Contract
Exhibit
99.4
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”). NO
INTEREST IN THIS NOTE MAY BE OFFERED OR SOLD EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (B) TO THE EXTENT APPLICABLE, PURSUANT TO
RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT), OR (C) PURSUANT TO
EXEMPTIONS FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW WHERE THE
HOLDER HAS FURNISHED A WRITTEN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE
COMPANY, TO THE EFFECT THAT SUCH TRANSFER IS LEGAL UNDER THE ACT AND APPLICABLE
STATE LAW.
PAYMENTS
OF PRINCIPAL AND INTEREST IN RESPECT OF THIS NOTE ARE SUBORDINATED, TO THE
EXTENT SPECIFIED IN THE SUBORDINATION AGREEMENT, DATED AS OF JULY __, 2008, BY
AND BETWEEN VICTORY PARK MANAGEMENT, LLC, AS ADMINISTRATIVE AGENT AND COLLATERAL
AGENT, AND VICTORY PARK CAPITAL, L.P., AS HOLDER, TO PAYMENTS OF CERTAIN SENIOR
INDEBTEDNESS OF THE COMPANY.
THE
SECURITIES THAT MAY BE ISSUED HEREUNDER ARE SUBJECT TO A REGISTRATION RIGHTS
AGREEMENT, DATED AS OF JULY __, 2008, BETWEEN THE COMPANY AND HOLDER, AS AMENDED
AND MODIFIED FROM TIME TO TIME.
QSGI-CCSI,
INC.
SUBORDINATED
SECURED CONVERTIBLE NOTE
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$10,000,000.00
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July
__, 2008
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FOR VALUE RECEIVED, the
undersigned, QSGI-CCSI,
INC. (“QSGI-CCSI”) and QSGI INC., (“QSGI”), each a
Delaware corporation (collectively the “Company”), jointly
and severally, hereby promises to pay to the order of XXXX X. XXXXXXX, an
individual, or his assigns (the “Holder”), the
principal sum of Ten Million and 00/100 ($10,000,000.00) Dollars, plus interest
thereon. The outstanding principal amount of, plus all accrued and
unpaid interest on, this Note shall be due and payable on the earlier of the
following dates (the “Maturity Date”),
unless this Note is converted pursuant to Section 6: (a) December 31, 2011 or
(b) any date on which the principal amount of, together with accrued and unpaid
interest on, this Note is declared to be, or becomes, due and payable pursuant
to Section 5.
1. Stock Purchase
Agreement. This Subordinated Secured Convertible Note (this
“Note”) is
being issued pursuant to that certain Stock Purchase Agreement dated as of May
6, 2008, as amended by a First Amendment to Stock Purchase Agreement of even
date herewith (such Agreement, as amended and as further amended, modified and
supplemented from time to time, the “Purchase Agreement”)
between the Company and Xxxx X. Xxxxxxx. Capitalized terms used
herein but not defined herein have the meanings ascribed to them in the Purchase
Agreement.
2. Subordination. This Note, and the
payment of principal and interest hereunder, shall be subordinated to the prior
payment of any indebtedness of the Company constituting Senior Debt in favor of
the Senior Lender, in the manner and to the extent provided in the Subordination
Agreement dated as of June 5, 2008 between the Holder and the Senior Lender (the
“Subordination Agreement”). The provisions of the Subordination
Agreement are solely for the purpose of defining the relative rights of the
Holder and the Senior Lender, and shall not impair, as between the Holder and
the Company, the obligation of the Company to pay and discharge its obligations
under this Note in accordance with its terms.
3.
Payment of Interest;
Prepayment of Principal.
(a) The
principal balance of this Note outstanding from time to time shall bear interest
at the annual rate of 10% per annum from the date hereof until paid or until
converted pursuant to Section 6.
(b) Interest
accrued on this Note and unpaid shall be due and payable in installments, with
the first installment due and payable on the first day of the month next
following the date hereof, and each installment thereafter due and payable on
the first day each July, October, January and April in each year, commencing on
the first such date to occur after the date of the first installment, until the
Maturity Date or the date this Note is paid in full or converted pursuant to
Section 6.
(c) The
Note may be prepaid in whole or in part at any time without premium or
penalty. All payments made by the Company on this Note shall be
applied first to the payment of accrued and unpaid interest and then to the
reduction of the unpaid principal balance.
(d) Payments
on this Note shall be paid in lawful money of the United States of America to
the registered Holder of this Note at the address shown in the register
maintained by the Company for such purpose, all in the manner provided below and
in the Purchase Agreement.
