Promissory Note - Viseon Inc. and Carbone Holdings LLC
PROMISSORY NOTE
$300,000 LAS VEGAS, NEVADA May 31, 2003
FOR VALUE RECEIVED, the undersigned, Viseon, Inc. f/k/a RSI Systems,
Inc. a Nevada corporation (the "Company"), with its registered office in the
state of Nevada located at 2620 South Maryland Parkway, Suite 309, Las Vegas,
Nevada 89109 hereby promises to pay to the order of Carbone Holdings, L.L.C. or
permitted assigns (the "Payee"), at 237 Silver Castle Las Vegas, Nevada 89134,
or at any such other place as any Holder of this Note may designate in writing,
the principal amount of THREE HUNDRED THOUSAND DOLLARS ($300,000), (the
"Principal Amount"), with interest from the date hereof on the Principal Amount
from time to time remaining unpaid at the rate of twelve percent (12%) per
annum. Interest on this Note shall be calculated based upon a year of 365 or 366
days as applicable. All payments of principal and interest shall be made in
lawful money of the United States of America.
This Note is due and payable as follows: Interest Only shall be due and
payable semi annually in arrears. The first such payment of interest only is due
and payable on the 1st day of December 2003, in the amount of EIGHTEEN THOUSAND
DOLLARS ($18,000), with a like payment of interest only being due and payable on
the 1st day of June 2004. On November 30, 2004, all Principal and all accrued
but unpaid interest shall be due and payable in full. All payments hereunder
shall be applied first to the payment of interest and then to the outstanding
Principal Amount.
Notwithstanding Any Other Provisions Of This Note, In No Event
Shall The Amount Of Interest Payable Hereon Exceed The Maximum Amount Of
Interest Permitted To Be Charged Or Payable Hereon By Applicable Law.
Payments. All payments hereunder shall be made on or before the due
date and shall be delivered to Payee at the address indicated hereinabove, or at
any such other address as any payee may designate in writing.
Waivers. The Company and any other person who signs, makes, guarantees
or endorses this Note, to the extent allowed by law, hereby waives presentment,
demand for payment, protest, notice of dishonor, notice of acceleration of the
maturity of this Note, diligence in collecting, grace, notice and protest and
agrees to one or more extensions for any period or periods of time and partial
payments before or after maturity without prejudice to the Holder. Upon any
change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as the Company, a guarantor,
accommodation party for the Company or endorser, shall be released from
liability. All such parties agree that Payee may renew, extend (repeatedly and
for any length of time) or modify this loan, or release any party or guarantor
or collateral; or impair, fail to realize upon or perfect Payee's security
interest in any of the collateral without the consent of or notice to anyone.
Event of Default. In case an Event of Default (as defined below) shall
occur, the Principal Amount due and payable as of or prior to the date of the
occurrence of such Event of Default but not yet paid shall become (along with
all accrued but unpaid interest) immediately due and payable. For purposes of
this Note an Event of Default shall have occurred if:
(i) The Company shall fail to make any payment pursuant hereto
when due and such failure shall continue for a period of five (5)
calendar days following the due date;
(ii) The Company shall fail to perform any non-monetary
obligation pursuant under this Note promptly, at the time, and strictly
in the manner provided in this Note, and such failure shall continue
for a period of five (5) calendar days after notice;
(iii) The Company shall (a) execute an assignment for the
benefit of creditors, (b) admit in writing its inability to pay its
debts generally as they become due, (c) voluntarily seek the benefits
of any Debtor Relief Law which could suspend or otherwise effect
Payee's rights hereunder, or (d) take any corporate action to authorize
any of the forgoing;
(iv) A case or proceeding shall have been commenced
involuntarily against the Company in a court having competent
jurisdiction seeking a decree or order (a) under the Bankruptcy Code or
any other applicable federal, state, or foreign bankruptcy or other
similar law; (b) for the appointment of a custodian, receiver,
liquidator, assignee, trustee, or sequestrator (or similar official) of
the Company or a substantial part of its assets or (c) the
reorganization or winding up or liquidation of the affairs of the
Company, and such case or proceeding shall remain undismissed or
unstayed for 60 days or more or a decree or order granting the relief
sought in such case or proceeding shall be entered by a court of
competent jurisdiction over such case or proceeding.
