THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. IT MAY NOT BE TRANSFERRED, RESOLD, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
TELENETICS CORPORATION
8% Convertible Subordinated Unsecured Promissory Note due 2001
$_________________ Lake Forest, California
September 15, 2000
FOR VALUE RECEIVED, the undersigned, TELENETICS CORPORATION, a
California corporation (the "COMPANY"), hereby promises to pay to
___________________________________________, or registered assigns, the
principal sum of ___________________________________________________
($___________), at maturity as set forth in SECTION 1 below, with interest
(computed on the basis of a 360-day year of twelve 30-day months) on the unpaid
principal amount hereof at the rate of 8% per annum.
1. PAYMENTS. Interest on the unpaid principal portion of this Note will
accrue at a rate of 8% per annum and is payable in full at maturity on March 15,
2001. The undersigned may prepay all or part of the outstanding principal
balance of this Note, together with all accrued but unpaid interest thereon,
only in accordance with this Note. All payments of principal of and interest on
this Note shall be in such coin or currency of the United States of America as
at the time of payment shall be legal tender for payment of public and private
debts.
2. CERTAIN DEFINITIONS. For purposes of this Note, the following terms
shall have the following respective meanings:
"COMMON STOCK" shall mean the Company's common stock, no par
value per share.
"SENIOR INDEBTEDNESS" shall mean the principal of and unpaid
interest on all indebtedness of the Company regardless of whether incurred on,
before or after the date of this Note (i) for money borrowed from any bank,
savings and loan or other financial institution, and is evidenced by notes,
bonds, debentures or other written obligations and (ii) in connection with any
renewals or extensions of any indebtedness described in (i) above; PROVIDED,
HOWEVER, that the term shall not include indebtedness which by the terms of the
instrument creating or evidencing it is subordinated to or on a parity with this
Note.
3. SUBORDINATION. The provisions of this SECTION 3 apply
notwithstanding anything to the contrary contained in this Note. The Company
covenants and agrees, and the holder of this Note, by such holder's acceptance
hereof, likewise covenants and agrees, that the indebtedness represented by this
Note and the payment of the principal of and interest on this Note are hereby
expressly made subordinate and subject in right of the prior payment in full of
all Senior Indebtedness.
4. DEFAULT.
4.1 EVENTS OF DEFAULT. If any of the following events (herein
called "EVENTS OF DEFAULT") shall occur:
(a) the Company shall default in the payment of any
part of the principal of or interest on this Note;
(b) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Company in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or for any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs, and such decree or order shall remain unstayed and in effect for a
period of sixty (60) consecutive days; or
(c) the Company shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or for any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action in furtherance of any of the foregoing;
then and in any such event the holder of this Note may at any time (unless all
defaults theretofore or thereupon shall have been remedied) at its option, by
written notice to the Company, declare this Note to be due and payable,
whereupon the same shall forthwith mature and become due and payable without
presentment, demand, protest or other notice, all of which are hereby waived.
4.2 REMEDIES ON AND NOTICES OF DEFAULT. Subject to the
provisions of SECTION 3, in case any one or more Events of Default shall occur,
the holder of this Note may proceed to protect and enforce the rights of such
holder by a suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any agreement contained in this Note, or
for an injunction against a violation of any of the terms or provisions hereof
or thereof, or in aid of the exercise of any power granted hereby or thereby or
by law. In case of a default under this Note, the Company will pay to the holder
of this Note such further amount as shall be sufficient to cover the reasonable
cost and expense of enforcement, including, without limitation, reasonable
attorneys' fees. If the holder of this Note shall give any notice or take any
other action in respect of a claimed default, the Company shall forthwith give
written notice thereof to all other holders of similarly subordinated notes at
the time outstanding, describing the notice or action and the nature of the
claimed default. No course of dealing and no delay on the part of any holder of
this Note in exercising any right shall operate as a waiver thereof or otherwise
prejudice such holder's rights or the rights of the holder of any similarly
subordinated notes. No remedy conferred by this Note upon the holder shall be
exclusive of any other remedy referred to herein or now or hereafter available
at law, in equity, by statute or otherwise.
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5. CONVERSION. Any holder of this Note may convert all or any portion
of the outstanding principal amount of this Note and accrued and unpaid interest
thereon into a number of shares of the Company's Common Stock computed by
dividing such principal amount by $1.625.
6. LIQUIDATING DIVIDENDS. If the Company declares or pays a dividend
upon the Common Stock payable otherwise than in cash out of earnings or earned
surplus (determined in accordance with generally accepted accounting principles,
consistently applied) except for a stock dividend payable in shares of Common
Stock (a "Liquidating Dividend"), then the Company will pay to the holder of
this Note at the time of payment thereof the Liquidating Dividends which would
have been paid on the Common Stock had the entire outstanding principal amount
of this Note been converted immediately prior to the date on which a record is
taken for such Liquidating Dividend, or, if no record is taken, the date as of
which the record holders of Common Stock entitled to such dividends are to be
determined.
7. MISCELLANEOUS.
(a) This Note shall be governed by and construed in accordance
with the laws of the State of California. If any one or more of the provisions
contained in this Note shall for any reason be found by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, the parties
agree that such court may modify such provision to the extent necessary to make
it valid, legal and enforceable. In any event, such provision shall be separable
and shall not limit or affect the validity, legality or enforceability of any
other provision hereunder.
(b) If this Note is collected by law or through an attorney
for collection or enforcement, the holder hereof shall be entitled to collect
reasonable attorneys' fees and all costs of collection from the Company. The
Company hereby waives presentment for payment, notice of nonpayment, protest and
notice of protest.
(c) Unless otherwise specifically stated herein, all notices,
demands, payments or other communications to be given or delivered pursuant to
this Note shall be in writing and shall be given to the Company at its principal
executive offices and to the holder of this Note at the holder's last known
address as shown in the records of the Company.
(d) All of the covenants contained herein shall bind the
Company, its successors and assigns.
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IN WITNESS WHEREOF, the Company has executed and delivered this Note on
the date first written above.
TELENETICS CORPORATION
By:
---------------------------
Xxxxx Xxxxxx, President and
Chief Executive Officer
Acknowledged and agreed:
Signature:______________________________
Print Name:____________________________
Date:__________________________________
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