THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
THIS CONVERTIBLE NOTE, AND PAYMENT AND ENFORCEMENT HEREOF,
IS SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN
SUBORDINATION AGREEMENT DATED JULY 19, 2002, BETWEEN THE FROST
NATIONAL BANK, A NATIONAL BANKING ASSOCIATION DOING BUSINESS AS
FROST CAPITAL GROUP, XXXXX X. UPFIELD, THE HOLDER OF THIS
CONVERTIBLE NOTE, AND THE HOLDERS OF ALL OF THE OTHER CONVERTIBLE
NOTES ISSUED UNDER THE NOTE PURCHASE AGREEMENT REFERRED TO IN
THIS CONVERTIBLE NOTE, AND ACKNOWLEDGED BY TEMTEX INDUSTRIES,
INC. AND TEMCO FIREPLACE PRODUCTS, INC., AS SUCH AGREEMENT MAY BE
AMENDED FROM TIME TO TIME, WHICH AGREEMENT IS INCORPORATED HEREIN
BY REFERENCE. NOTWITHSTANDING ANY STATEMENT TO THE CONTRARY
CONTAINED IN THIS INSTRUMENT, NO PAYMENT OF ANY NATURE ON ACCOUNT
OF THE OBLIGATIONS, WHETHER OF PRINCIPAL OR INTEREST OR
OTHERWISE, SHALL BE DEMANDED, MADE, PAID, RECEIVED OR ACCEPTED
EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS OF SUCH AGREEMENT.
TEMTEX INDUSTRIES, INC.
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
Dallas, Texas
July 19, 2002
TEMTEX INDUSTRIES, INC., a Delaware corporation (the
"Company"), the principal office of which is located at One
Lincoln Centre, 0000 XXX Xxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000-
2602, for value received hereby promises to pay to
__________________________, or its registered assigns, the sum of
__________________________________________ Dollars ($________),
or such other amount as shall then equal the outstanding
principal amount hereof and any unpaid accrued interest hereon,
as set forth below, which shall be due and payable on the earlier
to occur of (i) July 19, 2007, (ii) when declared due and payable
by the Holder upon the occurrence of an Event of Default (as
defined below) or (iii) when declared due and payable by the
Holder in a Pay-Off Election (as defined below). Payment for all
amounts due hereunder shall be made by mail to the registered
address of the Holder. This Note is issued in connection with the
transactions described in that certain Note Purchase Agreement
between the Company and the Investors described therein, dated as
of the date hereof, as the same may from time to time be amended,
modified or supplemented (the "Note Purchase Agreement"). The
Holder of this Note is subject to certain restrictions set forth
in the Note Purchase Agreement and shall be entitled to certain
rights and privileges set forth in the Note Purchase Agreement,
the Investors' Rights Agreement and the Voting Agreement (as
defined below). This Note is one of the Notes referred to as the
"Notes" in the Note Purchase Agreement.
The following is a statement of the rights of the Holder of
this Note 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 terms,
unless the context otherwise requires, have the following
meanings:
(i) "Automatic Conversion Event" shall mean any transaction or
series of transactions effecting the consolidation or merger of
the Company with or into any other corporation or other entity or
person, or any other corporate reorganization in which the
Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization or any transaction or
series of related transactions by the Company in which in excess
of 50% of the Company's voting power is transferred, or a sale of
all or substantially all of the assets of the Company.
(ii) "Company" includes any corporation that, to the extent
permitted by this Note or the Note Purchase Agreement shall
succeed to or assume the obligations of the Company under this
Note.
(iii) "Existing Credit Facility" shall refer to that certain
$4,000,000 Loan Agreement by and among The Frost National Bank
d/b/a Frost Capital Group, as lender and the Company and its
wholly-owned subsidiary, Temco Fireplace Products, Inc., as
borrowers, dated as of September 6, 2000, as amended, extended,
renewed or increased from time to time, including any "over-line"
or loan facility related thereto.
