MICRO GENERAL CORPORATION
CONVERTIBLE NOTE
(MULTIPLE ADVANCES)
$2,000,000.00
Irvine, California
August 1, 1996
MICRO GENERAL CORPORATION, a corporation duly organized and existing
under the laws of Delaware (herein called the "Company," which term includes
any successor corporation or corporations under the Agreement hereinafter
referred to), for value received, hereby promises to pay to Dito Caree L.P., a
Nevada limited partnership, at its office at 0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx
000, Xxx Xxxxx, Xxxxxx 00000 ("Lender"), or order, principal sum of Two
Million Dollars ($2,000,000), or so much thereof as shall have been disbursed
by Lender and which at that time remains unpaid, together with simple interest
thereon from the date hereof at the rate of nine and one-half percent (9.5%)
per annum, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, payable as follows: Accrued interest only on the principal amount
hereof shall be payable quarterly in arrears during the first two (2) years of
the term hereof commencing August 1, 1996. Thereafter, commencing August 1,
1998, the Note shall be payable in equal quarterly installments of principal
and accrued interest thereon until the principal balance and all accrued but
unpaid interest thereon is paid in full on or before July 31, 2001, at which
time the entire unpaid balance of this Note, including principal and accrued
but unpaid interest, shall be due and payable. All payments shall be applied
first to accrued interest and then to principal.
This Note may be prepaid in whole or in part at any time with the prior
written consent of Lender so long as the Company gives ten (10) days' prior
written notice to Lender of the Company's intent to prepay this Note or any
portion hereof. Such notice shall state the proposed payment date (the
"Payment Date") and the principal amount to be repaid. At any time during the
term hereof, the Lender may, but shall not be obligated to, elect to convert
all or any portion of the principal to be repaid on the Payment Date into
shares of the Company's common stock (the "Common Stock") at the "Conversion
Price" (as that term is defined in the Agreement hereinafter referred to) then
in effect by delivering to the Company, to the attention of its President,
written notice of its election to exercise its conversion rights as set forth
herein. Notwithstanding anything contained herein to the contrary, and
notwithstanding the Company's payment of this Note in whole or in part, the
Lender shall retain the right to convert the then-outstanding principal
balance hereof into the subject shares of Common Stock throughout the five (5)
year term of this Note at the Conversion Price.
Any partial prepayments made hereunder shall be applied to installments
due hereunder in inverse order of maturity.
This Note is duly authorized and issued by the Company, is designated as
set forth on the face hereof, and is limited to the aggregate principal amount
of $2,000,000.00 issued under and pursuant to that certain Convertible Note
Purchase Agreement, dated as of August 1, 1996 (herein called the
"Agreement"), duly executed and delivered by the Company and Lender, to which
Agreement reference is hereby made for a further description of the rights,
limitation of rights, obligations, and duties thereunder of the Company and
Lender. In case an Event of Default shall have occurred under this Note or
under the Agreement (as the term "Event of Default" is defined in said
Agreement), the principal balance hereof and all accrued but unpaid interest
thereon may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Agreement.
Reference is hereby made to the further provisions of the Agreement,
including, without limitation, provisions giving the Lender of this Note the
right to convert this Note into Common Stock on the terms and subject to the
limitations more fully specified in the Agreement. Such further provisions
shall for all purposes have the same effect as though fully set forth at this
place. Capitalized terms used in this Note and not otherwise defined still
have the meanings assigned to such terms in the Agreement.
IN WITNESS WHEREOF, the Company has caused this instrument to be signed
manually or by facsimile by its duly authorized officers.
Dated: August 1, 1996 MICRO GENERAL CORPORATION
(the "Company")
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Corporate Secretary
