Exhibit 10.2


 


THIS NOTE AND THE
SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, 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.


 


XTERO DATACOM, INC.


 


AMENDMENT NO. 1 TO


CONVERTIBLE PROMISSORY NOTE


 


RECITALS


 


A.            Xtero Datacom, Inc., a private British Columbia corporation (the “Company”),
entered into a Convertible Promissory Note dated February 9, 2007 (the “Note”)
pursuant to which the Company promised to pay Schmitt Industries, Inc., an
Oregon corporation (the “Holder”), the sum of Two Hundred Fifty Thousand
Dollars (US $250,000), or so much thereof as has been advanced, and any unpaid
accrued interest thereon, pursuant to the terms of the Note.


 


B.            Since the date of the Note, the Holder has advanced to the Company the
sum of US $250,000 pursuant to the terms of the Note.  The Company and the Holder now wish to amend
certain terms of the Note including increasing the amount that may be advanced
to the Company to US $500,000.


 


THEREFORE,
the parties agree to amend certain terms of the Note as follows.  All terms of the Note not expressly amended
are hereby ratified and confirmed.


 


1.             The first paragraph shall be amended to read in its
entirety:


 


	
  $500,000

  	
  Vancouver, British Columbia

  
	
   

  	
  February 9, 2007

  



 


For
value received, Xtero Datacom, Inc., a private British Columbia
corporation (the “Company”), the principal
office of which is located at Unit 110, 998 Harbourside
Drive, North Vancouver, British Columbia  V7P 3T2,
hereby promises to pay to Schmitt Industries, Inc., an Oregon corporation
(the “Holder”), or its registered assigns, the sum of Five Hundred Thousand Dollars
(US $500,000), or so much thereof as may be advanced, and any unpaid accrued
interest thereon, as set forth below, to be computed on each advance from the
date of its disbursement, on the earlier to occur of (i) December 31,
2008, or (ii) when declared due and payable by the Holder upon the
occurrence of an Event of Default (as defined below). Payment for all amounts
due hereunder shall be made by wire transfer to the Holder’s account or by mail
to the registered address of the Holder.


 

















 


2.             Section 2.1 shall be amended to read in its
entirety:


 


2.1           Borrowing.  The Company may from time to
time during the term of this Note borrow from Holder specific sums of money, up
to and including a total of US $500,000.


 


3.             Section 2.2 shall be amended to read in its
entirety:


 


2.2           Repayment.  All payments shall be made in lawful money of the United States of
America at the principal office of the Holder, or at such other place or
account as the Holder hereof may from time to time designate in writing to the
Company.  Payment shall be credited first
to Costs (as defined below), if any, then to accrued interest due and payable,
and the remainder applied to principal. 
Prepayment of the principal, together with accrued interest, may not be
made without the Holder’s prior written consent.  The Company hereby waives demand, notice,
presentment, protest and notice of dishonor.


 


4.             Section 3 shall be deleted in its entirety.


 


5.             Section 7.1 shall be amended to add the
following sentence at the end of the section:


 


Notwithstanding
the above, if the acquisition transaction contemplated by the Interim
Acquisition Agreement (the “Interim Acquisition Agreement”) dated October 4,
2007 among the Company, certain of its shareholders and the Holder is not closed
by May 31, 2008, other than by reason of a breach by the Company or its
shareholders of the Interim Acquisition Agreement or a superceding definitive
acquisition agreement, the conversion price after May 31, 2008 shall be
equal to Cdn $0.50, subject to adjustments pursuant to Section 8 hereof.


 


6.             Section 11.5 shall be amended to read in its
entirety:


 


11.5         Use
of Loan Proceeds.  The Company intends to use the proceeds of any
advances beyond the first US $250,000 primarily to fund legal fees incurred in
connection with the Holder’s acquisition of all of the outstanding shares of
the Company pursuant to the terms of the Interim Acquisition Agreement (the “Transaction”).  The Company and the Holder will jointly agree
in advance on the specific use of the proceeds of advances made pursuant to the
Note.


 


7.             Section 11.6 shall be amended to read in its
entirety:


 


11.6         Issuance
of Additional Shares.  Until the earlier of the closing of the
Transaction or May 31, 2008, the Company shall not issue any new shares or
other equity other than those issuances described in Schedule C to the Note or
such other issuances as may be approved in advance in writing by the Holder.


 


8.             Section 12 shall be deleted in its entirety.


 


9.             Exhibit A (Milestones and Advances) shall be
deleted in its entirety.


 


10.          Exhibit B (Pledge and Guaranty Agreement)
shall be deleted in its entirety.


 

















 


IN
WITNESS WHEREOF, the Company has caused this Amendment No. 1 to
Convertible Promissory Note to be made this 23rd day of October, 2007.


 


	
   

  	
  XTERO
  DATACOM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  David Peachey

  	
   

  
	
   

  	
   

  	
  David
  S. Peachey, President

  



 


Acknowledged and Agreed to:


 


SCHMITT INDUSTRIES, INC.


 


 


	
  By:

  	
   /s/
  Wayne A. Case

  	
   

  	
   

  
	
   

  	
  Wayne
  A. Case, President

  	
   

  



 


Dated:  October 23, 2007


 


Address:


2765 NW Nicolai Street


Portland, Oregon 
97210