(iv) "Holder" when the context refers to a holder of this Note,
shall mean any person who shall at the time be the registered
holder of this Note.
(v) "Investors' Rights Agreement" shall refer to that Investors'
Rights Agreement, dated as of the date hereof, which has been
executed by the Company in connection with the transactions
contemplated by the Note Purchase Agreement.
(vi) "Voting Agreement" shall refer to that Voting Agreement,
dated as of the date hereof, which has been executed by the
Company in connection with the transactions contemplated by the
Note Purchase Agreement.
(vii) Other capitalized terms shall have the meanings
ascribed thereto elsewhere herein.
-2-
2. Interest. Commencing on September 1, 2002, and on the first
calendar day of each month thereafter until all outstanding
principal and interest on this Note shall have been paid in full
or converted, the Company shall pay interest at the rate of six
percent (6%) per annum or, if less, the maximum rate permitted by
applicable law (the "Initial Interest Rate") on the principal of
this Note outstanding during the period beginning on the date of
issuance of this Note and ending on the date that the principal
amount of this Note becomes due and payable. In the event that
the principal amount of this Note is not paid in full when such
amount becomes due and payable, interest at the same rate as the
Initial Interest Rate plus three percent (3%) or, if less, the
maximum rate permitted by applicable law, shall continue to
accrue on the balance of any unpaid principal until such balance
is paid or converted.
3. Events of Default. If any of the events specified in this
Section 3 shall occur (herein individually referred to as an
"Event of Default"), the Holders possessing more than one-half of
the face amount of all then outstanding Notes issued pursuant to
the Note Purchase Agreement may, so long as such condition
exists, declare the entire principal and unpaid accrued interest
hereon immediately due and payable, by notice in writing to the
Company, signed by such number of Holders:
(i) Default in the payment of the principal of or unpaid accrued
interest on this Note when due and payable if such default is not
cured by the Company within fifteen (15) calendar days after the
Holder has given the Company written notice of such default; or
(ii) Breach by the Company of any material representation,
warranty, or covenant in this Note, the Note Purchase Agreement
or the Voting Agreement; provided, that, in the event of any such
breach, to the extent such breach is susceptible to cure, such
breach shall not have been cured by the Company within thirty
(30) calendar days after written notice to the Company of such
breach; or
(iii) The institution by the Company of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by it to
institution of bankruptcy or insolvency proceedings against it or
the filing by it of a petition or answer or consent seeking
reorganization or release under the Federal Bankruptcy Act, or
any other applicable federal or state law, or the consent by it
to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official
of the Company, or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors,
or the taking of corporate action by the Company in furtherance
of any such action; or
(iv) If, within sixty (60) calendar days after the commencement
of an action against the Company (and service of process in
connection therewith on the Company) seeking any bankruptcy,
insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation,
such action shall not have been resolved in favor of the Company
or all orders or proceedings thereunder affecting the operations
or the business of the Company stayed, or if the stay of any such
order or proceeding shall thereafter be set aside, or if, within
sixty (60) days after the appointment without the consent or
acquiescence of the Company of any trustee, receiver or
liquidator of the Company or of all or any substantial part of
the properties of the Company, such appointment shall not have
been vacated; or
(v) Any default of the Company under any Senior Indebtedness (as
defined below) that results in the holder thereof accelerating
the maturity of such Senior Indebtedness.
-3-
4. Subordination. The indebtedness evidenced by this Note is
hereby expressly subordinated, to the extent and in the manner
hereinafter set forth, in right of payment to the prior payment
in full of all the Company's Senior Indebtedness and in
accordance with and pursuant to that certain Subordination
Agreement of even date herewith among Holder and each of the
Investors party to the Note Purchase Agreement and the holders of
certain Senior Indebtedness of the Company (the "Subordination
Agreement").
