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SECURED CONVERTIBLE PROMISSORY NOTE
$ 80,004 Salt Lake City, Utah
Effective as of March 6, 2006
1. PROMISE TO PAY.
FOR VALUE RECEIVED, MICROCOR, INC., A UTAH CORPORATION
("Maker"),
promises to pay to the order of Wescor, Inc., a Utah
corporation
("Holder"), at 459 South Main, Logan, Utah 84321, or at such
other
place as the Holder may from time to time designate in writing,
amounts
designated as Minimum Royalty Advances, or so much thereof as
may be
disbursed to, or for the benefit of the Borrower by Lender
pursuant to
the terms and conditions of a separate Loan Agreement between
Borrower
and Lender as described more fully in Section 2 below (the
"Loan
Agreement"). It is the intent of the Borrower and Lender that
Lender
shall advance to Borrower the amount of $6,667 per month
commencing on
the Effective Date hereof for a period of twelve months for
Minimum
Royalty Advances as defined in the Loan Agreement. and such
additional
amounts as may be agreed upon by the parties in writing.
Subject to the provisions of the Loan Agreement, the principal
and
accrued interest hereunder shall be repaid by Borrower to Lender
on or
before the maturity date. This Note, sometimes referred to
herein and
in the Loan Documentation as the Minimum Royalty Advance Note
evidences
the Minimum Royalty Advances (the "Minimum Royalty Advance
Loan") from
Holder to Maker.
2. LOAN AGREEMENT.
This Note has been executed and delivered by Maker to Holder
in
conjunction with a separate Loan Agreement between Maker and
Holder
which sets forth the terms and conditions of the loan to be
made
hereunder and other agreements of the parties. This Note shall
at all
times be governed by and construed in accordance with the
Loan
Agreement. All defined terms contained herein if not
otherwise
identified shall have the same meaning as contained in the
Loan
Agreement.
3. CONVERTIBILITY.
This Note, at the election of Holder, shall be convertible into
shares
of Maker's existing common stock upon the occurrence of a
Conversion
Event. At such time, upon election and notice by Holder to
Maker, all
or any portion of the outstanding principal and accrued and
unpaid
interest then due on this Note shall be converted (the
"Conversion")
into fully paid and nonassessable common stock of Maker at a
conversion
price equal to the Conversion Price. Provided, however, that
no
fractional shares shall be issued. Upon complete conversion of
the
amounts outstanding on this Note, Maker shall pay to Holder cash
in
lieu of any fractional shares. Such Conversion shall be subject
to
compliance with all applicable securities laws and the execution
of an
Exchange Agreement approved by Maker's counsel.
4. SECURITY.
This Note is secured by, among other things, the Security
Agreement
dated as of even date herewith which creates a lien on that
certain
property described therein. This Note, the Loan Agreement and
the
Security Agreement are defined herein as the "Loan
Documents."
5. MATURITY DATE.
Absent the occurrence of an Event of Default hereunder or under
any of
the Loan Documents, the unpaid principal balance hereof and all
other
amounts payable by Maker under the terms of the Loan Documents,
shall
be due and payable on March 6, 2008 (the "Maturity Date"). If
the
Maturity Date should fall (whether by acceleration or otherwise)
on a
day that is not a business day, payment of the outstanding
principal
shall be made on the next succeeding business day.
6. PAYMENT AND PREPAYMENT.
(A) At such time and from time to time as Maker shall have
generated revenues in excess of working capital needs
("Excess Revenues"), as determined by Maker's Board, on
which Holder shall have a representative, Maker shall pay
any such Excess Revenues to Holder as payments toward the
amounts owing hereunder.
(b) Subject to any limitations and penalties contained in the
Loan
Documents, Maker may prepay the Loan, in whole or in part,
at
any time without penalty or premium.
(c) Maker shall not be entitled to reborrow amounts prepaid.
5. INTEREST.
(a) This Note shall accrue interest at an annual rate of
interest
equal to two (2) percentage points above the prime rate
published on a daily basis in The Wall Street Journal as the
prime rate may be modified from time to time (the "Prime
Rate").
(b) Upon the occurrence of an Event of Default (and so long as
the
Event of Default shall continue), interest will accue at an
annual rate of interest equal to the Pri
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