PROMISSORY NOTE
FOR VALUE RECEIVED, in the form of a loan for $800,000, the
undersigned promises to pay to the order of Tallman Supply Inc
("TSI") the sum of $800,000 according the following terms and
conditions:
This note in payable in two installments. The first installment
of $200,000 is payable upon closing of the attached acquisition
agreement between The Atrium Group of companies limited and
Tallman Supply Inc. The second installment of $600,000 is
payable on January 1, 2000 subject to TSI achieving the attached
milestones.
2,135,000 shares of TSI as defined in attached acquisition
agreement and shareholder list will be held in mutually
acceptable lawyers escrow account and be subject to escrow
agreement attached as security for payment of this Promissory
Note.
No interest shall accrue during the first 36 months of the loan
period. For the 24 months after the first 36 month period,
interest only shall be paid quarterly in arrears computed
quarterly on the unpaid balance at the rate announced from time
to time by the US Federal Reserve as its prime rate ("Note Rate")
and at a rate of one (1) percent per annum above the Note Rate on
overdue payments or while a default exists and after maturity,
whether by acceleration or otherwise. Each change in the prime
rate shall cause a change in the Note Rate to become effective on
the day after the next payment is due hereunder. At the end of
60 months the Note shall be payable at the discretion of the TSI
board, either in a lump sum of $800,000 or the equivalent value
in shares of TSI, with the price per share being computed as the
average share price over the last 5 trading days prior to the
Note being paid. Provided, however, that the Payee under this
Note shall take no action to accelerate the same or to levy on
any security other than to charge the default rate of interest
provided for herein until and unless 30 days have elapsed from
the date of any failure to pay as herein provided for and
provided further that, upon such 30 day period having elapsed
time shall be of the essence and no payment tendered or accepted
by the Payee shall waive the Payee's then right to accelerate
this Note and further provided, nothing herein to the contrary
withstanding, the entire principal and accrued interest shall be
immediately due and payable. The Note may be prepaid at any time
without penalty pursuant to the payment terms above indicated.
The undersigned and each endorser of this Note, and any other
party liable for the debt evidenced by this Note, severally
waives demand, presentment, notice of dishonour and protest of
this Note; and consents to any extension or postponement of time
of its payment without limit as to number or period; to any
substitution, exchange or release of all or any part of the
collateral securing this Note; to the addition of any party; and
to the release, discharge or suspension of any rights and
remedies against any person who may be liable for the payment of
this debt. No delay on the part of the holder in the exercise of
any right or remedy shall operate as a waiver, no single or
partial exercise by the holder of any right or remedy shall
preclude any other or further exercise of that right or remedy or
the exercise of any other right or remedy; and no waiver or
indulgence by the holder of any default shall be effective unless
it is in writing and signed by the holder; nor shall a waiver on
one occasion be construed as a bar to, or waiver of, any right on
any future occasion. Thirty (30) days after the occurrence and
continuance of a default, all amounts then remaining unpaid on
this Note may be declared to be, and shall thereafter be,
immediately due and payable.
Dated: 20th October, 1998.
For and on behalf of Biotechnology & Healthcare Ventures Ltd.
_______________________
<Authorized Signatory>
For and on behalf of Tallman Supply, Inc.
_______________________
Officer <Chris Every>
