EXHIBIT 10 TO FORM 10-Q
(Material Contracts)
Exhibit Page
No. No. Description
- ------- ----- -----------
10.1 * Lease with Capitol Properties Four, L.C.
10.2 * 1998 Incentive Stock Option Plan
10.3 * Security Agreement with Michael and Barbara Feaster
10.4 * Employment Agreement with Robert H. Reback, President and
Chief Executive Officer
10.5 * Employment Agreement with David P. Faulkner, Executive Vice
President and Managing Director of Machine Control Products
10.6 * Employment Agreement with Michael D. Feaster, Vice President
of Software Development
10.7 * Employment Agreement with Steven K. Sorensen, Vice President
and Chief Technical Officer
10.8 * Employment Agreement with Riley G. Astill, Vice President of
Finance, Chief Financial Officer, Treasurer and Secretary
10.9 * Amendment 1 to 1998 Incentive Stock Option Plan
10.10 * Amendment 2 to 1998 Incentive Stock Option Plan
10.11 * Form of Indemnification Agreement with directors and officers
10.12 * Settlement Agreement and Mutual Release with Peter Manley and
Jana Manley
10.13 E-10.1 Convertible Note Purchase Agreement and Convertible Note with
Tsunami Network Partners Corporation
- --------------------------------------------------------------------------------
*Incorporated by reference (See exhibit listing above in ITEM 6. Exhibits and
Reports on Form 8-K.)
<page>
CONVERTIBLE NOTE PURCHASE AGREEMENT
THIS CONVERTIBLE NOTE PURCHASE AGREEMENT (the "Agreement") is made and
entered into effective as of this ___ day of September, 2002, by and between
CIMETRIX, INCORPORATED, a corporation organized and existing under the laws of
the State of Nevada (the "Company"), and TSUNAMI NETWORK PARTNERS CORPORATION,
an entity organized and existing under the laws of Japan (the "Investor").
WITNESSETH:
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor
and the Investor shall purchase the Convertible Note (as defined below) in the
principal amount of $500,000, plus accrued interest at the rate of 6-3/4% per
annum;
WHEREAS, the Company has provided to the Investor in connection with the
offering of the Convertible Note (as defined below) the following documents that
it has filed with the Securities and Exchange Commission: (i) Annual Report on
Form 10-K for the year ended December 31, 2001, (ii) Quarterly Reports on Form
10-Q for the quarters ended March 31, 2002 and June 30, 2002, and (iii)
Definitive Proxy Statement for the Company's 2002 Annual Meeting of Shareholders
(the "SEC Documents");
WHEREAS, the Investor has thoroughly read and reviewed the SEC Documents
and all documents and agreements referenced therein and all other documents and
agreements deemed relevant in connection with the Investor's investment
decision;
WHEREAS, such investment shall be made in reliance upon the provisions of
Section 4(2) and Regulation D of the U.S. Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the "Securities Act")
and/or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to the investment to be made
hereunder; and
WHEREAS, the Company now desires to issue to the Investor the Convertible
Note (as that term is defined in Section 1 below).
NOW, THEREFORE, in consideration of the mutual premises, representations,
warranties, covenants and conditions contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Issuance of Convertible Note. Subject to the terms and conditions of
this Agreement, the Company hereby agrees to issue to the Investor, and the
Investor agrees to accept from the Company, a Convertible Note ("Convertible
Note") in the principal amount of Five Hundred Thousand Dollars ($500,000), plus
interest thereon at the rate of 6-3/4% per annum. It is hereby understood and
agreed that the Convertible Note will be issued in favor of and in the name of
the Investor as indicated on the signature page herein.
2. Representations and Warranties of the Company. Except as otherwise set
forth in this Agreement, the Company hereby represents and warrants to the
Investor as follows:
E-10.1
<page>
2.1 The Company is a corporation duly organized and validly existing under,
and by virtue of, the laws of the State of Nevada, and is in good standing under
the laws of said state.
2.2 The Company has all requisite legal and corporate power and authority
to execute and deliver this Agreement, to sell and issue the Convertible Note to
the Investor and to carry out and perform its obligations under the terms of
this Agreement.
