Exhibit 10
-1-
Date: November 5, 2007 Amount: $30,000 (U.S.)
MERILUS, INC.
PROMISSORY NOTE
BEARING INTEREST AT 18% PER ANNUM
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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE TRANSFERRED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OR
OTHER COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS OF THE APPLICABLE
STATE OR A "NO-ACTION" OR INTERPRETIVE OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER AND ITS COUNSEL TO THE EFFECT THAT THE SALE
OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND
SUCH STATE STATUTES.
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MERILUS, INC., a corporation duly organized and existing under the laws
of the state of Nevada (hereinafter referred to as the "Company"), for value
received, hereby promises to pay to Michelle Turpin, the registered holder
hereof, up to that amount borrowed by the Company from Ms. Turpin which as of
the date of the note is for twenty-eight thousand three hundred ninety four
dollars ($28,394) on December 31, 2007, upon presentation and surrender of this
promissory note (the "Note") at the offices of the Company, in such lawful money
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debt, until the principal hereof is paid
or made available for payment as herein provided. Ms. Turpin has agreed to loan
a total of up to thirty thousand dollars ($30,000) to the Company on the terms,
conditions and documentation provided in this Note. This Note shall take the
place of all prior notes entered into by the Company and Ms. Turpin.
This Note is subject to the following further terms and material
provisions:
1. Letter of Credit. Ms. Turpin agrees to loan the Company up to thirty
thousand dollars ($30,000) at any time within one year of the date of this Note
upon request of the Company. All sums loaned to the Company shall be on the same
terms and conditions of this Note and be covered by this Note. At the execution
of this Note, Ms. Turpin has loaned twenty-eight thousand three hundred ninety
four dollars ($28, 394) to the Company.
2. Term and Interest. The date of maturity of the Note shall be
December 31, 2007, subject to prepayment as set forth in paragraph 3 hereof. The
Note shall bear simple interest at the rate of eighteen percent (18.0%) per
annum. The principal on the Note is payable on the maturity date, subject to
prepayment as set forth in paragraph 3 hereof, and will be paid at the office of
the Company, maintained for such purposes, to the registered holder of the Note
on the books and records of the Company. Accrued interest on the Note will be
payable annually, on the anniversary date of the Note, and will be paid at the
office of the Company, maintained for such purposes, to the register holder of
the Note on the books and records of the Company
3. Prepayment. This Note is subject to prepayment, in whole or in part,
at the election of the Company at any time, upon not less than 10 days notice.
Prepayment shall be effected by paying the amount equal to the outstanding
principal amount of the Note and accrued interest at the date of prepayment. On
the date fixed for prepayment by the Company, the amount of principal shall be
paid in cash or certified funds. Any Note which is prepaid only in part shall be
presented for notation thereon by the Company of such partial prepayment. If
less than all the Note principal amount and interest is to be prepaid, notice of
the proposed prepayment shall be sent to the registered holder of the Note and
such prepayment shall be made.
4. Satisfaction and Discharge of Note. This Note shall cease to be of
further effect (except as to any surviving rights of transfer, or exchange of
Notes herein expressly provided for) when:
(a) The Company has paid or caused to be paid all sums payable
hereunder by the Company, including all principal and interest amounts
under the Note; and
(b) All the conditions precedent herein provided for relating
to the satisfaction and discharge of this Note have been met.
5. Events of Default. "Events of Default," when used herein, whatever
the reason for such event of default and whether it shall be voluntary or
involuntary or be effected by operation of law pursuant to any judgment, decree,
or order of any court or any order, rule, or regulation of any administrative or
government body or be caused by the provisions of any paragraph herein means any
one of the following events:
(a) Default in the payment of the principal of the Note, when
due, whether at maturity, or otherwise; or
(b) Default in the performance or breach of any covenant or
warranty of the Company in this Note (other than a covenant or
warranty, the breach or default in performance of which is elsewhere in
this section specifically dealt with), and continuation of such default
or breach for a period of 30 days after there has been given to the
Company by registered or certified mail, by the holders of a majority
in principal amount of the outstanding Note, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a notice of default hereunder; or
(c) The entry of a decree or order by a court having
jurisdiction in the premises adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of or in
respect of the Company under the Federal Bankruptcy Act or any other
applicable federal or state law, or appointing a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Company or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuation of any
such decree or order unstayed and in effect for a period of 30
consecutive days; or
(d) The institution by the Company of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or a
filing by it of a petition or answer or consent seeking reorganization
or relief under the Federal Bankruptcy Act or any other applicable
federal or state law; or
(e) The consent by the Company to the filing of any such
petition or the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or of
any substantial part of its property), or the making by it of an
assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due,
or the taking of corporate action by the Company in furtherance of any
such action.
