Convertible_Promissory_Note

CONVERTIBLE PROMISSORY NOTE $____________________ ________________________, Illinois ___________________, 19___ FOR VALUE RECEIVED, the undersigned, __________________ ________________, a _________ corporation (the "Corporation"), agrees and promises to pay to _______________ (the "Holder") at _________, or at such other place or places as the Holder may designate in writing, the principal amount of ____________ Dollars ($_______), with interest as provided, in legal tender of the United States of America, in immediately available funds, as follows: (a) The unpaid principal amount from time to time outstanding shall bear interest from this date until paid at a rate equal to the sum of ___% per year. Interest shall be computed for the actual number of days elapsed on the basis of a year of 360 days. (b) Except as otherwise provided herein, for the period from this date until _________, 19__, interest only shall be due and payable semi-annually on the last Business Day of each June and December, with the first payment of interest commencing _________, 19__. For purposes of this Agreement, "Business Day" shall mean any day on which commercial banks are open to do business in Chicago, Illinois. (c) The entire principal amount of this Note, together with accrued but unpaid interest, shall be due and payable on _________, 19__. (d) The Corporation may _________, 19__, prepay this Note in written notice delivered to the Holder. shall also pay the interest accrued on date of prepayment. at its option from time to time after whole or in part on not less than 30 days Upon such prepayment, the Corporation that portion of principal so prepaid to the 1. Convertible Notes. This Note is one of several promissory notes issued pursuant to the Note Purchase Agreement. The term "Note" refers to this Note and the term "Convertible Notes" refers to this Note and the other promissory notes issued pursuant to the Note Purchase Agreement. Reference is made to the Note Purchase Agreement for a description of the agreement among the parties (including, without limitation, the extent to which the Convertible Notes are subordinated to other indebtedness of the Corporation and the circumstances and procedures under which the maturity of the Convertible Notes may be accelerated). A copy of the Note Purchase Agreement, as in effect from time to time, is available for review by any holder at the office of the Corporation. The Holder shall be bound by the terms of the Note Purchase Agreement, as it may be amended from time to time. All terms which are not defined in this Note shall be as defined in the Note Purchase Agreement. 2. Place and Manner of Payment. All sums due under this Note are payable not later than 12:30 P.M., Chicago time, in legal tender of the United States of America current on the dates such sums or payments are respectively due, in immediately available funds, without offset or setoff. All payments in excess of $10,000 shall be made at the option of the Holder by wire transfer to a bank account designated in writing to the Corporation by the Holder not less than five days prior to the time such payment is due and, if no such designation has been made by the Holder, by check mailed by certified or registered mail to the address of the Holder designated in accordance with Section 13(b). Any remittances by check shall be made on the second day prior to the time such payment is due subject to the condition that such check may be handled for collection in accordance with the practice of the collecting bank or banks, and any receipt shall be void unless the amount due is actually received by the Holder. 3. Events of Default; Consequences. In the event of the occurrence of an Event of Default (as defined) the Holder may, subject to the provisions of Section 10.1 of the Note Purchase Agreement, declare the entire unpaid principal balance of this Note, together with interest accrued, immediately due and payable at the place of payment, without presentment, protest, notice or demand, all of which are expressly waived. The term "Event of Default" shall mean: (a) the failure to pay any installment of principal or interest due under this Note or under the other Convertible Notes within ten days after the day on which any such payment is due; (b) the Corporation shall make an assignment for the benefit of creditors or admit in writing its inability to pay its debts generally as they become due or fail to generally pay its debts as they become due; an order, judgment or decree shall be entered for relief in respect of or adjudicating the Corporation or any of its subsidiaries bankrupt or insolvent; the Corporation or any of its subsidiaries shall petition or apply to any tribunal for the appointment of, or taking of possession by, a trustee, receiver, custodian, or liquidator or other similar official of the Corporation or any subsidiary or of any substantial part of any of their respective assets; the Corporation or any of its subsidiaries shall commence any proceeding relating to the Corporation or any subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, or any such petition or application is filed or any such proceeding is commenced against the Corporation or any of its subsidiaries and such petition, application or proceeding is not dismissed within 60 days; (c) Any representation or warranty made by the Corporation herein or in the Note Purchase Agreement is breached or is false or misleading in any 2 material respect, or any schedule, certificate, financial statement, report, notice, or other writing furnished by the Corporation to the holder is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified. 4. No Setoff, Etc. The obligations of the Corporation to pay the principal balance and interest due to the Holder shall be absolute and unconditional and the Corporation shall make such payment without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including, without limitation, any defense, setoff, recoupment, or counterclaim which the Corporation may have or assert against the Holder or any other person. 