Exhibit 99.10
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO DYNTEK, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
AMENDED AND RESTATED SECURED CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, DYNTEK, INC., a Delaware corporation (the "Borrower"),
hereby promises to pay to LAURUS MASTER FUND, LTD., c/o Ironshore Corporate
Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church Street, Grand
Cayman, Cayman Islands, Fax: 000-000-0000 (the "Holder") or its registered
assigns or successors in interest, on order, the sum of SIX MILLION SIX HUNDRED
FORTY NINE THOUSAND NINE HUNDRED NINETY NINE DOLLARS ($6,649,999), together with
any accrued and unpaid interest hereon, on January 30, 2007 (the "Maturity
Date") if not sooner paid. This note amends and restates in its entirety (and is
given in substitution for and not in satisfaction of) that certain $6,000,000
amended and restated promissory note made by Dyntek, Inc. in favor of Laurus
Master Fund, Ltd. on May 3, 2004.
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Securities Purchase Agreement dated as of
the date hereof between the Borrower and the Holder (the "Purchase Agreement").
The following terms shall apply to this Note:
ARTICLE I
INTEREST & AMORTIZATION
1.1 Interest Rate and Payment. (a) Subject to Sections 4.9 and 5.6 hereof,
interest payable on this Note shall accrue at a rate per annum (the "Interest
Rate") equal to the "prime rate" published in The Wall Street Journal from time
to time, plus one (1%). The prime rate shall be increased or decreased as the
case may be for each increase or decrease in the prime rate in an amount equal
to such increase or decrease in the prime rate; each change to be effective as
of the day of the change in such rate. Subject to adjustment as set forth in
Section 1.1(b), in no event shall the prime rate be less than percent (4.00%)
subject to the provisions of Section 1.2 as regards Tranche B (as hereinafter
defined), interest shall be payable monthly in arrears commencing on April 1,
2004, and on the first day of each consecutive calendar month thereafter (each,
a "Repayment Date"), and on the Maturity Date.
1.1 (b) On the last business day of each month hereafter (each a
"Determination Date"), the Interest Rate shall be adjusted: if (i) the Company
shall have registered the shares of the Company's common stock underlying the
conversion of the Note and that certain warrant issued to Holder on a
registration statement declared effective by the SEC, and (ii) the volume
weighted average price of the Common Stock as reported by Bloomberg, L.P. on the
principal market for the ten (10) trading
days immediately preceding a Determination Date exceeds the then applicable
Fixed Conversion Price in such percentages as outlined in the table below, the
Interest Rate for the succeeding calendar month shall be decreased by fifty
basis points (0.50%) for each twenty five percent (25%) incremental increase
above the Fixed Conversion Price as per the following example:
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100% or less of Applicable Fixed Conversion Price Interest Rate
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125% of the applicable Fixed Conversion Price Interest Rate minus 0.50%
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150% of the applicable Fixed Conversion Price Interest Rate minus 1.0%
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175% of the applicable Fixed Conversion Price Interest Rate minus 1.5%
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In no event shall the Interest Rate be less than zero (0.00%)
1.2 Minimum Monthly Payments. Amortizing payments of the aggregate
principal amount outstanding under this Note at any time (the "Principal
Amount") shall begin on as set forth below and shall recur on the first calendar
day of each succeeding month specified below thereafter until the Maturity Date
(each, an "Amortization Date"). Subject to Section 3.4 below, beginning on
December 1, 2005 the deferred Amortization Date, the Borrower shall make monthly
payments to the Holder on each Repayment Date occurring thereafter until the
Maturity Date, each in the amount of $277,083, together with any accrued and
unpaid interest to date( the "Monthly Amount").
