CONVERTIBLE PROMISSORY NOTE OF DAUPHIN TECHNOLOGY, INC.
THIS
NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY STATE
SECURITIES LAWS. THEY ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE
AND MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER
THE
ACT OR APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
_________________________
OF
DAUPHIN
TECHNOLOGY, INC.
|
Principal
Amount : $1,000,000
|
Date:
June 20, 2006
|
Dauphin
Technology, Inc., an Illinois corporation (the “Company”), for value received,
hereby promises to pay to the order of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, a
resident/corporation/partnership of the state of Illinois (the “Holder”), at
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, the principal sum of One Million Dollars
($1,000,000), plus interest on the principal amount outstanding at a rate
of two
percent (2%) per annum, calculated from the date of this Convertible Promissory
Note (this “Note”) until the principal amount hereof and all interest accrued
thereon is paid (or converted, as provided in Section 2 hereof). The outstanding
principal amount of this Note, and the interest accrued thereon, shall be
due
and payable at the Holder’s address given above on the earliest to occur of (i)
December 31, 2006 (the “Maturity Date”), or (ii) when, upon or during the
occurrence of an Event of Default (as defined in Section 8 below), such amounts
are declared due and payable by Holder or made automatically due and payable
in
accordance with the terms hereof, unless this Note shall have been previously
converted pursuant to Section 2 hereof or as provided otherwise in this Note.
This
Note
is one of several convertible promissory notes that have been issued or that
may
hereafter be issued in connection with the Company’s borrowing of an aggregate
principal amount (including the principal amount represented by this Note)
of up
to $2,000,000.00 (the “Series”).
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.
The
following definitions shall apply for all purposes of this Note:
1.1 “Company”
shall
mean the Company, as defined above, and includes any corporation or entity
that
shall succeed to or assume the obligations of the Company under this
Note.
1.2 “Conversion
Date”
shall
mean the date on which, pursuant to Sections 2 and 3 hereof, this Note is
converted into the Conversion Stock.
1.3 “Conversion Stock”
shall
mean 3,333,333 shares of $0.001 par value common stock of the Company, in
consideration of the principal amount payable hereunder. Upon conversion
into
stock, the holder agrees to waive all interest accrued during the term of
the
loan.
1.4 “Holder,”
or
similar terms, 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.
2. Conversion;
Prepayment.
a. Conversion
of Note.
The
Holder or the Company shall have the right, to convert the principal into
Conversion Stock, at any time after the Company has amended its Articles
of
Incorporation to provide for a number of authorized shares of $0.001 par
value
common stock sufficient in number to enable the Company to validly issue
Conversion Stock in an amount sufficient to convert this Note and any other
notes issued as part of the Series, and prior to the Company’s payment of the
outstanding principal balance of this Note. Upon Conversion under this Section
2, this Note shall be surrendered at the principal offices of the Company.
b. Prepayment
of Note.
Prior
to Stock Conversion this Note may be prepaid in full at any time without
penalty
only by mutual agreement between the company and the holder.
3. Issuance
of Conversion Stock.
As soon
as practicable after conversion and surrender of this Note, the Company will,
at
its expense, cause to be issued in the name of and delivered to the Holder,
a
certificate or certificates for the number of shares of Conversion Stock
to
which the Holder shall be entitled upon such conversion, bearing such legends
as
may be required by applicable state and federal securities laws in the opinion
of legal counsel of the Company. Such conversion shall be deemed to have
occurred (i) under Section 2 above and (ii) immediately prior to the close
of
business on the Conversion Date. No fractional shares will be issued upon
conversion of this Note. If upon any conversion of this Note a fraction of
a
share would otherwise result, then, in lieu of such fractional share, the
Company will pay the cash value of that fractional share, calculated on the
basis of the closing price as of the close of trading on the last trading
day
occurring immediately before the Conversion Date.
2
4. Reservation
of Stock.
4.1 Notice
of Amendment.
The
Company shall promptly give to the Holder written notice, by first class
mail,
postage prepaid, at the Holder’s address as shown on the Company’s books, of any
amendment to its Articles of Incorporation that results in the provision
for a
number of authorized shares of $0.001 par value common stock sufficient in
number to enable the Company to validly issue Conversion Stock in an amount
sufficient to convert this Note and any other notes issued as part of the
Series.
4.2 Reservation
of Stock.
Promptly following the effective date of any amendment to its Articles of
Incorporation that results in the provision for a number of authorized shares
of
$0.001 par value common stock sufficient in number to enable the Company
to
validly issue shares of Conversion Stock in an amount sufficient to convert
this
Note and any other notes issued as part of the Series, the Company shall
take
all corporate action, and shall obtain all government consents and approvals,
necessary to issue or to reserve for issuance the shares of Conversion Stock
issuable upon a conversion of this Note and any other notes in the Series.
5. Fully
Paid Shares.
All
shares of Conversion Stock issued upon the conversion of this Note shall
be
validly issued, fully paid and non-assessable.
6. No
Rights or Liabilities as Stockholder.
This
Note does not by itself entitle the Holder to any voting rights or other
rights
as a stockholder of the Company. In the absence of conversion of this Note,
no
provisions of this Note, and no enumeration herein of the rights or privileges
of the Holder, shall cause the Holder to be a stockholder of the Company
for any
purpose.