6. Acceleration of Maturity. If an event of default occurs and is
continuing then, in every such case, the holder of a majority in principal
amount of the outstanding Notes, may declare the principal of the Notes to be
due and payable immediately, by a notice in writing to the Company of such
default, and upon any such declaration, such principal shall become immediately
due and payable. At any time after such declaration of acceleration has been
made, and before a judgment or decree for payment of money due has been obtained
by the holders, the holders of a majority of the principal of the outstanding
Notes, by written notice to the Company, may rescind and annul such declaration
and its consequences, if all events of default, other than the nonpayment of the
principal of the Notes which has become due solely by such acceleration, has
been cured or waived. No such recession shall affect any subsequent default or
impair any right contingent thereon.
7. Suits for Enforcement. If an event of default occurs and is
continuing, the holder of a majority in principal amount of the outstanding Note
may, in their discretion, proceed to protect and enforce their rights by such
appropriate judicial proceedings as the holders shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement under this Note or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
8. Limitation on Suits. No holder of any Note shall have any right to
institute any proceedings, judicial or otherwise, with respect to this Note, or
for the appointment of a receiver or trustee, or for any remedy hereunder,
unless such holder has previously given written notice to the Company of a
continuing event of default as provided above; it being understood and intended
that no one or more holders of this Note shall have any right in any manner
whatever by virtue of, or by availing of, any provisions of this Note to effect,
disturb or prejudice the right of any other holders of Notes, or to obtain or to
seek to obtain priority or preference over any other holders or to enforce any
right under this Note, except in the manner herein provided and for the equal
and ratable benefit of all the holders of the Note.
9. Acts of Holders. Any request, demand, authorization, direction,
notice, consent, waiver, or other action provided by this Note to be given or
taken by the holder hereof or by the holders of the Notes may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such holders in person or by their agent or attorney-in-fact, duly appointed in
writing; and, except as otherwise expressly provided herein, such action shall
become effective when such instrument or instruments are delivered to the
Company in the manner provided for giving notices herein. Such instrument or
instruments, and the action embodied therein or evidenced thereby, are herein
sometimes referred to as the "act" of the holders signing such instrument or
instruments. Proof of execution of any such instrument or of writing appointing
any such agent shall be sufficient for any purpose of this Note if the fact and
date of execution by any person of any purpose of the Note if the fact and date
of execution by any person of any such instrument or writing is verified by the
affidavit of a witness of such execution or by the request, demand,
authorization, direction, notice, consent, waiver, or other action by the holder
of this Note shall bind every Note holder of the same Note and the holder of
every Note issued upon the transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done or suffered to be done by any person in
reliance thereon, whether or not notation of such action is made upon such Note.
10. Notices to Holders; Waiver. Where this Note provides for notice to
holders of any event, such notice shall be sufficiently given if in writing and
sent by courier providing for delivery within 72 hours or mailed, registered,
postage prepaid, to each holder affected by such event, at her address as it
appears in the Note register maintained by the Company, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. Where the Note provides for notice to the Company, such notice
shall be sufficiently given if in writing and mailed, registered, postage
prepaid, to the Company at its address set forth above (or at such other address
as shall be provided to the holder of this Note in the manner for giving notices
set forth herein), not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. Where this Note
provides for notice in any manner, such notice may be waived in writing by the
person entitled to receive such notice, whether before or after the event, any
such waiver shall be equivalent of such notice.
11. Restrictions. The holder of this Note, by acceptance hereof,
represents and warrants as follows:
(a) The Note is being acquired for the holder's own account to
be held for investment purposes only and not with a view to, or for,
resale in connection with any distribution of such Note or any interest
therein without registration or other compliance under the Securities
Act and applicable state securities laws, and the holder hereof has no
direct or indirect participation in any such undertaking or in
underwriting such an undertaking.