ARTICLE II
BORROWER PAYMENT OPTIONS
2.1 (a) Payment of Monthly Amount in Cash or Common Stock. Subject to the
terms hereof, the Borrower shall have the sole option to determine whether to
satisfy payment of the Monthly Amount on each Repayment Date either in cash or
in shares of Common Stock (as defined in the Purchase Agreement), or a
combination of both. Each month by the tenth (10th) day of such month, the
Borrower shall deliver to the Holder a written irrevocable notice in the form of
Exhibit B attached hereto electing to pay the Monthly Amount payable on the next
Repayment Date in either cash or Common Stock, or a combination of both (each, a
"Repayment Election Notice") (the date by which such notice is required to be
given being hereinafter referred to as the "Notice Date"). If a Repayment
Election Notice is not delivered to the Holder by the applicable Notice Date for
such Repayment Date, then the Monthly Amount due on such Repayment Date shall be
paid in cash. Any portion of the Monthly Amount paid in cash on a Repayment
Date, shall be paid to the Holder as an amount equal to (x) 102% of the
principal portion of the Monthly Amount plus (y) any accrued and unpaid interest
in satisfaction of such obligation. If the Borrower repays all or a portion of
the Monthly Amount in shares of Common Stock, the number of such shares to be
issued for such Repayment Date shall be the number determined by dividing (x)
the portion of the Monthly Amount to be paid in shares of Common Stock, by (y)
the Fixed Conversion Price. For purposes hereof, the "Fixed Conversion Price"
means $0.65; provided, however, that notwithstanding anything
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contained in this Note, or in any Warrant issued to the Holder in connection
with the closing of the sale of this Note pursuant to the terms of the Purchase
Agreement or otherwise, the aggregate number of shares of Common Stock to be
issuable (i) under such warrants and (ii) upon the repayment or conversion of
this Note, including any warrant coverage or other increases granted as a result
of delayed filing of any registration statement with the Securities and Exchange
Commission (the "Maximum Coverage") with respect to the distribution of the
shares of Common Stock acquired by Holder pursuant to subprovisions (i) and (ii)
above, shall be subject to a maximum limit such that the Maximum Coverage can
not equal or exceed 20% of the number of shares of Common Stock outstanding on
the date of this Note without the Borrower first obtaining the requisite
shareholder approval.
(b) Monthly Amount Common Stock Payment Guidelines. Subject to Sections
2.1(a) and 2.2 hereof, if the Borrower has elected to pay all or a portion of
the Monthly Amount due on such Repayment Date in shares of Common Stock and the
closing price of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market (as defined in Section 4.7 hereof) for any of the five (5)
trading days preceding the applicable Repayment Date was less than 115% of the
Fixed Conversion Price, then the Borrower shall pay in cash instead. Any part of
the Monthly Amount due on such Repayment Date that the Borrower did not elect to
pay in shares of Common Stock shall be paid by the Borrower in cash on such
Repayment Date. Any part of the Monthly Amount due on such Repayment Date which
the Borrower elected to pay in shares of Common Stock but which must be paid in
cash (as a result of the closing price of the Common Stock on one or more of the
five (5) trading days preceding the applicable Repayment Date was less than 115%
of the Fixed Conversion Price) shall be paid within ten (10) business days of
the applicable Repayment Date;
2.2 No Effective Registration. Notwithstanding anything to the contrary
herein, the Borrower shall not repay any part of its obligations to the Holder
hereunder in Common Stock if (i) there fails to exist an effective current
Registration Statement (as defined in the Registration Rights Agreement)
covering the shares of Common Stock to be issued in connection with such
payment, or (ii) an Event of Default hereunder exists and is continuing, unless
such Event of Default is cured within any applicable cure period or is otherwise
waived in writing by the Holder in whole or in part at the Holder's option.
2.3 Optional Prepayments in Common Stock. Subject to Section 2.2 hereof,
if the average closing price of the Common Stock on the Principal Market is
greater than 115% of the Fixed Conversion Price for a period of at least five
(5) consecutive trading days, then the Borrower may, at its sole option, provide
the Holder written notice (a "Prepayment Call Notice") requiring the conversion
at the then applicable Fixed Conversion Price of all or a portion of the
outstanding principal, interest and fees outstanding under this Note (subject to
compliance with Section 2.3 and 3.2), together with accrued interest on the
amount being prepaid, as of the date set forth in such Prepayment Call Notice
(the "Prepayment Call Date"). The Prepayment Call Date shall be at least ten
(10) trading days following the date of the Prepayment Call Notice. On the
Prepayment Call Date, the Borrower shall deliver to the Holder certificates
evidencing the shares of Common Stock issued in satisfaction of the principal
and interest being prepaid. Notwithstanding the foregoing, the Borrower's right
to issue shares of Common Stock in satisfaction of its obligations under this
Note shall be subject to the limitation that the number of shares of Common
Stock issued in connection with any Prepayment Call Notice shall not exceed 25%
of the aggregate dollar trading volume of the
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Common Stock for the ten (10) trading days immediately preceding the Prepayment
Call Date (as such volume is reported by the Principal Market). If the price of
the Common Stock falls below 115% of the then applicable Fixed Conversion Price
during the ten (10) trading day period immediately preceding the Prepayment Call
Date, then the Holder will then be required to convert only such amount of the
Note as shall equal twenty five percent (25%) of the aggregate dollar trading
volume (as such volume is reported by the Principal Market) for each day that
the Common Stock has exceeded 115% of the then applicable Fixed Conversion
Price.