(e) Upon
the occurrence of an Event of Default as defined below, interest shall be
payable on this Note at the default rate of 15% per annum.
(f) In
no event shall interest payable hereunder exceed the maximum rate permitted by
applicable law.
4. Replacement of
Note. In the event that this Note is mutilated, destroyed,
lost or stolen, the Company shall execute, register and deliver a new Note, in
exchange and substitution for this Note, if mutilated, or in lieu of and
substitution for this Note, if destroyed, lost or stolen. In the case
of destruction, loss or theft, the Holder shall furnish to the Company indemnity
reasonably satisfactory to the Company, and in any such case, and in the case of
mutilation, the Holder shall also furnish to the Company certification of an
authorized representative of the Holder of the mutilation, destruction, loss or
theft of this Note and of the ownership thereof. Any replacement Note
so issued shall be in the same outstanding principal amount as this Note and
dated the date of this Note.
5. Events of
Default. Upon the occurrence of any of the following events
(each an “Event of
Default”): (a) the Company shall fail to pay any principal of or interest
on this Note within ten (10) days after the date due (whether by scheduled
maturity, acceleration, demand or otherwise); or (b) the Company fails to cure a
material breach of any representation or warranty or any failure to timely
perform any obligation, covenant or agreement made to the Holder or owed by the
Company to the Holder, in or pursuant to the Purchase Agreement, this Note, or
any other Related Agreement, within 30 days of the Company’s receipt of notice
of such breach or failure from the Holder; or (c) the Company shall fail to pay
the Senior Debt, or any other indebtedness for borrowed money or other similar
obligation or liability (“Indebtedness”) in
excess of $600,000 (excluding Indebtedness evidenced by this Note), or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Senior Debt or Indebtedness, or any other default
under any agreement or instrument relating to any such Senior Debt or
Indebtedness, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit the
acceleration of the maturity of such Senior Debt or Indebtedness, unless such
default or failure to pay has been waived by the party to which enforcement
would be charged; or any such Senior Debt or Indebtedness shall be declared to
be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof; or (d) one
or more judgments or orders for the payment of money exceeding by $600,000 or
more any applicable insurance coverage shall be rendered against the Company,
and either (i) enforcement proceedings shall have been commenced by any creditor
upon any such judgment or order, or (ii) there shall be any period of ten (10)
consecutive days during which a stay of enforcement of any such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
(e) the Company dissolves or ceases its operations or generally shall not pay
its debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Company
seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for the Company or for any substantial part of its property and
such proceeding shall remain undismissed or unstayed for a period of sixty (60)
days; or the Company shall take any action to authorize or effect any of the
actions set forth above in this clause (e); then the Holder may, upon written
notice to the Company, (x) declare the outstanding principal amount of this Note
and all other amounts due hereunder to be immediately due and payable, whereupon
the outstanding principal amount of this Note and all such other amounts shall
become and shall be forthwith due and payable, without diligence, presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, (y) notwithstanding any provision to the contrary contained herein,
convert this Note at the Conversion Price then in effect, and (z) exercise any
and all of its other rights under applicable law, and hereunder.
If an
Event of Default occurs, (i) the Company agrees to pay upon demand all of the
Holder’s costs, expenses and fees incurred by the Holder to enforce or collect
any of the amounts due under this Note, and (ii) the Holder shall have the right
to foreclose or otherwise enforce all liens or security interests securing
payment hereof, or any part hereof, and offset against this Note any sum or sums
owed by the Holder to the Company (if any). Failure of the Holder to
exercise this option shall not constitute a waiver of the right to exercise the
same upon the occurrence of a subsequent Event of Default.
6.
Conversion of the
Note.
(a) Optional Conversion.
The outstanding principal and the accrued but unpaid interest on this Note may
be converted, at any time, in the Holder’s sole discretion, in whole or in part,
into restricted common stock of QSGI (the “Common Stock”) upon
written notice (the “Conversion Notice”)
to the Company at a conversion price of $.75 per share, subject to adjustment
from time to time pursuant to this Section 6 (the “Conversion
Price”). The number of shares of Common Stock to be issued to
the Holder upon such conversion shall equal the sum of the outstanding principal
and accrued but unpaid interest on this Note divided by the Conversion
Price.