5. Waiver of Presentment, Etc. The Corporation waives presentment, demand, notice of dishonor, protest and notice of nonpayment and protest. 6. Costs of Collection. The Corporation shall pay all costs and expenses of collection incurred by the Holder, including reasonable attorneys' fees. 7. Conversion. (a) Commencing ________, 19__, the Holder may at any time prior to 5:00 p.m., Chicago time, on __________, 19__, convert the principal amount of this Note or any portion in aggregate amounts of not less than 50% of the original principal amount outstanding under this Note on the date of its initial issuance (unless such amount is the only amount then remaining outstanding under this Note in which event the conversion of the remaining principal amount then outstanding shall be permitted) into fully paid and nonassessable shares of the Common Stock, par value $___ per share, of the Corporation (the "Common Stock"), on the basis of one share of such stock for each $_____ (the "Conversion Price") in principal amount of this Note. Such conversion shall be effected by the surrender of this Note at the principal office of the Corporation (or such other office or agency of the Corporation in the continental United States as the Corporation may designate by notice in writing to the Holder) at any time during usual business hours, together with notice in writing that the Holder wishes to convert a portion or all of this Note, which notice shall also state the name(s) (with addresses) and denominations in which the certificate(s) for Common Stock shall be issued and shall include instructions for delivery thereof. Such conversion shall be deemed to have been effected as of the close of business on the date on which this Note shall have been surrendered and such notice shall have been received, and at such time (the "Voluntary Conversion Date") the rights of the Holder with respect to the principal amount of the Note converted shall cease and the person(s) in whose name(s) any certificate(s) for Common Stock are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented by such certificate(s). As soon as practicable after the Voluntary 3 Conversion Date, the Corporation shall deliver to, or as directed by, the Holder, certificates representing the number of shares of Common Stock issuable by reason of such conversion registered in such name or names and such denomination or denominations as the Holder shall have specified, together with cash as provided in Section 11 in respect of any fraction of a share of such stock otherwise issuable upon such conversion. The Corporation shall also make payment to the Holder of accrued interest to the date of conversion on the portion of the Note converted in accordance with the manner of payment provisions of Section 2 of this Note. In each case of conversion of this Note in part only, the Corporation shall receive and hold this Note as a fiduciary agent of the Holder, shall endorse on this Note the date and amount of this Note so converted, and such amount shall be deemed no longer outstanding. Upon such endorsement, the Corporation shall promptly return this Note to the Holder. (b) At any time after _________, 19__ the Corporation shall be entitled, after giving 20 days prior written notice to the Holder of its intent to prepay all or any portion of this Note and receipt of notice from the Holder within such 20 days that he declines to accept prepayment, to compel the conversion of this Note or such portion into fully paid and nonassessable shares of Common Stock at the ratio and (to the extent not inconsistent with the provisions of this subsection (b)) in the manner set forth in subsection (a) of this Section 7. In the event the Holder shall fail to surrender this Note together with a written notice stating the names (with addresses) and denominations in which the certificate(s) for Common Stock shall be issued (including instructions for delivery) on or before the tenth day after the date of the Prepayment Notice, this Note shall be deemed to have been surrendered for conversion on such date. The earlier of the date this Note and said written notice are surrendered, or such tenth day after the date of the Prepayment Notice shall be referred to for purposes of this Note as the "Mandatory Conversion Date." Such conversion shall be deemed to have been effected as of the close of business on the Mandatory Conversion Date, and at such time the rights of the Holder shall cease and (i) the person(s) in whose name(s) any certificate(s) for Common Stock are to be issued upon such conversion, or (ii) in the event the Holder has failed to surrender this Note and the written notice as provided, the Holder, shall be deemed to have become the holder or holders of record of the shares of Common Stock represented by such certificate(s). As soon as practicable after the Mandatory Conversion Date (but in no event more than fifteen Business Days), the Corporation shall deliver to the Holder, or as directed by the Holder if such be the case, certificates representing the number of shares of Common Stock issuable by reason of such conversion registered in the name of the Holder or, if such be the case, in such name or names and in such denomination or denominations as the Holder shall have specified, together with cash as provided in Section 11 in respect of any fraction of a share of such stock otherwise issuable upon such conversion. The Corporation shall also make payment to the Holder of accrued interest to the date of conversion on the converted Note in accordance with the manner of payment provisions of Section 2 of this Note. 4 8. Reservation of Common Stock; Etc. (a) The Corporation will at all times from and after this date reserve and keep available out of its authorized but unissued shares of Common Stock or its treasury shares, or otherwise, solely for the purpose of issuance upon the conversion of this Note, such number of shares of Common Stock as shall then be issuable upon the conversion of this Note. The Corporation covenants that all shares of Common Stock which shall be so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges. (b) The Corporation will not take any action which would result