EXHIBIT 4.3
THIS NOTE AND THE SECURITIES
REPRESENTED
HEREBY HAVE NOT BEEN
REGISTERED UNDER
THE SECURITIES ACT OF 1933,
AS AMENDED. THEY MAY
NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES
UNDER SAID ACT OR AN
OPINION OF COUNSEL
SATISFACTORY TO
THE
CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
DETTO TECHNOLOGIES, INC.
SUBORDINATED CONVERTIBLE PROMISSORY NOTE
January 15, 2004
$1,827,103
Seattle, Washington
FOR VALUE
RECEIVED, DETTO
TECHNOLOGIES,
INC., a Washington
corporation
("Company"), promises to pay to New Sea Equities, LLC, ("Holder"), or his
registered assigns, the principal sum of $1,827,103 or such lesser
amount as
shall then equal the
outstanding principal amount hereof, together with
interest
from the date of this Note on
the unpaid
principal balance at a rate equal
to
eight percent (8%) per annum.
This Note shall
represent:
all amounts owing
by
the Company to the Holder
pursuant to the promissory notes previously issued by
the Company to Holder on
August 20, 2002,
as amended
(the "Previous Notes")
including all interest through the above date. This Note shall replace and
supercede, in their entirety the Previous
Notes. The Holder hereby understands
and agrees that, upon execution hereof, the Previous Notes will be deemed
to
have been cancelled and all
rights thereunder extinguished.
All unpaid
principal,
together with any then
unpaid and accrued interest
and other amounts payable
hereunder, shall be due and payable (unless previously
converted pursuant to Section 6 hereof) on the
earlier of (i) January 15, 2005
(the "Maturity Date") or (ii) when such amounts
are declared due and payable by
the Holder or made
automatically due and payable upon or after the occurrence
of
an Event of Default (as
defined below).
The following is a statement of the
rights of Holder and the
conditions to which this Note is subject, and to which
the Holder hereof, by the
acceptance of this Note, agrees:
1.
DEFINITIONS. As used
in this Note, the following capitalized terms
have the following
meanings:
(a) "Holder"
shall mean the Person
specified in the
introductory
paragraph of this Note or any Person who shall at the time be the
registered
holder of this
Note.
(b)
"Indebtedness"
of a Person shall mean and include the
aggregate amount of, without
duplication (i) all obligations for borrowed money,
(ii) all obligations evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations to pay the deferred purchase price of
property or services (other than accounts payable incurred in the ordinary
course of business
determined in
accordance with generally accepted accounting
principals), (iv) all obligations with respect to capital leases, (v) all
guaranty obligations, (vi) all obligations created or arising under any
conditional sale or other title retention agreement with respect to
property
acquired by such Person, and (vii) all reimbursement and other payment
obligations, contingent or
otherwise, in respect of letters of credit.
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(c) "Company"
includes the
corporation initially
executing
this
Note and any Person which
shall succeed to or assume the obligations of Company
under this Note.
(d) "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) "Senior
Indebtedness" shall mean, unless expressly
subordinated to or made on a parity with the
amounts due under this
Note, the
principal of (and premium, if
any), unpaid interest on and amounts reimbursable,
fees, expenses, costs of enforcement and other
amounts due in connection with,
Indebtedness of Company to
Coamerica Bank,
Access Finacial or
other current or
future institutional
Indebtedness.
2.
INTEREST.
Accrued interest on this Note shall be payable at
such
time as the outstanding
principal amount hereof shall be paid in
full. If this
Note is converted pursuant to
Section 6 hereof, the accrued interest may, at the
election of the Company, be paid in shares of Common Stock (as defined in
Section 6(a)
below).
3.
EVENTS OF
DEFAULT. The
occurrence
of any of the
following shall
constitute an "Event of
Default" under this Note:
(a) Failure to
Pay. The Company shall fail in any material respect
to pay (i) any principal payment for a period of three days from
the due date
thereof or (ii) any interest
or other payment
required under the
terms of this
Note on the date due and such
payment shall not have been made within
fifteen
(15) days of Company's receipt of Holder's written notice to Company of
such
failure to pay; or
(b) Breaches of
Covenants. The Company
shall fail in any material
respect to observe or perform
any covenant,
obligation, condition
or agreement
contained in this Note (other than those
covenants specified in Section 3(a)
hereof) and (i) such
failure is not
remedied, cured or waived for a period
of
thirty (30) days after the
Company has notice of
the failure,
or (ii) if
such
failure is not curable
within such
thirty (30) day
period, but is
reasonably
capable of cure within sixty
(60) days, either (A)
such failure shall
continue
for sixty (60) days or (B)
Company shall not have
commenced a cure in a
manner
reasonably satisfactory to
Holder within the initial thirty (30) day period; or
(c)
Representations and Warranties. Any representation or
warranty
made by Company to Holder in
this Note shall be untrue in any material respect
when made; or
(d)
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