2.3 All corporate action on the part of the Company, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Agreement by the Company, the authorization, sale, issuance
and delivery of the Convertible Note and the performance of all of the Company's
obligations hereunder has been or will be taken prior to the Company's execution
of this Agreement.
2.4 The Convertible Note, when issued and transferred to the Investor in
compliance with the provisions of this Agreement, will be duly authorized and
validly issued.
3. Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company with respect to the Investor's purchase
and acquisition of the Convertible Note, as follows:
3.1 The undersigned is acquiring the Convertible Note for its own account
as principal, not as a nominee or agent, for investment purposes only, and not
with a view to, or for, resale, distribution or fractionalization thereof in
whole or in part and no other person has a direct or indirect beneficial
interest in such Convertible Note. Further, the undersigned does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person with
respect to the Note for which the undersigned is purchasing.
3.2 The undersigned has full power and authority to enter into this
Agreement, the execution and delivery of this Agreement has been duly
authorized, if applicable, and this Agreement constitutes a valid and legally
binding obligation of the undersigned.
3.3 The undersigned acknowledges its understanding that the offering and
sale of the Convertible Note is intended to be exempt from registration under
the Securities Act of 1933, as amended, by virtue of Section 4(2) of the
Securities Act and the provisions of Regulation D ("Regulation D") and
Regulation S as promulgated thereunder by the United States Securities and
Exchange Commission ("SEC"). In furtherance thereof, the undersigned represents
and warrants to, and agrees with, the Company as follows:
(a) The undersigned realizes that the basis for the exemption may not be
present if, notwithstanding any representations and/or warranties to the
contrary herein contained, the undersigned has in mind merely acquiring the
Convertible Note for a fixed or determinable period in the future, or for a
market rise, or for sale if the market does not rise;
(b) The undersigned has the financial ability to bear the economic risk of
its investment, has adequate means for providing for its current needs and
personal contingencies and has no need for liquidity with respect to its
investment in the Company;
(c) The undersigned has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Convertible Note. The undersigned also represents it has not
been organized for the purpose of acquiring the Convertible Note.
E-10.2
<page>
(d) The undersigned has been furnished with the SEC Documents and any and
all documents which may have been made available upon request for a reasonable
time prior to the date hereof, and the undersigned has carefully read the SEC
Documents;
(e) The undersigned has been provided an opportunity for a reasonable time
prior to the date hereof to obtain additional information concerning the
offering of the Convertible Note, the Company and all other information to the
extent the Company possesses such information or could acquire it without
unreasonable effort or expense;
(f) The undersigned has been given the opportunity for a reasonable time
prior to the date hereof to ask questions of, and receive answers from, the
Company or its representatives concerning the terms and conditions of the
offering of the Convertible Note, and other matters pertaining to an investment
in the Convertible Note, and has been given the opportunity for a reasonable
time prior to the date hereof to obtain such additional information necessary to
verify the accuracy of the information contained in the SEC Documents or that
which was otherwise provided in order for it to evaluate the merits and risks of
a purchase of the Convertible Note to the extent the Company possesses such
information or could acquire it without unreasonable effort or expense;
(g) The undersigned has not been furnished with any oral representation or
oral information in connection with the offering of the Convertible Note which
is not contained in the SEC Documents; and
(h) The undersigned has determined that the Convertible Note is a suitable
investment for it and that at this time the undersigned could bear a complete
loss of such investment.
3.4 The undersigned is not relying on any statements or representations
made by the Company with respect to economic considerations involved in an
investment in the Convertible Note.
3.5 The undersigned will not sell or otherwise transfer the Convertible
Note or the shares (the "Shares") of the Company's Common Stock, $.001 par value
per share (the "Common Stock") issuable upon the conversion of the Convertible
Note without registration under the Securities Act or an exemption therefrom and
the undersigned fully understands and agrees that it must bear the economic risk
of its purchase because, among other reasons, neither the Convertible Note nor
the Shares of Common Stock have been registered under the Securities Act or
under the securities laws of any state and, therefore, cannot be resold,
pledged, assigned or otherwise disposed of unless they are subsequently
registered under the Securities Act and under the applicable securities laws of
such states or unless exemptions from such registration requirements are
available. In particular, the undersigned is aware that the Convertible Note and
Shares are "restricted securities," as such term is defined in Rule 144
promulgated under the Securities Act ("Rule 144"), and they may not be sold
pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The
undersigned also understands that, except as otherwise provided herein, the
Company is under no obligation to register the Convertible Note or Shares on its
behalf or to assist it in complying with any exemption from the registration
requirements of the Securities Act or applicable state securities laws. The
undersigned further understands that sales or transfers of the Convertible Note
and the Shares are further restricted by state securities laws and the
provisions of this Agreement.