in any adjustment of the number of shares of Common Stock acquirable upon conversion of this Note if the total number of shares issuable after such action upon conversion of this Note, together with the total number of shares of Common Stock then outstanding, would exceed the total number of shares of Common Stock then authorized under the Corporation's Certificate of Incorporation which are not reserved or required to be reserved for any purpose other than the purpose of issue upon conversion of this Note. (c) The issuance of certificates for shares of Common Stock upon conversion of this Note shall be made without charge to the Holder for any issuance tax or other cost incurred by the Corporation in connection with such conversion and the related issuance of shares of Common Stock. (d) If any shares of Common Stock required to be reserved for purposes of conversion of this Note require, before such shares may be issued upon conversion, registration with or approval of any governmental authority under any federal or state law (other than any registration under the Securities Act of 1933, as then in effect, or any similar federal statute then in force, or any state securities law, required by reason of any transfer involved in such conversion) or listing on any domestic securities exchange, the Corporation will, at its expense and as expeditiously as possible, use its best efforts to cause such shares to be duly registered or approved for listing or listed on such domestic securities exchange, as the case may be. 9. Adjustment Provisions. In order to prevent dilution of and to the conversion rights of the Holder hereunder, the number of shares of Common Stock to be issued by the Corporation upon conversion hereof shall be subject to adjustment from time to time as provided in this Section 9. For purposes of this Section 9, the term "Common Stock" shall mean the Common Stock and any other class of stock ranking on a parity with such stock; provided, however, that, subject to the provisions of subsection (d) of this Section 9, shares 5 issuable upon the conversion of this Note shall include only shares of the class designated as Common Stock as of this date. (a) Adjustments to Conversion Price for Diluting Issues: For purposes of this subsection (a), the (i) Special Definitions. following definitions shall apply: (A) "Option" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities, excluding (I) the rights, options and warrants set forth in Schedule ______ to the Note Purchase Agreement. (B) "Convertible Securities" shall mean (I) any evidences of indebtedness of the Corporation (other than any Convertible Note), and (II) shares of stock or other securities, which are directly or indirectly convertible into or exchangeable for Common Stock. (C) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to paragraph (iii) of this subsection (a), deemed to be issued) by the Corporation after the Original Issue Date, other than shares of Common Stock issued: (I) by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock excluded from the definition of Additional Shares of Common Stock by the foregoing clauses (I) and (II) or this clause (III); or (II) upon the exercise of the rights, options or warrants excluded from the definition of "Option" under subparagraph (A) of this paragraph (i). (ii) No Adjustment of Conversion Price. No adjustment in the number of shares of Common Stock into which this Note is convertible shall be made, by adjustment in the applicable Conversion Price unless (A) the consideration per share (determined pursuant to paragraph (v) of this subsection (a)) for an Additional Share of Common Stock issued or deemed to be issued by the 6 Corporation is less than the applicable Conversion Price in effect on the date of, and immediately prior to, the issue of such Additional Share of Common Stock. (iii) Issue of Options and Convertible Securities Deemed Issue of Additional Shares of Common Stock. If the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument without regard to any provision for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date; provided, however, that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to paragraph (v) of this subsection (a)) of such Additional Shares of Common Stock would be less than the applicable Conversion Price in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued: (A) no further adjustment in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities; (B) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Corporation, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue (or upon the occurrence of a record date), and any subsequent adjustments shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; (C) no readjustment pursuant to subparagraph (B) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (I) the Conversion Price on the original adjustment date, or (II) the Conversion Price that 7 would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date; and (D) upon the expiration or termination of any unexercised Option or the right to convert any Convertible Security, (I) the number of shares of Common Stock deemed to have been Additional Shares of Common Stock by reason of the provisions of this paragraph (iii) shall no longer be deemed to be Additional Shares of Common Stock, and (II) the Conversion Price shall promptly be readjusted to the price which would have prevailed had all adjustments been made on the basis of the issue only of the shares of Common Stock actually issued upon the exercise of such Options or upon conversion or exchange of such Convertible Securities. (iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the Corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to paragraph (iii) of this subsection (a)), without consideration or for a consideration per share less than the applicable Conversion Price in effect on the date of and immediately prior to such issue, then and in such event, such Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price; and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common Stock so issued. (v) Determination of Consideration. For purposes of this