(b) The holder hereof has been advised and understands that
the Note has not been registered under the Securities Act and the Note
must be held and may not be sold, transferred, or otherwise disposed of
for value unless it is subsequently registered under the Securities Act
or an exemption from such registration is available; except as set
forth herein, the Company is under no obligation to register the Note
under the Securities Act; in the absence of such registration, sale of
the Note may be impracticable; the Company will maintain stop-transfer
orders against registration of transfer of the Note. The Company may
refuse to transfer the Note unless the holder thereof provides an
opinion of legal counsel reasonably satisfactory to the Company or a
"no-action" or interpretive response from the Securities and Exchange
Commission to the effect that the transfer is proper; further, unless
such letter or opinion states that the Note are free from any
restrictions under the Securities Act, the Company may refuse to
transfer the Note to any transferee who does not furnish in writing to
the Company the same representations and agree to the same conditions
with respect to such Note if any set forth herein. The Company may also
refuse to transfer the Note if any circumstance is present reasonably
indicating that the transferee's representations are not accurate.
12. Conversion. Subject to, and in compliance with, the provisions
contained herein, the Holder of this Note is entitled, at Holder's option, at
any time prior to maturity or payment, or in case this Note or some portion
hereof shall have been called for prepayment or considered in default under
paragraph 5 hereof, then, in respect of this Note or such portion hereof, to
convert this Note (or any portion of the principal amount hereof), into validly
issued, fully paid and nonassessable shares (calculated as to each conversion to
the nearest share) of common stock of the Company (the "Common Stock" or
"Shares") at the rate of: (i) if the Note is called for payment, and the Company
request the Holder to convert the Note at the time it is due, the Note shall be
converted into one share for each $0.05 per share of principal and accrued but
unpaid interest of the Note subject to such adjustment in such conversion price,
if any, as may be required by the provisions of this Note, by surrender of this
Note, duly endorsed (if so required by the Company) or assigned to the Company
or in blank, to the Company at its offices, accompanied by written notice to the
Company, that the Holder hereof elects to convert this Note or, if less than the
entire principal amount hereof is to be converted, the portion hereof to be
converted. On conversion, no adjustment for interest is to be made, but if any
Holder surrenders this Note for conversion between the record date for the
payment of any installment of interest and the next interest payment date, the
holder of such Note when surrendered for conversion shall be entitled to payment
of the interest thereon from the last preceding record date for interest through
the date of conversion which the registered holder is entitled to receive on
such conversion date. No fraction of Shares will be issued on conversion, but
instead of any fractional interest, the Company will pay cash adjustments as
provided herein. Following receipt of the written notice of intention to convert
the Note, the Company shall take such steps as it deems appropriate to permit
conversion of the Note as specified herein without registration or qualification
under applicable federal and state securities laws. The Shares this Note shall
be converted into shall be after taking into affect any stock splits,
recapitalizations or other changes in the Company's common stock prior to a
merger or acquisition with an operating entity.
13. Severability. In case any provision in this Note shall be invalid,
illegal, or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
14. Governing Law. This Note shall be governed by and construed and
interpreted in accordance with the laws of the state of Utah.
15. Legal Holidays. In any case where any date provided herein shall
not be a business day, then (notwithstanding any other provision of this Note)
the event required or permitted on such date shall be required or permitted, as
the case may be, on the next succeeding business day with the same force and
effect as if made on the date upon which such event was required or permitted
pursuant hereto.
16. Delay or Omission; No Waiver. No delay or omission of any holder of
the Note to exercise any right or remedy accruing upon any event of default
shall impair any such right or remedy or constitute a waiver of any such event
or default or any acquiescence therein. Every right or remedy given hereby or by
law may be from time to time, and as often as may be deemed expedient.
17. Miscellaneous. This Note is subject to the following additional
terms and conditions:
(a) If this Note is placed with any attorney for collection,
or if suit be instituted for collection, or if any other remedy
provided by law is pursued by the registered holder hereof, because of
any default in the terms and conditions herein, then in either event,
the undersigned agrees to pay reasonable attorneys' fees, costs, and
other expenses incurred by the registered holder hereof in so doing.
(b) None of the rights and remedies of the registered holder
hereof shall be waived or affected by failure or delay to exercise
them. All remedies conferred on the registered holder of this Note
shall be cumulated and none is exclusive. Such remedies may be
exercised concurrently or consecutively at the registered holder's
option.
(c) This Note is negotiable and transferable, subject to
compliance with the provisions of paragraph 11 hereof.
(d) The makers, guarantors, and endorsers hereof severally
waive presentment for payment, protest, and notice of protest, and of
nonpayment of this Note.
DATED effective as of the 5th day of November, 2007.
MERILUS, INC.
By
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Alex Demitriev
Michelle Turpin
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