THIS NOTE AND THE SHARES OF COMMON STOCK ACQUIRABLE ON CONVERSION HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, OFFERED FOR SALE, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION SHALL BE
SATISFACTORY TO THE CORPORATION, THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED CONVERTIBLE PROMISSORY NOTE
$1,150,000.00 Arlington Heights, Illinois
November ___, 2004
FOR VALUE RECEIVED, TECHALT, INC., a Nevada corporation, formerly known
as Dendo Global Corporation (the "Corporation"), agrees and promises to pay to
Services By Desigawise, Ltd. (the "Holder"), the sum of One Million One Hundred
Fifty Thousand and no/100 Dollars ($1,150,000.00), together with interest from
the date hereof on the principal amount from time to time remaining unpaid as
provided below. Payment for all amounts due hereunder shall be made to Holder at
5250 Cleveland Street, Skokie, IL 60077.
The following is a statement of the rights of the Holder of this Note and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note agrees:
1. Interest/Debt Service/Pre-Payment/Acceleration.
1.1 Interest. The unpaid principal amount from time to time
outstanding shall bear interest commencing from November 1, 2004 until
paid at a rate equal to the sum of five percent (5%) per year. Interest
shall be computed for the actual number of days elapsed on the basis of a
year of 365 days. All past due principal and interest shall bear interest
until paid at twelve percent (12%) per annum. All payments made pursuant
to this Note shall be applied first to accrued and unpaid interest and
then to the unpaid principal balance of this Note.
1.2. Interest and Principal Payment Terms. Except as otherwise
provided herein, during the term of this Note, interest only shall be due
and payable quarterly on the first (1st) Business Day of each March, June,
September, and December with the first payment of interest commencing
March 1, 2005. For purposes of this Note, "Business Day" shall mean any
day on which commercial banks are open to do business in Chicago,
Illinois. All interest and principal sums due under this Note are payable
not later than 5:00 P.M., Chicago time, in legal tender of the United
States of America current on the dates such sums or payments are
respectively due.
1.3. First Installment Date. On the date which is twelve (12) months
from the "Closing" (as defined in the Settlement Agreement of even date
among the Corporation, Holder and others) ("First Installment Date"), the
principal amount of Six Hundred Fifty Thousand and 00/100 Dollars
($650,00.00), ("First Principal Payment") together with accrued but unpaid
interest, shall be due and payable.
1
1.4. Final Installment Date. On the date twelve (12) months
following the First Installment Date, (the "Final Due Date"), the entire
unpaid principal amount and all accrued but unpaid interest shall be paid
in full.
1.5. Prepayment. The Corporation may at its option from time to time
prepay this Note in whole or in part, without any prepayment penalty.
Notwithstanding anything to the contrary contained herein, no such
prepayment, whether in whole or in part, shall extinguish Holder's
conversion rights hereunder.
1.6. Acceleration.
(a) Notwithstanding anything contained herein to the contrary, and
in accordance with this Section 1.6, the Corporation's payment obligations
hereunder may accelerate as set forth in Section 1.6(b) below in whole or
in part at Holder's option upon the receipt by the Corporation of cash or
cash equivalents from any source after the date hereof from the purchase
of equity securities of the Corporation, whether in the form of common
stock or preferred stock, or the purchase of any security which is
convertible to or exerciseable or otherwise exchangeable for an equity
security of the Corporation, ("Additional Capital"). Additional Capital
shall include cash or cash equivalents received by the Corporation upon
the exercise of the Sunrise Investors' Warrants to purchase an aggregate
of eight million (8,000,000) shares of the Common Stock of the Company at
an exercise price of $1.00 per share, subject to adjustment.