subsection (v), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows: (A) Cash and Property: Such consideration shall: (I) insofar as it consists of cash, be computed at the aggregate of cash received by the Corporation, excluding amounts paid or payable for accrued interest or accrued dividends; 8 (II) insofar as it consists of property other than cash, be computed at the fair market value at the time of such issue, as determined in good faith by the Board of Directors of the Corporation; and (III) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (I) and (II) above, as determined in good faith by the Board of Directors of the Corporation. (B) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to paragraph (iii) of this subsection (a), relating to Options and Convertible Securities, shall be determined by dividing: (I) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the applicable instruments, without regard to any provision contained in such instruments for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities; by (II) the maximum number of shares of Common Stock (as set forth in the applicable instruments without regard to any provision contained in such instruments for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. 9 (b) Subdivisions and Combinations. Anything in this Section 9 to the contrary notwithstanding, in the event the Corporation shall at any time subdivide (by any stock split, stock dividend or otherwise) one or more classes of its outstanding Common Stock into a greater number of shares of such stock, the Conversion Price shall be proportionately decreased. Conversely, in the event the outstanding shares of one or more classes of Common Stock shall at any time be combined into a smaller number of shares (by reverse stock split or otherwise), the Conversion Price shall be proportionately increased. In the case of any stock dividend described in this subsection (b), the adjustment to be made shall be made as of the time immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend; provided, however, that if such record date shall have been fixed and such dividend shall not have been fully paid on the date fixed, such adjustment shall be cancelled as of the close of business on such record date and, thereafter, the Conversion Price shall be adjusted pursuant to this subsection (b) as of the time of actual payment of such dividend. In the case of any subdivision (other than a stock dividend) or combination described in this subsection (b), the adjustment to be made pursuant hereto shall be made as of the close of business on the date immediately prior to the date upon which such corporate action becomes effective. (c) No Adjustment for Small Amounts. Notwithstanding any provision of subsections (a) or (b) of this Section 9 which may be to the contrary, the Corporation shall not be required to give effect to any adjustment to the Conversion Price if the amount of such adjustment would be less than $___, but any such adjustment shall be carried forward and adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, causes a cumulative net adjustment of $___ or more. (d) Organic Changes, Etc. If any capital reorganization or reclassification of the capital stock of the Corporation (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of an issuance of Common Stock by dividend or other distribution or by reason of a subdivision or combination), or any consolidation or merger of the Corporation with or into another corporation, or any sale of all or substantially all of the Corporation's property and assets to any person, firm or corporation (collectively, any "Organic Change") shall be effected in such a way that holders of Common Stock shall be entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, then, as a condition to such Organic Change, lawful and adequate provision shall be made whereby the Holders shall thereafter have the right to acquire and receive upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock of the Corporation immediately theretofore acquirable and receivable (directly or upon subsequent conversion, assuming unrestricted convertibility) upon the conversion of this Note, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of Common Stock immediately theretofore acquirable and receivable (directly or upon subsequent conversion, assuming unrestricted convertibility) upon conversion of this Note had such Organic Change not taken 10 place (except that the terms of the parenthetical provision at the end of the next sentence shall be applied in determining the number of shares of Common Stock immediately theretofore acquirable and receivable). In any such case, appropriate provision shall be made with respect to the Holder's rights and interests to the end that the provisions contained in this Note (including without limitation provisions for adjustments of the number of shares of Common Stock acquirable and receivable upon the exercise of the conversion rights granted herein) shall thereafter be applicable in relation to any shares of stock, securities or assets thereafter deliverable upon the conversion of this Note (including, in the case of any such consolidation, merger or sale in which the successor corporation or purchasing entity is other than the Corporation, an immediate adjustment in the number of shares of Common Stock acquirable and receivable upon conversion of this Note). In the event of a merger or consolidation of the Corporation with or into another corporation or the sale of all or substantially all of the Corporation's property and assets to another corporation as a result of which a number of shares of common stock of the surviving or purchasing corporation greater or lesser than the number of shares of Common Stock of the Corporation outstanding immediately prior to such merger, consolidation or sale are issuable to holders of Common Stock, the aggregate number of shares of Common Stock into which this Note was convertible in effect immediately prior to such merger, consolidation or sale shall be adjusted (pursuant to subsection (b) of this Section 9) as though there were a subdivision or combination of the outstanding shares of Common Stock. The provisions of this subsection (d) shall similarly apply to successive Organic Changes. 