Acceleration. If default is made in the payment of any installment of
interest due under this Note, the entire principal balance owing hereon shall at
once become due and payable, at the option of the Payee(s) without written
notice of acceleration to the Company. Failure to exercise this option shall not
constitute a waiver of the right to exercise the same in the event of any
subsequent default. Payee may declare immediately due the entire indebtedness,
including the unpaid principal balance on this Note, all accrued unpaid interest
and all other amounts, costs and expenses for which the Company is responsible
under this Note or pertaining to the indebtedness represented hereby.
Special Provisions.
A. Conversion Shares: Any amount due any Holder hereunder,
including each installment of interest and the entire
Principal Amount due (at maturity or upon Acceleration), may
be converted at the option of any Holder, in whole or in part,
in a single transaction or series of transactions, to common
stock of the Company, par value $0.01 per share, at the
conversion price of Thirty Cents ($.30) per share (the
"Conversion Shares"). When issued and delivered, all
Conversion Shares shall be duly authorized, validly issued,
fully paid and nonassessable.
In the event any Holder desires to convert any amount due or
to become due hereunder, such Holder must provide prior notice
of its intention to convert any such payment to the Company in
writing (the "Conversion Notice"). Each Conversion Notice
shall set forth the requested date, no more than one hundred
twenty days nor less than ninety days thereafter, upon which
conversion is to be effective (the "Conversion Notice
Effective Date"). Each Conversion Notice shall also include
the projected amount of the total obligation payable to such
Holder on the Conversion Notice Effective Date, calculated in
accordance with the terms of this Note, and the dollar amount
thereof for which conversion is requested (the "Converted
Payment Amount"). Upon conversion, the number of shares such
Holder shall be entitled to receive in consideration of the
Converted Payment Amount shall be calculated by dividing the
Converted Payment Amount specified in a Conversion Notice by
thirty percent (.30).
In the event a conversion notice is timely received by the
Company, the Company shall take all necessary action to cause
its transfer agent to issue the applicable amount of common
stock in the name of such Holder and deliver the same to the
Holder as soon as practicable following the Conversion Notice
Effective Date, but in no event more that five business days
thereafter. Any Conversion Notice timely received by the
Company, requesting a Converted Payment Amount in an amount
less than the entire projected amount of the total obligation
payable to such Holder on the Conversion Notice Effective
Date, shall require the Company, in addition to the issuance
and delivery of the Conversion Shares, to pay such Holder, in
cash or a cash equivalent, the balance remaining after
deducting the Converted Payment Amount from the total amount
due and payable to the Holder on the Conversion Notice
Effective Date (the "Post Conversion Balance Payment") and
deliver the same to the Holder on or before five business days
following the Conversion Notice Effective Date.
In the event the Company fails to issue the applicable amount
of common stock in the name of such Holder and deliver the
same to the Holder on or before five business days following
the Conversion Notice Effective Date, or fails to pay the
entire amount of any Post Conversion Balance Payment when due,
in addition to the Conversion Shares and all other amounts
payable hereunder, such Holder shall be entitled to receive
additional interest on the aggregate total of any Converted
Payment Amount for which Conversion Shares have not been
delivered and any unpaid Post Conversion Balance Payment at
the rate of 18% per annum, calculated on per diem basis,
commencing on the Conversion Notice Effective Date and
accruing until the date all Conversion Shares and the entire
unpaid Post Conversion Balance Payment is received by such
Holder (the "Additional Interest"). Additional Interest shall
constitute interest hereunder with respect to any other
provision of this Note.