(b) Upon the receipt by the Corporation of an aggregate of Four
Million and no/100 Dollars ($4,000,000.00) or more of Additional Capital
(the "Initial Acceleration Additional Capital") the Holder may require the
Initial Acceleration in the payment of the outstanding balance of
principal and accrued interest in a percentage calculated by dividing the
Initial Acceleration Additional Capital by eight million (8,000,000). In
the event that the Corporation shall receive Additional Capital after the
Holder has exercised the right to make an Initial Acceleration, the Holder
shall be entitled to accelerate the payment of the then outstanding
balance of principal and accrued interest in accordance with the following
schedule:
Amount of Additional Capital Percentage of Remaining
In Excess of Initial Acceleration Note Principal Balance
Additional Capital Subject to Acceleration
$1,000,000 33%
2,000,000 66%
3,000,000 100%
2
2. Convertible Note. This Note is a convertible note, convertible
into common equity of the Corporation as set forth herein and is given in
connection with the settlement of certain litigation between, among
others, the Corporation and the Holder.
3. Events of Default; Consequences. If any of the events specified
in this Section 3 shall occur (herein individually referred to as an
"Event of Default"), the Holder of this Note may, at the Holder's option,
in addition to any other rights the Holder may have in equity or at law
and in addition to the Holder's rights of conversion under Section 7 of
this Note as to all or any part of the principal and interest then due and
owing, declare this Note mature, and all sums owing hereon shall be due
and payable immediately without presentment, protest, demand, notice of
intention to accelerate, notice of acceleration, notice of non-payment,
notice of protest, or other notice of any kind, all of which are hereby
expressly waived by the Corporation:
(a) the failure to pay any installment of principal or
interest due under this Note, which failure is not cured within five
(5) business days after notice of such breach.
(b) the institution by the Corporation of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by it to
institution of bankruptcy or insolvency proceedings against it or
the filing by it of a petition or answer or consent seeking
bankruptcy reorganization or release under any statute, law or
regulation, or the consent by it to the filing of any such petition
or the appointment of a receiver, liquidator, assignee, trustee or
other similar official of the Corporation, or of any substantial
part of its property, or the making by it of an assignment for the
benefit of creditors, or the taking of corporate action by the
Corporation in furtherance of any such action; or
(c) if, within sixty (60) days after the commencement of an
action against the Corporation (and service of process in connection
therewith on the Corporation) seeking any bankruptcy, insolvency,
bankruptcy reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such
action shall not have been resolved in favor of the Corporation or
all orders or proceedings thereunder affecting the operations or the
business of the Corporation stayed, or if the stay of any such order
or proceeding shall thereafter be set aside, or if, within ninety
(90) days after the appointment without the consent or acquiescence
of the Corporation of any trustee, receiver or liquidator of the
Corporation or of all or any substantial part of the properties of
the Corporation, such appointment shall not have been vacated; or
(d) The Corporation's breach of any representation, warranty,
obligation, undertaking or covenant made or entered into herein
which breach is not cured in accordance with the provisions of this
Agreement.
(e) The Corporation shall fail to make any payment due
(whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) on any other debt to a third party in excess of
$50,000 (except due to a bona fide vendor dispute) and such default
shall continue unremedied for thirty (30) days.
(f) Any consolidation or merger or like transaction of the
Corporation with or into any other corporation or other entity or
person, or any other corporate reorganization in which the
Corporation shall not be the continuing or surviving entity in such
consolidation, merger or reorganization, any transaction or series
of related transactions by or affecting the Corporation in which the
right to control securities possessing in excess of fifty percent
(50%) of the voting power of all Corporation securities is
transferred (calculated on a fully diluted basis giving effect to
conversion or exercise of all instruments or securities entitling
the holder to convert into or to receive common stock or its
equivalent (including this Note)), a dissolution of the Corporation,
or a sale, transfer or other disposition of all or substantially all
of the assets of the Corporation ("Change of Control").
3
4. No Setoff, Etc. The obligations of the Corporation to pay the principal
balance and interest due to the Holder shall be absolute and unconditional and
the Corporation shall make such payment without abatement, diminution or
deduction regardless of any cause or circumstances whatsoever including, without
limitation, any defense, setoff, recoupment, or counterclaim which the
Corporation may have or assert against the Holder or any other person under this
Note or under any of the Related Agreements.