The Borrower shall not be permitted to give the Holder more than one
Prepayment Call Notice under this Note during any 10-day period.
Any principal amount of this Note which is prepaid pursuant to this
Section 2.3 shall be deemed to constitute payments of outstanding principal
applying to Monthly Amounts for the remaining Repayment Dates in chronological
order.
2.4 Optional Redemption in Cash. The Borrower will have the option of
prepaying this Note ("Optional Redemption") by paying to the Holder a sum of
money equal to one hundred two percent (102%), if there exists an effective
current Registration Statement (as defined in the Registration Rights Agreement)
covering the shares of Common Stock to be issued in connection with such
payment, otherwise one hundred four percent (104%), of the principal amount of
this Note together with accrued but unpaid interest thereon and any and all
other sums due, accrued or payable to the Holder arising under this Note, the
Security Agreement, or any Ancillary Agreement (as defined in the Security
Agreement) (the "Redemption Amount") outstanding on the day written notice of
redemption (the "Notice of Redemption") is given to the Holder. The Notice of
Redemption shall specify the date for such Optional Redemption (the "Redemption
Payment Date") which date shall be ten (10) days after the date of the Notice of
Redemption (the "Redemption Period"). A Notice of Redemption shall not be
effective with respect to any portion of this Note for which the Holder has a
pending election to convert pursuant to Section 3.1, or for conversions elected
to be made by the Holder pursuant to Section 3.1 during the Redemption Period.
The Redemption Amount shall be determined as if such Xxxxxx's conversion
elections had been completed immediately prior to the date of the Notice of
Redemption. On the Redemption Payment Date, the Redemption Amount must be paid
in good funds to the Holder. In the event the Borrower fails to pay the
Redemption Amount on the Redemption Payment Date, then such Redemption Notice
will be null and void.
ARTICLE III
CONVERSION RIGHTS
3.1. Holder's Conversion Rights. The Holder shall have the right, but not
the obligation, to convert all or any portion of the then aggregate outstanding
principal amount of this Note, together with interest and fees due hereon, into
shares of Common Stock subject to the terms and conditions set forth in this
Article III; provided, however, that notwithstanding anything contained in this
Note, or in the Warrant issued to the Holder in connection with the closing of
the sale of this Note pursuant to the terms of the Purchase Agreement, the
aggregate number of shares of Common Stock to be issuable (i) under the Warrant
and (ii) upon the repayment or conversion of this Note, including any warrant
coverage or other increases granted as a result of delayed filing of any
registration statement
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with the Securities and Exchange Commission (the "Maximum Coverage") with
respect to the distribution of the shares of Common Stock acquired by Holder
pursuant to subprovisions (i) and (ii) above, shall be subject to a maximum
limit such that the Maximum Coverage can not equal or exceed 20% of the number
of shares of Common Stock outstanding on the date of this Note without obtaining
the requisite shareholder approval. The Holder may exercise such right by
delivery to the Borrower of a written notice of conversion not less than one (1)
day prior to the date upon which such conversion shall occur. The date upon
which such conversion shall occur is (the "Conversion Date").
3.2 Conversion Limitation. Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to convert pursuant to the terms
of this Note an amount that would be convertible into that number of Conversion
Shares which would exceed the difference between the number of shares of Common
Stock beneficially owned by such Holder or issuable upon exercise of warrants
held by such Holder and 4.99% of the outstanding shares of Common Stock of the
Borrower. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and Regulation 13d-3 thereunder. The Holder may void the Conversion Share
limitation described in this Section 3.2 upon 75 days prior notice to the
Borrower or without any notice requirement upon an Event of Default.