E-10.3
<page>
3.6 No representations or warranties have been made to the undersigned by
the Company, or any officer, employee, agent, affiliate or subsidiary of the
Company, other than the representations of the Company contained herein and in
the SEC Documents, and in purchasing the Convertible Note the undersigned is not
relying upon any representations other than those contained herein or in the SEC
Documents.
3.7 Any information which the undersigned has heretofore furnished or is
simultaneously herewith furnishing to the Company with respect to its financial
position and business experience is correct and complete as of the date of this
Agreement and, if there should be any material change in such information, it
will immediately furnish revised or corrected information to the Company.
3.8 The undersigned understands and agrees that the Convertible Note and
the Shares of Common Stock issuable upon conversion of the Convertible Note
shall bear a legend substantially similar to the following legend until (a) such
securities shall have been registered under the Securities Act and effectively
been disposed of in accordance with the registration statement; or (b) in the
opinion of counsel for the Company such securities may be sold without
registration under the Securities Act as well as any applicable "Blue Sky" or
state securities laws:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT
WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING
OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE COMPANY, OR OTHER COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY, THAT THE PROPOSED DISPOSITION IS
CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY
APPLICABLE "BLUE SKY" OR OTHER STATE SECURITIES LAW.
3.9 The undersigned understands that an investment in the Convertible Note
is a speculative investment which involves a high degree of risk of loss of its
entire investment.
3.10 The undersigned's overall commitment to investments which are not
readily marketable is not disproportionate to the undersigned's net worth, and
an investment in the Convertible Note will not cause such overall commitment to
become excessive.
3.11 The undersigned represents and warrants that it has not retained any
finder, broker, agent, financial advisor or other intermediary in connection
with the transactions contemplated by this Agreement and agrees to indemnify and
hold harmless the Company from liability for any compensation to any such
intermediary retained by the undersigned and the fees and expenses of defending
against such liability or alleged liability.
3.12 The foregoing representations, warranties and agreements shall survive
the execution of this Agreement.
E-10.4
<page>
4. Miscellaneous.
4.1 The undersigned agrees to indemnify and hold harmless the Company, its
officers and directors, employees and its affiliates and each other person, if
any, who controls any thereof, against any loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation commenced or threatened or any claim whatsoever) arising out of
or based upon any false representation or warranty or breach or failure by the
undersigned to comply with any covenant or agreement made by the undersigned
herein or in any other document furnished by the undersigned to any of the
foregoing in connection with this transaction.
4.2 Neither this Agreement nor any provisions hereof shall be modified,
discharged or terminated except by an instrument in writing signed by the party
against whom any waiver, change, discharge or termination is sought.
4.3 Any notice, demand or other communication which any party hereto may be
required, or may elect, to give to anyone interested hereunder shall be
sufficiently given if (a) deposited, postage prepaid, first class mail,
addressed to such address as may be given herein, (b) delivered personally at
such address, (c) delivered by Federal Express or similar express courier,
freight prepaid to such address, or (d) delivered by facsimile transmission with
a copy by first class mail, postage prepaid to such address.
If to the Company to:
Cimetrix, Incorporated
6979 South High Tech Drive
Midvale, Utah 84047
United States of America
Attn: Robert H. Reback, President and Chief Executive Officer
Telephone No.: (801) 256-6500
Facsimile No.: (801) 256-6510
With a copy to:
Mackey Price & Thompson
57 West 200 South, Suite 350
Salt Lake City, Utah 84101-1655
United States of America
Attn: Randall A. Mackey, Esq.