5. Waiver of Presentment, Etc. The Corporation waives presentment, demand,
notice of dishonor, protest and notice of nonpayment and protest.
6. Costs of Collection. The Corporation shall pay all costs and expenses
of collection incurred by the Holder, including reasonable attorneys' fees in
the event that a court of law has determined that the Holder is the prevailing
party.
7. Conversion.
7.1 Conversion. The Holder of this Note has the right, at the
Holder's option, at any one time or from time to time from and after the date
hereof to convert this Note, on demand as follows:
7.1.a. Subject to the procedures provided in Section 7.2 below, the
Holder may at any time prior to 5:00 p.m., Chicago time, on the First
Installment Date, convert any part or all of the original principal amount
of this Note into fully paid and non-assessable shares of the
Corporation's common stock, with $.001 par value per share, (the "Common
Stock"), on the basis of one (1) share of Common Stock for each One Dollar
($1.00) (the "Conversion Price") of the principal amount of this Note. The
Conversion Price and the corresponding number of shares of Common Stock to
be issued upon the conversion of this Note shall be subject to adjustment
from time to time upon the occurrence of certain events, as provided in
this Note. The prepayment of this Note, in whole or in part prior to 5:00
p.m., Chicago time of the First Installment Date shall not reduce the
amount of this Note which may be converted into Common Stock in accordance
with the Section 7.1.a.
7.1.b. After the First Installment Date, and subject to the
procedures provided in Section 7.2 below, the Holder may at any time prior
to the later to occur of twelve (12) months after the First Installment
Date or the payment in full of all principal due on this Note convert any
part or all of the original principal amount in an amount which is the
greater of the amount of principal not yet paid and $500,000, into Common
Stock on the basis of one share of Common Stock for the Conversion Price.
The Conversion Price and the corresponding number of shares of Common
Stock to be issued upon the conversion of this Note shall be subject to
adjustment from time to time upon the occurrence of certain events, as
provided in this Note. The prepayment of this Note, shall not reduce the
amount of this Note which may be converted into Common Stock in accordance
with this Section 7.1.b.
4
7.2 Conversion Procedure. Such conversion shall be effected by (i)
the surrender of this Note at the principal office of the Corporation at
any time during usual business hours, together with (ii) five (5) days
notice in writing that the Holder wishes to convert a portion or all of
this Note, which notice shall also state the name(s) (with addresses) and
denominations in which the certificate(s) for Common Stock shall be issued
and shall include instructions for delivery thereof and (iii)
reimbursement without interest for any previous payment of principal by
the Corporation which is being converted. Such conversion shall be deemed
to have been effected as of the close of business on the date on which
this Note shall have been surrendered and such notice shall have been
received, and at such time (the "Voluntary Conversion Date") the rights of
the Holder with respect to the principal amount of the Note converted
shall cease and the person(s) in whose name(s) any certificate(s) for
Common Stock are to be issued upon such conversion shall be deemed to have
become the holder or holders of record of the shares of Common Stock
represented by such certificate(s).