(b) Conversion
Procedure
(i) Holder
shall effect a conversion by surrendering this Note accompanied by proper
assignment thereof to the Company, together with a completed and duly executed
conversion notice in the form of Exhibit A annexed hereto (the "Conversion
Notice"). Such conversion of this Note will be deemed to have
been effected as of the close of business on the date on which this Note and the
duly completed conversion notice has been surrendered at the principal office of
the Company (the "Conversion
Date"). At such time as such conversion has been effected, the
rights of the Holder to receive payments of principal and interest hereon will
cease and the Holder will be deemed to have become the holder of record of the
shares of Common Stock represented thereby. The provisions of this
Note that apply to optional conversion of all of this Note also apply to
conversion of a portion of this Note.
(ii) As
soon as possible after the conversion has been effected (but in any event within
fifteen (15) days after the surrender of this Note and the Conversion Notice to
the Company), the Company will deliver to the Holder:
(A) a
certificate or certificates representing the number of shares of
Common Stock issuable by reason of such conversion in the name of the Holder in
such denomination or denominations as the Holder has specified; and
(B) a
new duly executed Note for the principal amount of this Note which was delivered
to the Company in connection with such conversion but which was not
converted.
(iii) The
issuance of certificates for shares of Common Stock upon conversion of this Note
will be made without charge to the Holder for any issuance tax in respect
thereof or other cost incurred by the Company in connection with such conversion
and the related issuance of shares of Common Stock. Upon conversion
of this Note, QSGI will take all such actions as are necessary in order to
insure that the Common Stock issuable with respect to such conversion will be
validly issued, fully paid and nonassessable.
(c) Restrictions on
Shares. The Common Stock to be issued pursuant to Section 6(a)
or (b) will be subject to the Registration Rights Agreement. The
certificates issued by QSGI evidencing such shares of Common Stock shall contain
any restrictive legends as may be required by the Registration Rights Agreement
and any restrictions pursuant to Rule 144 under the 1933 Act.
(d) Stock Dividends and
Splits.
(i) If
QSGI, at any time while this Note is outstanding, (x) pays a stock dividend on
its common stock or otherwise makes a distribution on any class of capital stock
that is payable in shares of common stock, (y) subdivides outstanding shares of
common stock into a larger number of shares, or (z) combines outstanding shares
of common stock into a smaller number of shares, then in each such case the
Conversion Price shall be multiplied by a fraction of which the numerator shall
be the number of shares of Outstanding Common Stock immediately before such
event and the denominator shall be the number of shares of Outstanding Common
Stock immediately after such event. Any adjustment made pursuant to
clause (x) of this paragraph shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clause (y) or (z) of this paragraph
shall become effective immediately after the effective date of such subdivision
or combination.
(ii) “Outstanding Common
Stock” of QSGI means, as of the date of determination, the sum (without
duplication) of the following: (x) the number of shares of Common Stock then
outstanding at the date of determination, (y) the number of shares of Common
Stock then issuable upon the conversion of this Note (as such number may be
adjusted pursuant to the terms hereof or thereof) and (z) the number of
warrants, options and other rights to subscribe for or purchase common stock and
convertible securities which are convertible, exercisable or exchangeable, with
or without payment of additional consideration, for shares of common stock,
either immediately or upon the onset of a specified date or the happening of a
specified event. The number of shares of Outstanding Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of QSGI.
(iii) Notice of
Adjustments. Upon the occurrence of each adjustment pursuant
to this Section 6, the Company at its expense will reasonably promptly compute
such adjustment in accordance with the terms of this Note and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Conversion Price, describing the transactions giving rise to such adjustments
and showing in detail the facts upon which such adjustment is
based. Upon written request, the Company will reasonably promptly
deliver a copy of each such certificate to the Holder.
(e)
Organic
Changes. In case the Company shall effect an Organic Change,
then the Holder shall be given a written notice from the Company informing such
Holder of the terms of such Organic Change and of the record date thereof for
any distribution pursuant thereto, at least twenty (20) days in advance of such
record date, and, if such record date shall precede the Maturity Date, the
Holder shall have the right thereafter to receive, upon conversion of this Note,
the number of shares of stock or other securities, property or assets of QSGI,
or of its successor or transferee or any affiliate thereof, or cash receivable
upon or as a result of such Organic Change that would have been received by a
holder of the number of shares of Common Stock equal to the number of shares the
Holder would have received had such Holder converted this Note prior to such
event at the Conversion Price immediately prior to such event. In any such case,
the Company will make appropriate provision (in form and substance reasonably
satisfactory to the Holder) with respect to such Holder's rights and interests
to insure that the provisions of this Section 6(e) will thereafter be applicable
to this Note (including, in the case of any such Organic Change in which the
successor entity or purchasing entity is other than QSGI, an immediate
adjustment of the Conversion Price to the value for the Common Stock reflected
by the terms of such Organic Change, if the value so reflected is less than the
Conversion Price in effect immediately prior to such Organic Change). The
Company will not effect any such Organic Change unless prior to the consummation
thereof, the successor entity (if other than the Company) resulting from such
Organic Change assumes, by written instrument (in form and substance
satisfactory to the Holder), the obligation to deliver to Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such Holder may be entitled to acquire. The provisions of this Section 6(f)
shall similarly apply to successive Organic Changes. “Organic Changes”
shall mean, any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company’s assets
to another Person or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock.
