Exhibit 10.26
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED , the undersigned, ENTRX
CORPORATION , a Delaware corporation (the “Maker”),
hereby promises to pay to the order of Pandora Select Partners
L.P., a British Virgin Islands limited partnership, or its assigns
(the “Payee”), at such place as the Payee may designate
in writing, the principal sum of One Million Three Hundred Thousand
Dollars ($1,300,000), under the terms set forth herein.
1.
Interest . The unpaid principal balance hereof from time to
time outstanding shall bear interest from the date hereof at the
rate of ten percent (10%) per annum.
2.
Payment . The principal and interest hereof is payable as
follows:
(a) Payments
in cash of interest only are payable in arrears on December 15,
2003 and on January 15, February 15, March 15 and
April 15, 2004; and
(b) Commencing
on May 15, 2004, and on the 15th day of each of the following
32 months, Maker shall pay amortized principal and interest on
this Note of $45,221.45 (the “Monthly Scheduled
Payment”).
3.
Optional Payment in Stock .
(a) In lieu
of making a cash payment under subsection 2(b) above, Maker may pay
the Monthly Scheduled Payment, or any portion thereof, but only to
the extent permitted by this subsection (a), by the issuance of
shares of its $0.10 par value common stock (the “Common
Stock”), the per share value of which is computed as provided
in Subsection (b) below. Despite the foregoing, the number of
shares of Common Stock which may be issued to pay all or any
portion of a particular Monthly Scheduled Payment may not exceed
the lesser of (i) 8% of the aggregate number of traded shares
of Common Stock reported on the NASDAQ System (or if not then
traded on the NASDAQ System, on the OTC Bulletin Board as reported
by bigcharts.com, or if this service is discontinued, such other
reporting service acceptable to Payee) for the 20 trading days
immediately preceding such Monthly Scheduled Payment due or
(ii) a number of shares of Common Stock which, when added to
the number of shares of Common Stock owned of record together by
Payee and its affiliates, would not cause Payee and its affiliates
together to own of record more than 4.99% of the Maker’s
outstanding Common Stock. In computing under this subsection
(a) the aggregate number of traded shares during any time
period, the Maker shall exclude (i) shares sold by or for the
account or at the direction of the Maker, officers or directors of
Maker or any members of their immediate families or any affiliates
of Maker and (ii) shares determined solely by Payee (for which
Payee shall so inform the Maker in writing) to represent unlawful
or potentially unlawful sales. Maker may pay the Monthly Scheduled
Payment, or any portion thereof, by the issuance of Common Stock
only if, at the time of such payment, Maker has in effect a
registration statement on Form S-2 with the SEC and applicable
state securities laws covering the original issuance of such shares
by the Maker or the resale of such shares by the Payee. Further,
Maker may not pay a Monthly Scheduled Payment, or any portion
thereof, by the issuance of Common Stock if, at the time of such
payment, the per share value of the Maker’s Common Stock (as
computed in accordance with subsection (b) below) is less than
$0.72 per share.
(b) The per
share value of the Common Stock as of a specified Scheduled Monthly
Payment date for the purposes of this Section 3 is 90%
(rounded to the nearest $.01) of the average (rounded to the
nearest $.01) of the high closing bid prices of Maker’s
Common Stock on the NASDAQ System (or if not then traded on the
NASDAQ System, then on the OTC Bulletin Board as reported by
bigcharts.com, or if this service is discontinued, such other
reporting service acceptable to Payee) for the 20 trading days
immediately preceding the particular Scheduled Monthly Payment
date.