On or before the third business day following the Voluntary
Conversion Date, the Corporation shall (i) provided that the transfer
agent for the Corporation is participating in The Depository Trust Company
("DTC") Fast Automated Securities Transfer Program, upon the request of
Holder, credit such aggregate number of Shares to which the Holder is
entitled pursuant to such conversion to the Holders' or his or its
designee's balance account with DTC though its Deposit Withdrawal Agent
Commission system, or (ii) if the Corporation's transfer agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue
and dispatch, or cause to be issued and dispatched by overnight courier to
the address as specified in the written notice of conversion, a
certificate, registered in the name of the Holder or his or its designee,
for the number of Shares to which the Holder is entitled pursuant to such
conversion. The Corporation shall also make payment to the Holder of
accrued interest to the date of conversion on the portion of the Note
converted in accordance with the manner of payment provisions of Section 2
of this Note. In each case of conversion of this Note in part only, the
Corporation shall receive and hold the Note as a fiduciary agent of the
Holder, shall endorse on this Note the date and amount of this Note so
converted, and such amount shall be deemed no longer outstanding. Unless
this Note has been converted in its entirety and all principal and accrued
interest have been fully-paid, this Note, endorsed as provided for herein,
shall be delivered on or before the third business day following the
Voluntary Conversion by overnight courier to the Holder at the address
specified in the written notice of conversion. The rights of conversion
provided for in this Note shall not be restricted or modified in any way
during such period of time that this Note is held by Corporation. The
Corporation shall not be required to issue shares of Common Stock to any
individual or entity upon conversion of this Note unless and until said
individual or entity shall have completed a Subscription Agreement and
Investor Questionnaire substantially in the forms attached hereto as
EXHIBIT 1 and 2, respectively.
7.3. Adjustment of Conversion Price. If and whenever on or after the
date of this Note, the Corporation issues, sells or grants shares of
Common Stock in, or in accordance with Sections 7.4, 7.5 and 7.6 below is
deemed to have issued, sold or granted shares of Common Stock in, the
Corporation for no consideration or for consideration per share of Common
Stock less than the Conversion Price in effect immediately prior to the
time of such issuance or sale, then and in such event, such Conversion
Price shall be reduced, concurrently with such issue, to a price
(calculated to the nearest cent) determined by multiplying such Conversion
Price by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such issue plus the
number of shares of Common Stock which the aggregate consideration
received by the Corporation for the total number of additional shares of
Common Stock so issued or deemed to be issued, would purchase when divided
by such Conversion Price; and the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to such issuance
plus the number of such additional shares of Common Stock so issued or
deemed to be issued.
5
7.4. Issuance and Sale of Shares of Common Stock. For purposes of
determining the adjusted Conversion Price pursuant to Section 7.3 above,
the following events shall be deemed to be an issuance and sale of shares
of Common Stock by the Corporation:
(a) Issuance of Rights or Options. If (i) the Corporation, in
any manner, hereafter grants any rights or options to subscribe for,
or to purchase, shares of Common Stock, or any securities
convertible into or exchangeable for any shares of Common Stock of
the Corporation (such rights or options referred to herein as
"Options" and such convertible or exchangeable securities referred
to herein as "Convertible Securities") and (ii) the Price Per Unit
(as defined below) of the shares of Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of such
Convertible Securities is less than the Conversion Price in effect
immediately prior to the time of the granting of such Options or
issuing such Convertible Securities, then the shares of Common Stock
issuable upon the exercise of such Options or upon conversion or
exchange of such Convertible Securities will be deemed to have been
issued and sold by the Corporation for such lesser price per unit.
For the purposes of this Section 7.4(a) the "Price Per Unit" is
determined by dividing (i) the total amount, if any, received by the
Corporation as consideration for the granting of such Options or
issuing such Convertible Securities, plus the minimum aggregate
amount of additional consideration payable to the Corporation upon
exercise of all such Options, plus in the case of such Options which
relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon
the issuance or sale of such Convertible Securities and the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities.
No further adjustment of the Conversion Price will be made when
Convertible Securities are actually issued upon the exercise of such
Options or when shares of Common Stock are actually issued upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities.
(b) Calculation of Consideration Received. If any shares of
Common Stock in the Corporation, Options or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefor or the Price Per Unit, as the
case may be, will be deemed to be the net amount received or to be
received, respectively, by the Corporation therefor. In case any
shares of Common Stock in the Corporation, Options or Convertible
Securities are issued or sold for a consideration other than cash,
the amount of the consideration other than cash received by the
Corporation or the non-cash portion of the Price Per Unit, as the
case may be, will be the fair market value of such consideration
received or to be received, respectively, by the Corporation. If any
shares of Common Stock in the Corporation, Options or Convertible
Securities are issued in connection with any merger in which the
Corporation is the surviving Corporation, the amount of
consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving
Corporation as is attributable to such shares of Common Stock,
Options or Convertible Securities, as the case may be. The fair
value of any consideration other than cash and marketable securities
will be determined jointly by the Corporation and the Holder. If
such parties are unable to reach agreement within a reasonable
period of time, the fair value of such consideration will be
determined by an independent appraiser jointly selected by the
Corporation and the Holder.
