NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
Date of Issuance: November 18, 2005
$900,000
CONVERTIBLE PROMISSORY NOTE
DUE March 17, 2006
THIS
CONVERTIBLE PROMISSORY NOTE is issued by Detto Technologies,
Inc., a
Delaware corporation (the "Company"),
designated as its
Convertible
Promissory
Note, due March 17, 2006 (the "Convertible
Note") issued in
connection with the
Company's purchase of the Holder's shares
of the common stock of Channel Access,
Inc., a Utah corporation.
FOR VALUE
RECEIVED, the Company promises to pay to Royce Bybee or his
registered assigns (the "Holder"), the principal sum of $900,000 on
March 17,
2006 or such earlier date as the Convertible Note is required to be repaid
as
provided hereunder (the "Maturity Date"),
and to pay interest to
the Holder on
the aggregate unconverted and then outstanding principal amount of this
Convertible Note at the rate of 3% per annum,
payable on the
Maturity Date as
set forth herein. Interest shall be calculated on the basis
of a 360-day year
and shall accrue on the Maturity Date.
This
Convertible Note is subject to the following additional
provisions:
1. Issued Pursuant the Company's Purchase of the Holder's Stock. This
Convertible Note has been issued pursuant to the Company's purchase of the
Holder's shares of the common stock of
Channel Access which,
in part, includes
the principal amount of this Convertible Note, subject to certain investment
representations of the original Holder set
forth in a certain Purchase Agreement
entered into by the Holder and the Company
on November 18, 2005
(the "Purchase
Agreement"). This Convertible Note may be transferred or exchanged only in
compliance with applicable federal and state securities laws and regulations.
Prior to due presentment to the Company for
transfer of this
Convertible Note,
the Company and any agent of the Company
may treat the Person in whose name this
Convertible Note is duly registered on the Convertible Note Register as the
owner hereof for the purpose of receiving
payment as herein provided and for all
other purposes, whether or not this
Convertible Note is overdue, and neither the
Company nor any such agent shall be
affected by notice to the contrary.
1
<PAGE>
2. Recission Option. Commencing on the Maturity Date
and extending until
this
Convertible Note is fully satisfied,
both the Company and
the Holder shall have
the right to rescind the transactions described in the Purchase Agreement
pursuant to Section 2.3 (c) of the Purchase
Agreement.
Upon exercise of
either
the Company or the Holder of such recission
option, this
Convertible Note shall
be terminated.
3. Events of Default.
(a)
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law
or pursuant to any judgment, decree
or order of any court, or any order, rule
or regulation of any administrative or
governmental body):
(i) any default in the payment of the principal of, interest on, or
liquidated damages in respect of, any
Convertible
Note, free of any claim of
subordination, as and when the same shall become
due and payable
(whether on a
Conversion Date or the Maturity Date or by
acceleration
or otherwise) which
default is not cured, if possible to cure, within 10 days of notice of
such
default sent by the Holder;
(ii) the Company or any of its subsidiaries shall commence, or
there
shall be commenced against the Company or any such
subsidiary a case
under any
applicable bankruptcy or insolvency laws as now or hereafter in effect
or any
successor thereto, or the Company commences any other proceeding under any
reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Company or any
subsidiary thereof or
there
is commenced against the Company or any
subsidiary thereof any
such bankruptcy,
insolvency or other proceeding which remains undismissed for a period of 60
days; or the Company or any subsidiary thereof is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Company or any subsidiary thereof suffers any
appointment of any custodian or the like
for it or any
substantial part of
its
property which continues undischarged or unstayed for a period of 60
days; or
the Company or any subsidiary thereof makes
a general assignment for the benefit
of creditors; or the Company shall fail to
pay, or shall state that it is unable
to pay, or shall be unable to pay,
its debts generally as they become due; or
the Company or any subsidiary thereof shall
call a meeting of its creditors with
a view to arranging a composition,
adjustment or
restructuring of its debts; or
the Company or any subsidiary thereof shall by any act or failure to act
expressly indicate its consent to,
approval of or
acquiescence
in any of the
foregoing; or any corporate or other action is taken by the
Company or any
subsidiary thereof for the purpose of
effecting any of the foregoing.
(b)
Remedies Upon Default.
Subject to Section 3
hereof, if any Event
of
Default occurs and is continuing,
the full principal
amount of this Convertible
Note, together with interest and other
amounts owing in respect thereof, to the
date of acceleration shall become at the
Holder's election,
immediately due and
payable in cash. The Holder need not provide and
the Company hereby
waives any
presentment, demand, protest or other notice of any kind, and the Holder may
immediately and without expiration of any grace period
enforce any and all
of
its rights and remedies hereunder and all other remedies
available to it
under
applicable law. Such declaration may be rescinded and
annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a
Convertible Note holder until such time, if
any, as the full payment under this
Section shall have been received by it. No
such rescission or
annulment shall
affect any subsequent Event of Default or
impair any right consequent thereon.
2
<PAGE>
4. Conversion.
(a)
Conversion
Right. At any time after the Original
Issue Date,
this
Convertible Note shall be convertible into
shares of Common Stock at the option
of the Holder, in whole (and not in part) at any time and from
time to time
(subject to the limitations on conversion set forth in this Section 3(a)
hereof). The Holder shall effect the
conversion by delivering to the Co