10. Notice of Adjustment. (a) Immediately upon any adjustment in the number of shares of Common Stock acquirable and receivable upon conversion of this Note or any adjustment or readjustment in the Conversion Price, the Corporation shall send written notice to the Holder, which notice shall set forth in reasonable detail the method of calculation and the facts upon which such calculation is based. The Corporation shall, upon written request at any time of any holder of the Convertible Notes, furnish or cause to be furnished to such holder a similar certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price then in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which then would be received upon the conversion of the Convertible Notes. The Corporation may retain a firm of independent public accountants of recognized standing which may be the firm regularly retained by the Corporation to make any computation required under this Section and a certificate signed by such firm shall be conclusive evidence of the correctness of any computation made under this Section. (b) In the event that: (i) the Corporation shall declare any dividend or distribution upon its Common Stock, whether in cash, property, 11 stock or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus; or (ii) the Corporation shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; or (iii) there shall be any Organic Change; or (iv) there shall be any voluntary or involuntary dissolution, liquidation or winding up of the Corporation; then in connection with each such event, the Corporation shall send to the Holder (A) at least 60 days' prior written notice of the date on which the books of the Corporation shall close or a record shall be taken for such dividend, distribution or subscription rights (and specifying the date on which the holders of Common Stock shall be entitled) or for determining rights to vote in respect of such Organic Change, dissolution, liquidation or winding up, and (8) in the case of any such Organic Change, dissolution, liquidation or winding up, at least 60 days' prior written notice of the date when the same shall take place (and specifying the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such Organic Change, dissolution, liquidation or winding up). 11. Fractional Interests. The Corporation shall not be required to issue any fractional shares of Common Stock on the conversion of this Note. If any fraction of a share of Common Stock except for the provisions of this Section II would be issuable upon conversion of this Note, the Corporation shall purchase such fraction for an amount in cash equal to the current Market Price (as determined pursuant to Section 7(b) of this Note) of such fraction on the last Business Day prior to conversion. 12. Voting. Nothing contained in this Note shall be construed as conferring upon the Holder the right to vote or to consent or to receive notice as a stockholder in respect of the meetings of stockholders for the election of directors of the Corporation or any other matter. Notwithstanding the foregoing, the Corporation shall mail by first class to the Holder at the address specified in Section 13, one copy of all materials forwarded to stockholders or filed with the Securities and Exchange Commission by the Corporation, said mailing to be made promptly after mailing to stockholders or filing with the Securities and Exchange Commission, as the case may be. 13. Notices. 12 (a) Any notice pursuant to this Note to be given or made by the Holder to or upon the Corporation shall be sufficiently given or made if sent by certified or registered mail, postage prepaid, addressed (until another address is sent by the Corporation to the Holder) as follows: Park Avenue Distributors, Ltd. 6210 Madison Court Morton Grove, Illinois 60648 Attention: Chief Executive Officer (b) Any notice pursuant to this Note to be given or made by the Corporation to or upon the Holder shall be sufficiently given or made if sent by certified or registered mail, postage prepaid, addressed (until another address is sent by the Holder to the Corporation) to the address of the Holder set forth above. 14. Governing Law. This Note shall be governed by and construed in accordance with the internal laws of the State of Delaware. 15. Register of Notes. The Corporation shall keep at its principal office (or such other place the Corporation reasonably designates) a register for the registration of Convertible Notes. Each transfer of the Convertible Notes, conversion thereof into Common Stock and payment thereunder as well as the name and address of such holder of Convertible Notes shall be noted on the register of Convertible Notes. The register shall be made available by the Corporation for review by the Holder or his agent during usual business hours of the Corporation. 16. Modification and Waiver. No modification or waiver of any provision of this Note, nor any departure by the Corporation therefrom, shall in any event be effective unless the same shall be in writing signed by the Holder and then such modification or waiver shall be effective only in the specific instance for the specific purpose given. Notwithstanding the foregoing, the Board of Directors of the Corporation, in its sole discretion, shall have the right at any time or from time to time to decrease the Conversion Price and/or to increase the number of shares of Common Stock issuable upon conversion of this Note. Such reduction of the Conversion Price and/or increase in the number of shares of Common Stock issuable upon exercise shall be effective for a period or periods to be determined by such Board. Attest: ____________________________ By:____________________________ 13 Secretary President and Chief Executive Officer THIS NOTE AND THE SHARES OF COMMON STOCK ACQUIRABLE ON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, OFFERED FOR SALE, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION SHALL BE SATISFACTORY TO THE CORPORATION, THAT SUCH REGISTRATION IS NOT REQUIRED. 14