4.1 Senior Indebtedness. As used in this Note, the term
"Senior Indebtedness" shall mean the principal of and unpaid accrued
interest (including post-petition interest) on: (i) all
indebtedness of the Company to banks, commercial finance lenders,
insurance companies or other financial institutions regularly
engaged in the business of lending money, which is for money
borrowed by the Company (whether or not secured) including,
without limitation, any indebtedness of the Company and its
subsidiary Temco Fireplace Products, Inc. under the Existing
Credit Facility, and any indebtedness of the Company and its
subsidiary Temco Fireplace Products, Inc. to Xxxxx X. Upfield
evidenced by that Secured Term Note dated the date hereof in the
principal amount of $750,000 (the "Upfield Note"), (ii) any
indebtedness or any debentures, notes or other evidence of
indebtedness issued in exchange for or to refinance such Senior
Indebtedness, or any indebtedness arising from the satisfaction
of such Senior Indebtedness by a guarantor and (iii) any other
amounts constituting "Senior Debt" as defined in the
Subordination Agreement.
4.2 Default on Senior Indebtedness. If there should occur
any receivership, insolvency, assignment for the benefit of
creditors, bankruptcy, reorganization or arrangements with
creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets,
dissolution, liquidation or any other marshalling of the assets
and liabilities of the Company, or if this Note shall be declared
due and payable upon the occurrence of an event of default with
respect to any Senior Indebtedness, then (i) no amount shall be
paid by the Company in respect of the principal of or interest on
this Note at the time outstanding, unless and until the principal
of and interest on the Senior Indebtedness then outstanding shall
be satisfied, and (ii) no claim or proof of claim shall be filed
with the Company by or on behalf of the Holder of this Note that
shall assert any right to receive any payments in respect of the
principal of and interest on this Note, except subject to the
satisfaction of the principal of and interest on all of the
Senior Indebtedness then outstanding. If there occurs an event of
default that has been declared in writing with respect to any
Senior Indebtedness, or in the instrument under which any Senior
Indebtedness is outstanding, permitting the holder of such Senior
Indebtedness to accelerate the maturity thereof, then, unless and
until such event of default shall have been cured or waived or
shall have ceased to exist, or all Senior Indebtedness shall have
been satisfied, no payment shall be made in respect of the
principal of or interest on this Note, unless within three (3)
months after the happening of such event of default, the maturity
of such Senior Indebtedness shall not have been accelerated.
4.3 Effect of Subordination. Subject to the rights, if any, of
the holders of Senior Indebtedness under this Section 4 to
receive cash, securities or other properties otherwise payable or
deliverable to the Holder of this Note, nothing contained in this
Section 4 shall impair, as between the Company and the Holder,
the obligation of the Company, subject to the terms and
conditions hereof, to pay to the Holder the principal hereof and
interest hereon as and when the same become due and payable, or
shall prevent the Holder of this Note, upon default hereunder,
from exercising all rights, powers and remedies otherwise
provided herein or by applicable law.
-4-
4.4 Subrogation. Subject to the payment in full of all Senior
Indebtedness and until this Note shall be paid in full, the
Holder shall be subrogated to the rights of the holders of Senior
Indebtedness (to the extent of payments or distributions
previously made to such holders of Senior Indebtedness pursuant
to the provisions of Section 4.2 above) to receive payments or
distributions of assets of the Company applicable to the Senior
Indebtedness. No such payments or distributions applicable to the
Senior Indebtedness shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account
of this Note; and for the purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness
to which the Holder would be entitled except for the provisions
of this Section 4 shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account
of the Senior Indebtedness.
4.5 Undertaking. By its acceptance of this Note, the Holder
agrees to execute and deliver such documents as may be reasonably
requested from time to time by the Company or the lender of any
Senior Indebtedness in order to implement the foregoing
provisions of this Section 4 and/or the Subordination Agreement.
It is expressly acknowledged and agreed by the Holder that with
respect to the Senior Debt evidenced by the Existing Credit
Facility and the Upfield Note, the subordination provisions
contained in the Subordination Agreement shall control and be
applicable to the parties thereto with regard to the Existing
Credit Facility and the Upfield Note.