3.3 Mechanics of Xxxxxx's Conversion. (a) In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion
("Notice of Conversion") to the Borrower and such Notice of Conversion shall
provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees being converted. On each Conversion Date (as hereinafter
defined) and in accordance with its Notice of Conversion, the Holder shall make
the appropriate reduction to the Principal Amount, accrued interest and fees as
entered in its records and shall provide written notice thereof to the Borrower
within two (2) business days after the Conversion Date. Each date on which a
Notice of Conversion is delivered or telecopied to the Borrower in accordance
with the provisions hereof shall be deemed a Conversion Date (the "Conversion
Date"). A form of Notice of Conversion to be employed by the Holder is annexed
hereto as Exhibit A.
(b) Pursuant to the terms of the Notice of Conversion, the Borrower will
issue instructions to the transfer agent accompanied by an opinion of counsel
within three (3) business day of the date of the delivery to Borrower of the
Notice of Conversion and shall cause the transfer agent to transmit the
certificates representing the Conversion Shares to the Holder by crediting the
account of the Holder's designated broker with the Depository Trust Corporation
("DTC") through its Deposit Withdrawal Agent Commission ("DWAC") system within
three (3) business days after receipt by the Borrower of the Notice of
Conversion (the "Delivery Date"). In the case of the exercise of the conversion
rights set forth herein the conversion privilege shall be deemed to have been
exercised and the Conversion Shares issuable upon such conversion shall be
deemed to have been issued upon the date of receipt by the Borrower of the
Notice of Conversion and the Holder shall be treated for all purposes as the
record holder of such Common Stock thereafter, unless the Holder provides the
Borrower written instructions to the contrary.
3.4 Conversion Mechanics.
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(a) The number of shares of Common Stock to be issued upon each conversion
of this Note shall be determined by dividing that portion of the principal and
interest and fees to be converted, if any, by the then applicable Fixed
Conversion Price. In the event of any conversions of outstanding principal
amount under this Note in part pursuant to this Article III, such conversions
shall be deemed to constitute conversions of outstanding principal amount
applying to Monthly Amounts for the remaining Repayment Dates in chronological
order. The Fixed Conversion Price and number and kind of shares or other
securities to be issued upon conversion is subject to adjustment from time to
time upon the occurrence of certain events, as follows:
A. Stock Splits, Combinations and Dividends. If the shares of Common Stock
are subdivided or combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock in shares of Common Stock,
the Fixed Conversion Price or the Conversion Price, as the case may be, shall be
proportionately reduced in case of subdivision of shares or stock dividend or
proportionately increased in the case of combination of shares, in each such
case by the ratio which the total number of shares of Common Stock outstanding
immediately after such event bears to the total number of shares of Common Stock
outstanding immediately prior to such event.
B. During the period the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. The Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable. The Borrower agrees that its
issuance of this Note shall constitute full authority to its officers, agents,
and transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note.
C. Share Issuances. Subject to the provisions of this Section 3.4, if the
Borrower shall at any time prior to the conversion or repayment in full of the
Principal Amount issue any shares of Common Stock to a person other than the
Holder (except (i) pursuant to Subsections A or B above; (ii) pursuant to
options, warrants, or other obligations to issue shares outstanding on the date
hereof, including the Warrant issued pursuant to the Purchase Agreement, as
disclosed to Holder in writing or as disclosed in any Exchange Act Filings;
(iii) pursuant to options or other securities that may be issued under any
employee incentive plan adopted by the Borrower; (iv) issuance of any securities
within five (5) business days of the date hereof, in an offering registered with
the Securities and Exchange Commission; (v) issuance of any securities pursuant
to a joint venture, technology licensing or research and development
arrangements or pursuant to arrangements for the development, manufacture,
distribution, marketing or sale of Borrower's (or its subsidiaries') products or
services; (vi) issuance of any securities pursuant to a merger, consolidation,
sale of all or substantially all of the assets, sale or exchange of capital
stock or other similar transaction; or (vii) issuance of any securities, without
regard to the purpose therefor, during the 30-day period succeeding the date of
this Note) for a consideration per share (the "Offer Price") less than the Fixed
Conversion Price in effect at the time of such issuance, then the Fixed
Conversion Price shall be immediately reset pursuant to the formula below. For
purposes hereof, the issuance of any security of the Borrower convertible into
or exercisable or exchangeable for Common Stock shall result in an adjustment to
the Fixed Conversion Price at the time of issuance of such securities.