6
(c) Integrated Transactions. In case any Option is issued in
connection with the issuance or sale of other securities of the
Corporation, together comprising one integrated transaction in which
no specific consideration is allocated to such Option by the parties
thereto, the Option will be deemed to have been issued for a
consideration of $.01.
(d) Record Date. If the Corporation takes a record of the
holders of Common Stock for the purpose of entitling them: (i) to
receive a dividend or other distribution payable in shares of Common
Stock in the Corporation, Options or Convertible Securities; or (ii)
to subscribe for or purchase shares of Common Stock in the
Corporation, Options or Convertible Securities, then such record
date will be deemed to be the date of the issuance or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or upon the making of such other
distribution on the date of the granting of such right of
subscription or purchase, as the case may be.
7.5. Subdivision or Combination of Shares of Common Stock. If the
Corporation at any time subdivides one or more classes of its outstanding
shares of Common Stock into a greater number of shares of Common Stock (or
units thereof), the Conversion Price in effect immediately prior to such
subdivision will be proportionately reduced. If the Corporation at any
time combines one or more classes of its outstanding shares of Common
Stock into a smaller number of shares of Common Stock, the Conversion
Price in effect immediately prior to such combination will be
proportionately increased.
7.6 Organic Change. Exclusive of the merger between Technology and
the Corporation, prior to the consummation of any Organic Change (as
defined below), the Corporation will make appropriate provisions (in form
and substance satisfactory to Holder) to insure that the holder of this
Note will thereafter have the right to acquire and receive, in lieu of or
in addition to the shares of Common Stock in the Corporation immediately
theretofore acquirable and receivable upon the conversion of this Note,
such shares of stock, membership interests, partnership interests,
securities or assets as such holder would have received in connection with
such Organic Change if the holder had converted this Note immediately
prior to such Organic Change. In any such case, the Corporation will make
appropriate provisions (in form and substance satisfactory to Holder) to
insure that the provisions of this Section 7.6 will thereafter be
applicable to this Note (including, an immediate adjustment of the
Conversion Price to the value for the shares of Common Stock in the
Corporation reflected by the terms of such Organic Change and a
corresponding immediate adjustment in the number of shares of Common Stock
acquirable and receivable upon conversion of this Note, if the value so
reflected is less than the Conversion Price in effect immediately prior to
such Organic Change). The Corporation will not effect any such Organic
Change, unless prior to the consummation thereof, the successor
Corporation resulting from such Organic Change assumes by written
instrument (in form reasonably satisfactory to Holder), the obligation to
deliver to each such holder such shares of stock, securities or assets as,
in accordance with the foregoing provisions, such holder may be entitled
to acquire. All other terms of this Note shall remain in full force and
effect following such an Organic Change. The provisions of this Section
7.6 shall similarly apply to successive Organic Changes.
7
As used herein, the term "Organic Change" shall mean any merger,
consolidation, combination, recapitalization, reorganization, stock split,
stock dividend or other change in, or with respect to, the shares of
Common Stock in the Corporation not otherwise provided for herein.
7.7. Other Distributions. If the Corporation declares a distribution
for its shareholders of Common Stock, which distribution is payable in
securities of other parties, evidences of indebtedness issued by the
Corporation or other parties, assets (excluding cash dividends) or options
or rights not referred to in Section 7.4, then, in each such case for the
purposes of this Section 7.7, the Holder shall be entitled to a
proportionate share of any such distribution as though the Holder was the
holder of the number of shares of Common Stock into which the Note is
convertible as of the record date fixed for the determination of the
holders of Common Stock entitled to receive such distribution. In no event
shall such a distribution be deemed a repayment of principal under the
Note.