5. Prepayment. This Note may not be prepaid prior to the date
that the principal amount of this Note becomes due and payable except
with the express written consen of Holders of more than one-half of
the face amount of all then outstanding Notes issued pursuant to the
Note Purchase Agreement.
6. Conversion.
6.1 Conversion Shares. The number of shares of Common Stock
into which this Note may be converted ("Conversion Shares") shall
be determined by dividing the aggregate principal amount together
with all accrued interest to the date of conversion by the
Conversion Price (as defined below) in effect at the time of such
conversion. The Conversion Price shall be equal to $0.60, subject
to adjustment pursuant to Section 7 below.
6.1.1 Voluntary Conversion. Any Holder of this Note has the
right, at the Holder's option, at any time after July 19, 2003
but prior to payment in full of the principal balance of this
Note, to convert this Note, in accordance with the provisions
hereof, in whole or in part, into fully paid and nonassessable
shares of common stock of the Company (the "Common Stock").
-5-
6.1.2 Right of Conversion Upon Default. In addition to the
right of any Holder to convert such Holder's Note pursuant to the
provisions in Section 6.1.1 above, any Holder of this Note has
the right, at the Holder's option, at any time prior to July 19,
2003, but prior to payment in full of the principal balance of
the Note, upon an Event of Default, to convert this Note in
accordance with the provisions hereof into fully paid and
nonasssessable shares of Common Stock.
6.2 Automatic Conversion Event Provisions.
6.2.1 Notice of Automatic Conversion Event. The Company
shall provide written notice to each Holder at least twenty (20)
calendar days prior to the consummation of an Automatic
Conversion Event.
6.2.2 Pay-Off Election. Upon receipt of the notice set forth
in Section 6.2.1 above, Holders possessing more than one-half of
the face amount of all then outstanding Notes issued pursuant to
the Note Purchase Agreement may, at their option (but without
obligation), submit a written notice (the "Pay-Off Election") to
be received by the Company at least three (3) calendar days prior
to the consummation of the Automatic Conversion Event, that the
Holders voluntarily elect to accelerate the maturity of the Notes
(including those Notes not held by Holders participating in such
notice) on and as of the effective date of the Automatic
Conversion Event, whereupon, subject to the Subordination
Agreement, the entire principal and unpaid accrued interest
hereon shall be due and payable. Upon exercise in accordance with
a Pay-Off Election provided for herein, such Holder shall
surrender such Holder's Note, duly endorsed, at the office of the
Company against receipt of full payment of all principal of and
unpaid interest thereon.
6.2.3 Automatic Conversion. To the extent the Holders do not
timely submit the Pay-Off Election, the entire principal amount
of this Note and any unpaid accrued interest shall be
automatically converted into shares of Common Stock at the
Conversion Price at the time in effect immediately prior to the
applicable Automatic Conversion Event.
6.3 Conversion Procedure.
6.3.1 Notice of Conversion Pursuant to Section 6.1.1 and
6.1.2. Before the Holder shall be entitled to convert this Note
into shares of Common Stock pursuant to Section 6.1.1 or 6.1.2
hereof, it shall surrender this Note, duly endorsed, at the
office of the Company and shall give written notice by mail,
postage prepaid, to the Company at its principal corporate
office, of the election to convert the same pursuant to Section
6.1.1 or 6.1.2, as applicable, and shall state therein the name
or names in which the certificate or certificates for shares of
Common Stock are to be issued. At its expense, the Company
shall, as soon as practicable thereafter, issue and deliver to
such Holder at such principal office a certificate or
certificates for the number of shares of such Common Stock to
which the Holder shall be entitled upon such conversion (bearing
such legends as are required by the Note Purchase Agreement and
applicable state and federal securities laws in the opinion of
counsel to the Company), together with a check payable to the
Holder for any cash amounts payable for fractional shares as
provided in Section 6.4 below. Such conversion shall be deemed
to have been made immediately prior to the close of business on
the date of such surrender of this Note, and the person or
persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of
such date.