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If the Corporation issues any additional shares pursuant to Section 3.4
above, then and thereafter successively upon each such issue, the Fixed
Conversion Price shall be adjusted by multiplying the then applicable Fixed
Conversion Price by the following fraction:
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A + B
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(A + B) + [((C - D) x B) / C]
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A = Actual shares outstanding prior to such offering
B = Actual shares sold in the offering
C = Fixed Conversion Price
D = Offering price
D. Reclassification, etc. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of securities as would have been issuable as the result of such change with
respect to the Common Stock immediately prior to such reclassification or other
change.
3.5 Issuance of New Note. Upon any partial conversion of this Note, a new
Note containing the same date and provisions of this Note shall, at the request
of the Holder, be issued by the Borrower to the Holder for the principal balance
of this Note and interest which shall not have been converted or paid. The
Borrower will pay no costs, fees or any other consideration to the Holder for
the production and issuance of a new Note.
ARTICLE IV
EVENTS OF DEFAULT
If an Event of Default (as defined below) occurs and is continuing, the
Borrower's rights under Sections 2.1, 2.3 and 2.4 shall immediately cease and be
of no further effect until such time as the Event of Default has been cured, or
has been waived by the Holder. Upon the occurrence and continuance of an Event
of Default beyond any applicable grace period, the Holder may make all sums of
principal, interest and other fees then remaining unpaid hereon and all other
amounts payable hereunder due and payable within five (5) days after written
notice from Holder to Borrower (each occurrence being a "Default Notice
Period"). In the event of such acceleration, the amount due and owing to the
Holder shall be one hundred twenty percent (120%) of the outstanding principal
amount of the Note (plus accrued and unpaid interest and fees, if any). If, with
respect to any Event of Default other than a payment default described in
Section 4.1 below, within the Default Notice Period the Borrower cures the Event
of Default, the Event of Default will be deemed to no longer exist and any
rights and remedies of Holder pertaining to such Event of Default will be of no
further force or effect.
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The occurrence of any of the following events, shall constitute an "Event
of Default":
4.1 Failure to Pay Principal, Interest or other Fees. the Borrower fails
to pay when due any installment of principal, interest or other fees hereon in
accordance herewith.
4.2 Breach of Covenant. The Borrower breaches any material covenant or
other term or condition of this Note or the Purchase Agreement in any material
respect and such breach, if subject to cure, continues for a period of thirty
(30) days after the occurrence thereof.
4.3 Breach of Representations and Warranties. Any material representation
or warranty of the Borrower made herein, in the Purchase Agreement, or in any
Related Document (as defined in the Purchase Agreement) shall be materially
false or misleading and shall not be cured for a period of fifteen (15) days
after the occurrence thereof.
4.4 Receiver or Trustee. The Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed.
4.5 Judgments. Any money judgment, writ or similar final process shall be
entered or filed against the Borrower or any of its property or other assets for
more than $250,000, and shall remain unvacated, unbonded or unstayed for a
period of ninety (90) days.
4.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower, and in
the event involuntarily instituted against the Borrower shall not be dismissed
within sixty (60) days thereafter.
4.7 Stop Trade. An SEC stop trade order or the Principal Market trading
suspension of the Common Stock shall be in effect for five (5) consecutive days
or five (5 )days during a period of ten (10) consecutive days, excluding in all
cases a suspension of all trading on the Principal Market; provided, that this
shall only be an Event of Default to the extent that the Borrower shall not have
been able to cure such trading suspension within thirty (30) days of the notice
thereof or list the Common Stock on another trading market identified herein as
a Principal Market within sixty (60) days of such notice. The "Principal Market"
for the Common Stock shall include the NASD OTC Bulletin Board, NASDAQ SmallCap
Market, NASDAQ National Market System, American Stock Exchange, or New York
Stock Exchange, or any securities exchange or other securities market on which
the Common Stock is then being listed or traded (whichever of the foregoing is
at the time the principal trading exchange or market for the Common Stock).