B. Warrants: In partial consideration of this Note the Company
hereby agrees to issue to the Payee warrants to purchase from
the Company One Million (1,000,000) shares of duly authorized,
validly issued, fully paid and nonassessable Common Stock of
the Company, par value $0.01 per share at the exercise price
of Thirty Cents ($.30) per share. (the "Warrants"). The
Warrants shall expire not less than five years from May 30,
2008, be exercisable on not less than ninety days notice to
the Company and be otherwise exercisable and include terms and
provisions similar to other warrants issued by the Company in
similar private placement investments.
Attorneys' Fees. If this Note is placed in the hands of an attorney for
collection after default, or if all or any part of the indebtedness represented
hereby is proved, established or collected in any court or in any bankruptcy
receivership, debtor relief, probate or other court proceedings, the Company
agrees to pay reasonable attorney's fees and collection costs to the Payee(s)
hereof in addition to the principal and interest payable hereunder. The Company
also will pay Payee all other amounts actually incurred by Payee as court costs,
lawful fees for filing, recording, or releasing to any public office any
instrument securing this loan; the reasonable cost actually expended for
repossessing, storing, preparing for sale, and selling any security; and fees
for noting a lien on or transferring a certificate of title to any titled
collateral offered as security for this loan.
Severability. If any part of this Note cannot be enforced, this fact
will not affect the rest of the Note.
Usury. All agreements between the undersigned and the holder hereof,
whether now existing or hereafter arising and whether written or oral are hereby
limited so that in no contingency, whether by reason of demand for payment or
acceleration of the maturity hereof or otherwise, shall the interest contracted
for, charged or received by the holder hereof exceed the maximum amount
permissible under applicable law. In particular, this section means (among other
things) that the Company does not agree or intend to pay, and Payee does not
agree or intend to contract for, charge, collect, take, reserve or receive
(collectively referred to herein as "Charge or Collect"), any amount in the
nature of interest or in the nature of a fee for this loan, which would in any
way or event (including demand, prepayment, or acceleration) cause Payee to
charge or collect more for this loan that the maximum Payee would be permitted
to charge or collect by Federal law or the laws of the State of Nevada (as
applicable). Any such excess interest or unauthorized fee shall, instead of
anything stated to the contrary, be applied first to reduce the principal
balance of this loan, and when the principal has been paid in full, be refunded
to the Company. The right to accelerate maturity of sums due under this Note
does not include the right to accelerate any interest that has not otherwise
accrued on the date of such acceleration, and Payee does not intend to charge or
collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to Payee for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the loan evidenced by
this Note until payment in full so that the rate or amount of interest charged
to the account of the loan evidenced hereby does not exceed the applicable usury
ceiling. Payee may delay or forgo enforcing any of its rights or remedies under
this Note without losing them. If for any circumstances whatsoever, interest
would otherwise be payable to the holder hereof in excess of the maximum lawful
amount the interest payable to the holder hereof shall be reduced to the amount
permitted under applicable law; and if for any circumstances, the holder hereof
shall ever receive anything of value deemed interest by applicable law in excess
of the maximum lawful amount, an amount equal to any excessive interest shall be
applied to the reduction of the principal hereof and such excess shall be
refunded to the Company. This Section shall control all agreements between the
Company and the holder hereof.
Collateral. The indebtedness evidenced by this Promissory Note shall be
secured pursuant to that certain Security Agreement of even date herewith,
executed by Maker in favor of Payee..
Captions. The headings are included herein for ease of reference only
and shall not be considered in the construction or interpretation of the terms
and provisions of this date.
Assignment. The indebtedness evidenced by this Promissory Note shall be
binding upon and inure to the benefit of the parties hereto, their successors
and assigns.
Governing Law. THIS NOTE HAS BEEN DELIVERED TO AND ACCEPTED BY LENDER
IN CLARK COUNTY, NEVADA AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEVADA. ANY LEGAL PROCEEDINGS INSTITUTED UNDER
THIS NOTE SHALL BE BROUGHT IN CLARK COUNTY, NEVADA.
IN WITNESS WHEREOF, VISEON, INC. has caused this Note to be dated May
31, 2003, and to be executed on its behalf, by its officer thereunto duly
authorized.
VISEON, INC.
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By: JOHN HARRIS
Its: President