Telephone No.: (801) 575-5000
Facsimile No.: (801) 575-5006
If to Investor to:
Tsunami Network Partners Corporation
Shin-yokohama SR Bldg. 4F
3-6-1 Shin-yokohama, Kouhoku-ku
Yokohama-City, Kanagawa 222-0033 Japan
Telephone No.: 81 45 470-8088
Facsimile No.: 81 45 470-8090
E-10.5
<page>
4.4 This Agreement may be executed through the use of separate signature
pages or in any number of counterparts, and each of such counterparts shall, for
all purposes, constitute one agreement binding on all parties, notwithstanding
that all parties are not signatories to the same counterpart.
4.5 Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
If the undersigned is more than one person, the obligation of the undersigned
shall be joint and several and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made by and be binding
upon each such person and its successors and assigns.
4.6 This instrument contains the entire agreement of the parties and there
are no representations, covenants or other agreements except as stated or
referred to herein.
4.7 This Agreement is not transferable or assignable by the undersigned.
4.8 This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of Utah, without giving effect
to conflicts of law principles.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
dates indicated below effective as of the date first-above written.
THE INVESTOR: THE COMPANY:
TSUNAMI NETWORK PARTNERS CIMETRIX, INCORPORATED
CORPORATION
By: ______________________________ By: ______________________________
Its: ______________________________ Robert H. Reback, President
and Chief Executive Officer
DATED: ______________________, 2002. DATED: ______________________, 2002.
E-10.6
<page>
THIS CONVERTIBLE NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THESE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSFER IS IN
ACCORDANCE WITH RULE 144 OR A SIMILAR RULE AS THEN IN EFFECT UNDER THE
SECURITIES ACT, OR APPLICABLE STATE SECURITIES LAWS OR UNLESS THE CORPORATION
RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT OR IS OTHERWISE
REASONABLY SATISFIED THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT.
CIMETRIX, INCORPORATED
CONVERTIBLE NOTE
$500,000 September __, 2002
Salt Lake City, Utah
United States of America
FOR VALUE RECEIVED, CIMETRIX, INCORPORATED, a corporation organized and existing
under the laws of the State of Nevada (the "Company"), promises to pay to
TSUNAMI NETWORK PARTNERS CORPORATION, an entity organized and existing under the
laws of Japan ("Holder"), or its registered assigns, the principal sum of Five
Hundred Thousand Dollars ($500,000), together with interest from the date of
this Note on the principal balance at the rate equal to 6-3/4% per annum. All
principal, together with any accrued interest, shall be due and payable on the
earlier of (i) March 31, 2003 (the "Maturity Date"), or (ii) when such amounts
are made automatically due and payable upon or after the occurrence of an Event
of Default (as defined below). This convertible note (the Convertible Note") is
issued pursuant to the Convertible Note Purchase Agreement dated as of September
__, 2002 (as amended, modified or supplemented, the "Convertible Note Purchase
Agreement") between the Company and Holder. The following is a statement of the
rights of Holder and the conditions to which this Convertible Note is subject,
and to which Holder hereof, by the acceptance of this Convertible Note, agrees:
1. Definitions. As used in this Convertible Note, the following capitalized
terms have the following meanings:
1.1 "Holder" shall mean the Person specified in the introductory paragraph
of this Convertible Note or any Person who at the time shall be the registered
holder of this Convertible Note.
1.2 "Company" includes the corporation initially executing this Convertible
Note and any Person that shall succeed to or assume the obligations of the
Company pursuant to this Convertible Note.
1.3 "Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or other
entity or a governmental authority.
E-10.7
<page>
2. Automatic Conversion.
2.1 Conversion at Maturity Date. At the Maturity Date of the Convertible
Note, the Company shall convert the principal on this Convertible Note and
accrued interest due into shares of Common Stock as set forth in Section 2.2
below.
2.2 Common Stock. When the Company converts the Convertible Note at the
Maturity Date, this Convertible Note shall be converted into that number of
fully paid and nonassessable shares of Common Stock determined by dividing all
of the principal and accrued interest due on this Convertible Note as of the
Maturity Date by the average per share closing sales price of the Common Stock
on the OTC Electronic Bulletin Board during the period from January 1, 2003 to
March 31, 2003 (the "Common Stock Price"). The Common Stock Price for which the
Convertible Note shall be converted shall not exceed $0.75 per share or be less
than $0.35 per share.