7.8. New Financing. Notwithstanding anything to the contrary
contained herein, in the event the Corporation sells any security (equity,
debt or otherwise) of the Corporation ("New Security") at any time while
this Note is outstanding ("New Financing"), this Note shall, after such
New Financing, be convertible, at the option of the Holder, into the kind
and number of shares of the New Security, on such terms and conditions
(including any warrants or other consideration received by the purchasers
in the New Financing) as the New Security is sold in the New Financing,
subject to all of the terms of the New Financing. The conversion rights
set forth in this Section 7.8 are in addition to, and not in substitution
for, the other conversion rights set forth in this Note.
7.9. Notices.
(a) Immediately upon any adjustment in the number of shares of
Common Stock acquirable and receivable upon conversion of this Note or any
adjustment or readjustment in the Conversion Price, the Corporation shall
send written notice to the Holder, which notice shall set forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. The Corporation shall, upon written request at any
time of the Holder, furnish or cause to be furnished to such holder a
similar certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Price then in effect, and (iii) the number of shares
of Common Stock and the amount, if any, of other property which then would
be received upon the conversion of this Note. The Corporation may retain a
firm of independent public accountants of recognized standing which may be
the firm regularly retained by the Corporation to make any computation
required under this Section and a certificate signed by such firm shall be
rebuttable evidence of the correctness of any computation made under this
Section.
8
(b) In the event that:
(i) the Corporation shall declare any dividend or distribution
upon its Common Stock, whether in cash, property, stock or other
securities, whether or not a regular cash dividend and whether or
not out of earnings or earned surplus; or
(ii) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of
any class or other rights; or
(iii) there shall be any Organic Change; or
(iv) there shall be any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then in connection with each such event, the Corporation shall send to the
Holder (A) at least 60 days' prior written notice of the date on which the books
of the Corporation shall close or a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled) or for determining rights to vote in
respect of such Organic Change, dissolution, liquidation or winding up, and (B)
in the case of any such Organic Change, dissolution, liquidation or winding up,
at least 60 days' prior written notice of the date when the same shall take
place (and specifying the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such Organic Change, dissolution, liquidation or winding up).
8. Registration Rights. The Corporation grants registration rights to the
Holder hereof under the terms and conditions of the Registration Rights
Agreement of even date herewith.
9. Reservation of Common Stock; Etc.
(a) The Corporation will at all times from and after the date of
this Note reserve and keep available out of its authorized but unissued
shares of Common Stock or its treasury shares, or otherwise, solely for
the purpose of issuance upon the conversion of this Note, such number of
shares of Common Stock as shall then be issuable upon the conversion of
this Note. The Corporation covenants that all shares of Common Stock which
shall be so issuable shall, when issued, be duly and validly issued, fully
paid and non-assessable and free from all taxes, liens and charges.
9
(b) The Corporation will not take any action which would result in
any adjustment of the number of shares of Common Stock acquirable upon
conversion of this Note if the total number of shares issuable after such
action upon conversion of this Note, together with the total number of
shares of Common Stock then outstanding, would exceed the total number of
shares of Common Stock then authorized under the Corporation's Articles of
Incorporation which are not reserved or required to be reserved for any
purpose other than the purpose of issue upon conversion of this Note.
(c) 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 or other cost incurred by the Corporation in connection with
such conversion and the related issuance of shares of Common Stock.
(d) If any shares of Common Stock required to be reserved for
purposes of conversion of this Note require, before such shares may be
issued upon conversion, registration with or approval of any governmental
authority under any federal or state law (other than any registration
under the Securities Act of 1933, as then in effect, or any similar
federal statute then in force, or any state securities law, required by
reason of any transfer involved in such conversion) or listing on any
domestic securities exchange, the Corporation will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be
duly registered or approved for listing or listed on such domestic
securities exchange, as the case may be.