7. Corporate
Action; No Impairment.
The
Company will not, through reorganization, consolidation, merger, dissolution,
or
sale of substantially all of its assets, avoid or seek to avoid the observance
or performance of any of the terms of this Note, but will at all times in
good
faith assist in the carrying out of all such terms and in the taking of all
such
action as may be necessary or appropriate in order to protect the rights
of the
Holder against wrongful impairment.
8. Default.
The
Company’s failure to make any payment due and payable under the terms of this
Note within ten (10) days following the date of any written notice thereof
from
the Holder, or the Company’s failure to issue and deliver any shares of
Conversion Stock issuable to the Holder within thirty (30) days following
the
Holder’s delivery of written notice of conversion pursuant to Section 2, shall
constitute an “Event of Default.” In the event of an Event of Default, the
Holder shall, in addition to any other remedies allowed by law and following
delivery of written notice to the Company, be entitled to accelerate all
unpaid
principal and interest under this Note. Waiver of any Event of Default will
not
constitute a waiver of any other or subsequent Event of Default.
3
9. Waiver
and Amendment.
Any
provision of this Note may be amended, waived, modified, discharged or
terminated by written agreement signed by the Company and Holder.
10.
Assignment; Binding upon Successors and Assigns.
The
Company may not assign any of its obligations hereunder without the prior
written consent of the Holder. The terms and conditions of
this
Note shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties.
11.
Waiver
of Notice; Attorneys’ Fees.
The
Company and all endorsers of this Note hereby waive notice, demand, notice
of
nonpayment, presentment, protest and notice of dishonor. If any action at
law or
in equity is necessary to enforce this Note or to collect payment under this
Note, the Holder shall be entitled to recover, as an element of the costs
of
suit and not as damages, reasonable attorneys’ fees, costs and necessary
disbursements in addition to any other relief to which it may be entitled.
The
Holder shall be entitled to recover its costs of suit, regardless of whether
such suit proceeds to final judgment.
12.
Construction of Note.
The
terms of this Note have been negotiated by the Company and the Holder, with
the
assistance of their respective attorneys. The language hereof will not be
construed for or against either the Company or the Holder. Unless otherwise
explicitly set forth, a reference to a Section will mean a Section in this
Note.
The titles and headings herein are for reference purposes only and will not
in
any manner limit the construction of this Note, which will be considered
as a
whole.
13.
Notices. Any
notice or other communication required or permitted to be given under this
Note
shall be in writing, shall be delivered by hand or overnight courier service,
by
certified mail, postage prepaid, or by facsimile, and will be deemed given
upon
delivery, if delivered personally, one business day after deposit with a
national courier service for overnight delivery, or one business day after
transmission by facsimile with confirmation of receipt, and three days after
deposit in the mails, if mailed, to the following addresses:
|
(i)
If to the Holder:
|
To
the address first given above.
|
|
(ii)
If to the Company:
|
Dauphin
Technology, Inc.
|
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ ▇▇. Suite 111
|
|
|
Schaumburg,
IL 60173
|
|
|
Attention:
President
|
or
to
such other address as may have been furnished to the other party in writing
pursuant to this Section 13, except that notices of change of address shall
only
be effective upon receipt.
4
14.
Governing
Law.
This
Note shall be governed by and construed under the internal laws of the United
States and the State of Illinois applied to agreements among Illinois residents
entered into and to be performed entirely within the state of Illinois, without
reference to principles of conflict of laws or choice of laws.
15.
Dispute
Resolution. Any
controversy, dispute or claim between the parties arising out of, related
to or
in connection with this Note, or the performance or breach hereof, shall
be
submitted to and settled by arbitration conducted by the American Arbitration
Association in Chicago, Illinois, in accordance with its commercial arbitration
rules as then in effect; provided that the arbitration shall be by a single
arbitrator mutually selected by the Company and the Holder, and if such parties
do not agree within thirty (30) days after the date of notification of a
request
for such arbitration made by either of such parties, the selection of the
single
arbitrator shall be made by the American Arbitration Association in accordance
with said rules. In addition to, and not in substitution for any and all
other
relief in law or equity that may be granted by the arbitrator, the arbitrator
may grant equitable relief and specific performance to compel compliance
hereunder. The determination of the arbitrator shall be accom-panied by a
written opinion of the arbitrator and shall be final, binding and conclusive
on
the parties, and judgment on the arbitrator's award, including without
limitation equitable relief and specific performance, may be entered in and
enforced by any court having jurisdiction thereof. Fees and expenses of the
American Arbitration Association and of the arbitrator shall be borne as
shall
be determined by the arbitrator, and the arbitrator may in his discretion
award
attorneys' fees and expenses in addition to any other remedy that is allowed
and
regardless of whether such remedy includes an award of damages.
IN
WITNESS WHEREOF,
the
Company has caused this Note to be signed in its name as of the date first
above
written.
|
By:
|
_____________________________
|
|
|
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
|
||
|
CEO/Chairman
|
||
|
Dauphin
Technology, Inc.
|
||
|
and
|
||
|
By:
|
______________________________
|
|
|
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
|
||
|
Individual
|
||
MW:CONVERT_Tim_3,333,333_[1].doc
5