-6-
6.3.2 Notice of Conversion Pursuant to Section 6.2.3.
If this Note is automatically converted pursuant to the provisions of
Section 6.2.3 above, written notice shall be delivered to the
Holder of this Note at the address last shown on the records of
the Company for the Holder or given by the Holder to the Company
for the purpose of notice or, if no such address appears or is
given, at the place where the principal executive office of the
Company is located, notifying the Holder of the conversion to be
effected, specifying the Conversion Price, the principal amount
of the Note to be converted, the amount of accrued interest to be
converted, the date on which such conversion will occur and
calling upon such Holder to surrender to the Company, in the
manner and at the place designated, the Note. Upon any such
automatic conversion, the Holder shall surrender this Note, duly
endorsed, at the principal office of the Company. At its expense,
the Company shall, as soon as practicable thereafter, issue and
deliver to such Holder at such principal office a certificate or
certificates for the number of shares of such Common Stock to
which the Holder shall be entitled upon such conversion (bearing
such legends as are required by the Note Purchase Agreement and
applicable state and federal securities laws in the opinion of
counsel to the Company), together with any other securities and
property to which the Holder is entitled upon such conversion
under the terms of this Note, including a check payable to the
Holder for any cash amounts payable for fractional shares as
provided in Section 6.4 below.
6.4 Fractional Shares and Effect of Conversion. No fractional
shares of Common Stock shall be issued upon conversion of this
Note. In lieu of the Company issuing any fractional shares to the
Holder upon the conversion of this Note, the Company shall pay to
the Holder the amount of outstanding principal that is not so
converted, after giving effect to the maximum number of whole
shares into which this note may be converted at the time of any
conversion thereof. Upon conversion of this Note, the Company
shall be forever released from all its obligations and
liabilities under this Note, except that the Company shall be
obligated to pay the Holder, within ten (10) days after the date
of such conversion, any interest accrued and unpaid or
unconverted to and including the date of such conversion, and no
more.
7. Conversion Price Adjustments.
7.1 Adjustments for Stock Splits and Subdivisions. In the event
the Company should at any time or from time to time after the
date of issuance hereof fix a record date for a split or
subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the
Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then,
as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed),
the Conversion Price of this Note shall be appropriately
decreased so that the number of shares of Common Stock issuable
upon conversion of this Note shall be increased in proportion to
such increase of outstanding shares.
-7-
7.2 Adjustments for Reverse Stock Splits. If the number of
shares of Common Stock outstanding at any time after the date
hereof is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date of such
combination, the Conversion Price for this Note shall be
appropriately increased so that the number of shares of Common
Stock issuable on conversion hereof shall be decreased in
proportion to such decrease in outstanding shares.
7.3 Notices of Record Date, etc. In the event of:
7.3.1 any taking by the Company of a record of the holders
of any class of securities of the Company for the purpose of
determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend payable out of earned
surplus at the same rate as that of the last such cash dividend
theretofore paid) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities or property, or to receive
any other right; or
7.3.2 any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all of the assets
of the Company to any other person or any consolidation or merger
involving the Company; or
7.3.3 any voluntary or involuntary dissolution,
liquidation or winding up of the Company, the Company will mail to
the holder of this Note at least ten (10) days prior to the earliest
date specified therein, a notice specifying:
7.3.3.1 the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right; and
7.3.3.2 the date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective and the
record date for determining stockholders entitled to vote
thereon.
7.4 Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the Note, a number of its
shares of Common Stock as shall from time to time be sufficient
to effect the conversion of the Note; and if at any time the
number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of the entire
outstanding principal amount of this Note, in addition to such
other remedies as shall be available to the holder of this Note,
the Company will use reasonable efforts to take such corporate
action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purposes.
