Holder ”), without demand, the sum
of ________ ($_______) (“ Principal Amount
”), with interest accruing thereon, on [_________], 2009 (45
days from the Issue Date of this Note) (the “ Maturity
Date ”), if not sooner paid.
This Note has been entered into pursuant to the
terms of a subscription agreement between the Borrower, the Holder
and the other signatories thereto (“ Other Holders
”) dated at or about the date hereof (the “
Subscription Agreement ”), who have been issued Notes
pursuant to the Subscription Agreement (“ Other Notes
”) and shall be governed by the terms of such Subscription
Agreement. Unless otherwise separately defined herein,
all capitalized terms used in this Note shall have the same meaning
as is set forth in the Subscription Agreement. The
following terms shall apply to this Note:
ARTICLE I
GENERAL PROVISIONS
1.1
Interest Rate . Interest payable on this
Note shall accrue at the annual rate of five percent (5%) and be
payable on the Maturity Date, accelerated or otherwise, when the
principal and remaining accrued but unpaid interest shall be due
and payable, or sooner as described below.
1.2
Payment Grace Period . The Borrower shall not
have any grace period to pay any monetary amounts due under this
Note. During the pendency of an Event of Default (as
described in Article III), a default interest rate of eighteen
percent (18%) per annum shall be in effect.
1.3
Conversion Privileges . The Conversion Rights set
forth in Article II shall remain in full force and effect
immediately from the date hereof and until the Note is paid in full
regardless of the occurrence of an Event of
Default. This Note shall be payable in full on the
Maturity Date, unless previously converted into Common Stock in
accordance with Article II hereof.
1.4
Prepayment . This Note may be prepaid by the
Borrower in whole, at any time, or in part, from time to time,
without penalty or premium, upon thirty (30) days prior written
notice to the Holder. Upon receipt of such notice, the
Holder may determine to convert the Note pursuant to Article
II .
1,5
Acceleration . The Maturity Date shall be
accelerated at the election of the Holder to the closing date of
the Additional Funding as defined in Section 2.1(c)(E).
ARTICLE II
CONVERSION RIGHTS
The Holder shall have the right to convert the
principal and any interest due under this Note into Shares of the
Borrower's Common Stock, $.001 par value per share (“
Common Stock ”) as set forth below.
2.1.
Conversion into the Borrower's Common Stock .
(a) The
Holder shall have the right from and after the date of the issuance
of this Note and then at any time until this Note is fully paid, to
convert any outstanding and unpaid principal portion of this Note,
and accrued interest, at the election of the Holder (the date of
giving of such notice of conversion being a " Conversion
Date ") into fully paid and non-assessable shares of Common
Stock as such stock exists on the date of issuance of this Note, or
any shares of capital stock of Borrower into which such Common
Stock shall hereafter be changed or reclassified, at the conversion
price as defined in Section 2.1(b) hereof, determined as
provided herein. Upon delivery to the Borrower of a
completed Notice of Conversion, a form of which is annexed hereto
as Exhibit A , Borrower shall issue and deliver to the
Holder within three (3) business days after the Conversion Date
(such third day being the “ Delivery Date ”)
that number of shares of Common Stock for the portion of the Note
converted in accordance with the foregoing. At the
election of the Holder, the Borrower will deliver accrued but
unpaid interest on the Note, if any, through the Conversion Date
directly to the Holder on or before the Delivery
Date. The number of shares of Common Stock to be issued
upon each conversion of this Note shall be determined by dividing
that portion of the principal of the Note and interest, if any, to
be converted, by the Conversion Price.
(b) Subject
to adjustment as provided in Section 2.1(c) hereof, the
fixed conversion price per share shall be equal to $0.16 (“
Fixed Conversion Price ”). In the event (i)
there is not within twenty-eight days of the Closing Date, a
closing on an additional financing of not less than $700,000, or
(ii) the Note is not paid in full on the Maturity Date, then the
Conversion Price will be reduced to $0.07, subject to adjustments
as described in this Note and the Transaction Documents.
(c)
The Fixed Conversion Price and number and kind of shares or other
securities to be issued upon conversion determined pursuant to
Section 2.1(a) , shall be subject to adjustment from time to
time upon the happening of certain events while this conversion
right remains outstanding, as follows:
A.
Merger, Sale of Assets, etc . If (A) the Borrower
effects any merger or consolidation of the Borrower with
or into another entity, (B) the Borrower effects any sale of all or
substantially all of its assets in one or a series of related
transactions, (C) any tender offer or exchange offer
(whether by the Borrower or another entity) is completed pursuant
to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, (D)
the Borrower consummates a stock purchase agreement or other
business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more persons or entities whereby such
other persons or entities acquire more than the 50% of the
outstanding shares of Common Stock (not including any shares of
Common Stock held by such other persons or entities making or party
to, or associated or affiliated with the other persons or entities
making or party to, such stock purchase agreement or other business
combination), (E) any "person" or "group" (as these terms are used
for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or
shall become the "beneficial owner" (as defined in Rule 13d-3 under
the 1934 Act), directly or indirectly, of 50% of the aggregate
Common Stock of the Borrower, or (F) the Borrower effects any
reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property
(in any such case, a " Fundamental Transaction
"), this Note, as to the unpaid principal portion thereof and
accrued int