10. Fractional Interests. The Corporation shall not be required to issue
any fractional shares of Common Stock on the conversion of this Note. If
any fraction of a share of Common Stock would be issuable upon conversion
of this Note, the Corporation shall round up and issue one (1) whole share
in lieu of a fractional share.
11. Security Agreement. The Corporation hereby acknowledges that in
connection with executing this Note, the Corporation and Holder shall
enter into a Security Agreement substantially in the form attached hereto
as Exhibit 11 whereby the Corporation shall grant to Holder a security
interest in its assets as set forth therein.
12. Voting. Nothing contained in this Note shall be construed as
conferring upon the Holder the right to vote or to consent or to receive
notice as a stockholder in respect of the meetings of stockholders for the
election of directors of the Corporation or any other matter.
Notwithstanding the foregoing, the Corporation shall mail by first class
to the Holder at the address specified in Section 13, one copy of all
materials forwarded to stockholders or filed with the Securities and
Exchange Commission by the Corporation, said mailing to be made promptly
after mailing to stockholders or filing with the Securities and Exchange
Commission, as the case may be.
13. Notices.
10
(a) Any notice pursuant to this Note to be given or made by Holder to or
upon the Corporation shall be sufficient if it is in writing signed by or
on behalf of the Holder and delivered personally, by mail or by Federal
Express or similar overnight courier, postage paid, facsimile, and if by
mail, certified or registered, to the address set forth below or to such
other addressee or address as shall be set forth in a notice given in the
same manner:
TECHALT, INC.
3311 N. Kennicott Ave. - Suite A
Arlington Heights, IL 60004
Attn: James E. Solomon
(847) 398-1692
(b) Any notice pursuant to this Note shall be deemed given upon
delivery if delivered personally, on the next day if delivered by an
overnight carrier, or three (3) days after the date of postmark if
deposited in the U.S. Mail for delivery by certified or registered mail,
return receipt requested, postage prepaid, addressed, or upon transmission
if it has been given by facsimile between 9:00 a.m. and 5:00 p.m. central
time, Monday through Friday.
14. Governing Law. This Agreement shall be construed in accordance with,
governed by and enforced under the laws of the State of Illinois, the
parties acknowledging that this Agreement has been executed and performed
in Cook County, Illinois. All legal proceedings relating to the subject
matter of this Agreement may be brought only in the Cook County Circuit
Court of Illinois or in any federal court sitting in Chicago, Illinois.
15. Modification and Waiver. No modification or waiver of any provision of
this Note, nor any departure by the Corporation therefrom, shall in any
event be effective unless the same shall be in writing signed by the
Holder and then such modification or waiver shall be effective only in the
specific instance for the specific purpose given. Notwithstanding the
foregoing, the Board of Directors of the Corporation, in its sole
discretion, shall have the right at any time or from time to time to
decrease the Conversion Price and/or to increase the number of shares of
Common Stock issuable upon conversion of this Note. Such reduction of the
Conversion Price and/or increase in the number of shares of Common Stock
issuable upon exercise shall be effective for a period or periods to be
determined by such Board.
11
16. Transfer of Note and Stock. This Note and the Common Stock issued upon
conversion may each be sold, transferred, assigned, pledged or otherwise
disposed of by the Holder, provided that such sale, transfer, assignment,
pledge or other disposition is in accordance with all applicable federal
and state securities laws. The person or entity to whom a sale, transfer,
assignment, pledge or other disposition is made, shall be considered a
"Holder" for purposes of the rights and obligations provided for in this
Note, and as such, shall be entitled to enforce the registration rights
provided for in Section 8 hereof and in the referenced Registration Rights
Agreement.
Attest: TECHALT, INC.
By:
- --------------------------- ----------------------------------
Secretary James E. Solomon
Its President and Chief Executive Officer
12