2.3 Issuance of Securities upon Conversion. As soon as practicable after
conversion of this Convertible Note, the Company, at its expense, will cause to
be issued in the name of and delivered to the Holder of this Convertible Note, a
certificate or certificates representing the number of fully paid and
nonassessable shares of the Common Stock to which Holder shall be entitled on
such conversion. No fractional shares will be issued on conversion of this
Convertible Note. If Holder would otherwise be entitled to a fractional share,
Holder shall receive a cash payment equal to the Common Stock Price multiplied
by the fractional share Holder would otherwise be entitled to receive.
2.4 Termination of Rights. All rights with respect to this Convertible Note
shall terminate upon the issuance of shares of the Common Stock upon conversion
of this Convertible Note, whether or not this Convertible Note has been
surrendered. Notwithstanding the foregoing, the Holder agrees to surrender this
Convertible Note to the Company for cancellation as soon as is practicable
following conversion of this Convertible Note.
2.5 Mergers, Consolidations or Sales of Assets. In the event that the
Company shall propose at any time a merger, consolidation or reorganization with
or into another entity (other than a merger with another entity in which the
holders of voting securities of the Company immediately prior to such
transaction will hold greater than 50% of the voting securities of the surviving
entity) or sell all or substantially all of its assets for cash, the Company
shall send to the Holder at least twenty (20) days' prior written notice of the
date on which such merger, consolidation, reorganization or sale (the "Merger
Event") is expected to occur. As a part of such Merger Event, the Company may,
conditioned on the consummation of such Merger Event, convert this Convertible
Note into that number of shares of the common stock of the Company (the "Common
Stock") equal to the amount (rounded to the nearest whole number) obtained by
dividing (x) the amount of unpaid principal and accrued interest of this
Convertible Note by the average per share closing price of the Common Stock on
the OTC Electronic Bulletin Board during the thirty (30) day period prior to the
Merger Event.
3. Interest. Accrued interest on this Note shall be due at such time as the
outstanding principal amount hereof shall be due.
4. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default."
4.1 Breaches of Covenants. The Company shall fail to observe or perform any
covenant, obligation, condition or agreement contained in the Convertible Note
or Convertible Note Purchase Agreement (collectively, the "Transaction
Documents") and such failure shall continue for twenty (20) days following the
Company's receipt of Holder's written notice to the Company of such breach of
covenant; or
E-10.8
<page>
4.2 Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i)
apply for or consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its property, (ii) be
unable, or admit in writing its inability, to pay its debts generally as they
mature, (iii) make a general assignment for the benefit of its or any of its
creditors, (iv) be dissolved or liquidated in full or in part, (v) become
insolvent (as such term may be defined or interpreted pursuant to any applicable
statute), (vi) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
pursuant to any bankruptcy, insolvency or other similar law now or hereafter in
effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other
proceeding commenced against it, or (vii) take any action for the purpose of
effecting any of the foregoing; or
4.3 Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of the Company or of
all or a substantial part of the property thereof, or an involuntary case or
other proceedings seeking liquidation, reorganization or other relief with
respect to the Company or the debts thereof pursuant to any bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced
and an order for relief entered or such proceeding shall not be dismissed or
discharged within thirty (30) days of commencement.
5. Rights of Holder upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 4.2 and
4.3 of this Convertible Note) and at any time thereafter during the continuance
of such Event of Default, Holder may, by written notice to the Company, declare
all outstanding obligations payable by the Company hereunder to be immediately
due and payable without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived, anything contained in the
Transaction Documents to the contrary notwithstanding. Upon the occurrence or
existence of any Event of Default described in Sections 4.2 and 4.3 of this
Convertible Note, immediately and without notice, all outstanding obligations
payable by the Company hereunder shall automatically become immediately due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived, anything contained in the Transaction
Documents to the contrary notwithstanding. In addition to the foregoing
remedies, upon the occurrence or existence of any Event of Default, Holder may
exercise any other right, power or remedy granted to it by the Transaction
Documents or otherwise permitted to it by law, either by suit in equity or by
action at law, or both.
6. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 8 and 9 below, the rights and obligations of the Company
and Holder shall be binding upon and benefit the successors, assigns and
transferees of the parties.
7. Waiver and Amendment. Any provision of this Convertible Note may be
amended, waived or modified upon the written consent of the Company and Holder.
E-10.9
<page>
8. Transfer of this Convertible Note or Securities Issuable on Conversion
Hereof. With respect to any offer, sale or other disposition of this Convertible
Note or securities into which such Convertible Note may be converted, Holder
will give written notice to the Company prior thereto, describing briefly the
manner thereof, together with a written opinion of Holder's counsel, to the
effect that such offer, sale or other distribution may be effected without
registration or qualification (under any federal or state law then in effect).
Promptly upon receiving such written notice and reasonably satisfactory opinion,
if so requested, the Company, as promptly as practicable, shall notify Holder
that Holder may sell or otherwise dispose of this Convertible Note or such
securities, all in accordance with the terms of the notice delivered to the
Company. If a determination has been made pursuant to this Section 8 that the
opinion of counsel for Holder is not reasonably satisfactory to the Company, the
Company shall so notify the Holder promptly after such determination has been
made. The Convertible Note thus transferred and each certificate representing
the securities thus transferred shall bear a legend as to the applicable
restrictions on transferability in order to ensure compliance with the
Securities Act, unless in the opinion of counsel for the Company such legend is
not required in order to ensure compliance with the Securities Act. The Company
may issue stop transfer instructions to its transfer agent in connection with
such restrictions. Subject to the foregoing, transfers of this Convertible Note
shall be registered upon registration books maintained for such purpose by or on
behalf of the Company as provided in the Convertible Note Purchase Agreement.
Prior to presentation of this Convertible Note for registration of transfer, the
Company shall treat the registered holder hereof as the owner and holder of this
Convertible Note for the purpose of receiving all payments of principal and
accrued interest and for all other purposes whatsoever, whether or not this
Convertible Note shall be overdue, and the Company shall not be affected by
notice to the contrary.
9. Assignment by the Company. Neither this Convertible Note nor any of the
rights, interests or obligations hereunder may be assigned, by operation of law
or otherwise, in whole or in part, by the Company without the prior written
consent of Holder except in connection with an assignment in whole to a
successor corporation to the Company, provided that such successor corporation
acquires all or substantially all of the Company's property and assets and
Holder's rights hereunder are not impaired.
10. Treatment of Convertible Note. To the extent permitted by generally
accepted accounting principles, the Company will treat, account and report the
Convertible Note as debt and not equity for accounting purposes and with respect
to any returns filed with federal, state or local tax authorities.
11. Notices. All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given upon receipt or, if earlier, (a) five (5) days after
deposit with the postal service, if delivered by first class mail, postage
prepaid, (b) upon delivery, if delivered by hand, (c) two business days after
the business day of deposit with Federal Express or similar express courier,
freight prepaid or (d) one business day after the business day of a facsimile
transmission, if delivered by facsimile transmission with copy by first class
mail, postage prepaid, and shall be addressed (i) if to the Holder, at the
Holder's address as set forth in the Convertible Note Purchase Agreement or on
the register maintained by the Company, and (ii) if to the Company, at the
address of its principal corporate offices (Attn: President), or at such other
address as a party may designate by ten (10) days' advance written notice to the
other party pursuant to the provisions above.
12. No Prepayment. The Company may not prepay any of the principal or
interest due on this Convertible Note prior to the Maturity Date.
E-10.10
<page>
13. Governing Law. This Convertible Note and all actions arising out of or
in connection with this Convertible Note shall be governed by and construed in
accordance with the laws of the State of Utah, without regard to the conflicts
of law provisions of the State of Utah or of any other state.
IN WITNESS WHEREOF, the Company has caused this Convertible Note to be
issued as of the date first written above.
CIMETRIX, INCORPORATED
By:______________________________
Robert H. Reback, President and
Chief Executive Officer
E-10.11