-8-
8. Assignment. Subject to the restrictions on transfer
described elsewhere herein, the rights and obligations of the
Company and the Holder of this Note shall be binding upon and
benefit the successors, assigns, heirs, administrators and
transferees of the parties.
9. Waiver and Amendment. Any provision of this Note may be
amended, waived or modified upon the written consent of the
Company and holders of more than one-half of the face amount of
all then outstanding Notes issued pursuant to the Note Purchase
Agreement.
10. Transfer of This Note or Securities Issuable on Conversion
Hereof. With respect to any offer, sale or other disposition of
this Note or securities into which such Note may be converted,
the Holder will give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written
opinion of such Holder's counsel, to the effect that such offer,
sale or other distribution may be effected without registration
or qualification (under any federal or state law then in effect).
Promptly upon receiving such written notice and reasonably
satisfactory opinion, if so requested, the Company, as promptly
as practicable, shall notify such Holder that such Holder may
sell or otherwise dispose of this Note or such securities, all in
accordance with the terms of the notice delivered to the Company.
If a determination has been made pursuant to this paragraph that
the opinion of counsel for the Holder is not reasonably
satisfactory to the Company, the Company shall so notify the
Holder promptly after such determination has been made. Each Note
thus transferred and each certificate representing the securities
thus transferred shall bear a legend as to the applicable
restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the
Company such legend is not required. The Company may issue stop
transfer instructions to its transfer agent in connection with
such restrictions. In addition, each certificate representing
shares of Common Stock received upon conversion hereof shall be
endorsed by the Company with a legend reading substantially as
follows:
"The Shares evidenced hereby are subject to a
Voting Agreement (a copy of which may be
obtained upon written request from the
issuer), and by accepting any interest in
such shares the person accepting such
interest shall be deemed to agree to and
shall become bound by all the provisions of
said Voting Agreement."
11. Notices. Any notice, request or other communication required
or permitted hereunder shall be in writing and shall be deemed to
have been duly given if personally delivered or if faxed with
confirmation of receipt by telephone or if mailed by registered
or certified mail, postage prepaid, at the respective addresses
of the parties as set forth herein. Any party hereto may by
notice so given change its address for future notice hereunder.
Notice shall conclusively be deemed to have been given when
personally delivered, faxed, or when deposited in the mail.
12. No Stockholder Rights. Nothing contained in this Note shall
be construed as conferring upon the Holder or any other person
the right to vote or to consent or to receive notice as a
stockholder in respect of meetings of stockholders for the
election of directors of the Company or any other matters or any
rights whatsoever as a stockholder of the Company; and no
dividends shall be payable or accrued in respect of this Note or
the interest represented hereby or the shares of Common stock to
be obtained upon conversion hereunder until, and only to the
extent that, this Note shall have been converted.
-9-
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware,
excluding that body of law relating to conflict of laws.
14. Heading; References. All headings used herein are used for
convenience only and shall not be used to construe or interpret
this Note. Except where otherwise indicated, all references
herein to Sections or Paragraphs refer to Sections and Paragraphs
hereof.
(Signature Page Follows)
-10-
IN WITNESS WHEREOF, the Company has caused this Note to be
issued this 19th day of July, 2002.
TEMTEX INDUSTRIES, INC.
By: /s/ X.X. XXXXXX
---------------------------
President
Name of Holder:
-------------------------
Address:
--------------------------------
--------------------------------
--------------------------------
-11-
NOTICE OF CONVERSION
(To Be Signed Only Upon Conversion of Note)
TO TEMTEX INDUSTRIES, INC.
The undersigned, the holder of the foregoing Note, hereby
surrenders such Note for conversion into _______ shares of Common
Stock of TEMTEX INDUSTRIES, INC., to the extent of $____________
unpaid principal amount of and interest on such Note, and
requests that the certificates for such shares be issued in the
name of, and delivered to, _____________, whose address
is_______________________.
Dated:
(Signature must conform in all
respects to name of holder as
specified on the face of the Note)
(Address)