4.8 Failure to Deliver Common Stock or Replacement Note. The Borrower's
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note if such failure to timely deliver Common Stock shall not
be cured within two (2) Business Days, or if required, a replacement Note if
such failure to deliver a replacement Note is not cured within seven (7)
Business Days.
4.9 Default Under Related Agreements. The occurrence and continuance of
any Event of Default as defined in the Related Agreements.
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4.10 Payment Grace Period. The Borrower shall have a three (3) business
day grace period to pay any monetary amounts due under this Note or the Purchase
Agreement or any Related Document, after which grace period a default interest
rate of five percent (5%) per annum above the then applicable Interest Rate
hereunder shall apply to the monetary amounts due.
DEFAULT RELATED PROVISIONS
4.11 Conversion Privileges. The conversion privileges set forth in Article
III shall remain in full force and effect immediately from the date hereof and
until this Note is paid in full.
4.12 Cumulative Remedies. The remedies under this Note shall be
cumulative.
ARTICLE V
MISCELLANEOUS
5.1 Failure or Indulgence Not Waiver. No failure or delay on the part of
the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
5.2 Notices. Any notice herein required or permitted to be given shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party notified, (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day,
(c) five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Borrower at the address provided in the Purchase Agreement executed in
connection herewith, and to the Holder at the address provided in the Purchase
Agreement for such Holder, with a copy to Xxxx X. Xxxxxx, Esq., 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000,
or at such other address as the Borrower or the Holder may designate by ten days
advance written notice to the other parties hereto. A Notice of Conversion shall
be deemed given when made to the Borrower pursuant to the Purchase Agreement.
5.3 Amendment Provision. The term "Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument issued pursuant to Section 3.5
hereof, as it may be amended or supplemented.
5.4 Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Purchase Agreement.
5.5 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the state of
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New York. Both parties and the individual signing this Note on behalf of the
Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or unenforceability of any other provision of this
Note. Nothing contained herein shall be deemed or operate to preclude the Holder
from bringing suit or taking other legal action against the Borrower in any
other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court order in favor of the Holder.
5.6 Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.
5.7 Security Interest. The holder of this Note has been granted a security
interest in certain assets of the Borrower more fully described in a Security
Agreement dated as of January 30, 2004.
5.8 Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.
5.9 Cost of Collection. If default is made in the payment of this Note,
the Borrower shall pay to Holder reasonable costs of collection, including
reasonable attorney's fees.
[Balance of page intentionally left blank; signature page follows.]
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IN WITNESS WHEREOF, Xxxxxxxx has caused this Convertible Term Note to be
signed in its name effective as of this 30th day of January, 2004.
DYNTEK, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
WITNESS:
________________________________
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EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert all or part of the Note into
Common Stock
[Name and Address of Holder]
The Undersigned hereby elects to convert $_________ of the principal due on
[specify applicable Repayment Date] under the Convertible Term Note issued by
DYNTEK, INC. dated January __, 2004 by delivery of Shares of Common Stock of
DYNTEK, INC. on and subject to the conditions set forth in Article II of such
Note.
1. Date of Conversion _______________________
2. Shares To Be Delivered: _______________________
By: _______________________________
Name: _____________________________
Title: ____________________________
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EXHIBIT B
REPAYMENT ELECTION NOTICE
(To be executed by the Borrower in order to pay all or part of a Monthly Amount
with Common Stock)
[Name and Address of Holder]
DYNTEK, INC. hereby elects to pay $_________ of the Monthly Amount due on
[specify applicable Repayment Date] under the Convertible Term Note issued by
DYNTEK, INC. dated and effective as of January, 2004 by delivery of Shares of
Common Stock of DYNTEK, INC. on and subject to the conditions set forth in
Article II of such Note.
1. Fixed Conversion Price: $_______________________
2. Amount to be paid: $_______________________
3. Shares To Be Delivered (2 divided by 1): __________________
Date: ____________ DYNTEK, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
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