(f) No Dilution or
Impairment. The Company shall not, by amendment of its certificate of
incorporation or through any Organic Change or any other voluntary action, 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 dilution or other impairment.
Without limiting the generality of the foregoing, the Company (i) shall take all
such action as may be necessary or appropriate in order that QSGI may validly
and legally issue fully paid and nonassessable shares of Common Stock, free from
all taxes, Liens, security interests, encumbrances, preemptive rights and
charges on the conversion of this Note from time to time outstanding, (ii) shall
not take any action which results in any adjustment of the Conversion Price if
the total number of shares of Common Stock issuable after the action upon the
conversion of this Note would exceed the total number of shares of Common Stock
then authorized by QSGI's certificate of incorporation and available for the
purposes of issue upon such exercise and (iii) shall not permit the par value of
any shares of stock receivable upon the conversion of this Note to exceed the
amount payable therefor upon such exercise.
(g) Validly Issued
Shares. Shares of Common Stock of QSGI issued upon conversion
of this Note pursuant to this Section 6 will be duly authorized, validly issued,
fully paid, non-assessable and free and clear of all liens or encumbrances,
except for the limitations and restrictions imposed upon the Common Stock of
QSGI under QSGI’s Certificate of Incorporation, as amended, those set forth in
Section 6(c) above, and any agreement by and among the stockholders of QSGI that
may be in effect from time to time and that does not discriminate against the
Holder, which agreement the Holder hereby agrees to be bound by upon conversion
of this Note. Furthermore, the Holder agrees to take any action or
execute any documentation that is reasonably requested by the Company, or that
is reasonably necessary or advisable, in order to effect the transactions
contemplated hereunder in a timely manner.
(h) Taxes. (i)
The Holder shall be responsible for all tax liabilities that may arise as a
result of holding this Note or receiving the Common Stock upon conversion of the
Note, subject to clause (ii) below.
(ii) All
payments made by the Company hereunder shall be made free and clear of and
without deduction for any present or future income, stamp or other taxes,
levies, imposts, deductions, charges, fees, withholding, restrictions or
conditions of any nature now or hereafter imposed, levied, collected, withheld
or assessed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein, and all interest, penalties or similar
liabilities, excluding taxes on the overall net income of the Holder (such
non-excluded taxes are hereinafter collectively referred to as the "Taxes"). If the
Company shall be required by law to deduct or to withhold any Taxes from or in
respect of any amount payable hereunder, (a) the amount so payable shall be
increased to the extent necessary so that after making all required deductions
and withholdings (including Taxes on amounts payable to the Holder pursuant to
this sentence) the Holder receives an amount equal to the sum it would have
received had no such deductions or withholdings been made, (b) the Company shall
make such deductions or withholdings and (c) the Company shall pay the full
amount deducted or withheld to the relevant taxation authority in accordance
with applicable law. Whenever any Taxes are payable by the Company, as promptly
as possible thereafter the Company shall send the Holder an official receipt
showing payment. In addition, the Company agrees to pay any present or future
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery, performance, recordation or filing of, or
otherwise with respect to, this Note or any other Document (hereinafter referred
to as "Other
Taxes"). The Company will indemnify the Holder for the full amount of
Taxes or Other Taxes (including, any Taxes or Other Taxes on amounts payable to
the Holder under this paragraph) paid by the Holder and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
upon written demand by the Holder therefor.
7. Ownership of
Note. The Company may deem and treat the person in whose name
this Note shall be registered with the Company as the absolute owner of such
Note for the purpose of receiving payment of the principal or interest payable
hereunder and for all other purposes. The Company shall not be
affected by any notice to the contrary.
8. Restrictions on
Transfer. This Note has been acquired for investment and has
not been registered under the securities laws of the United States of America or
any state thereof. Accordingly, no right, title or interest in and to
this Note may be offered for sale, sold or transferred in the absence of
registration or qualification of this Note under applicable federal and state
securities laws or a written opinion of counsel of the Holder, reasonably
satisfactory to counsel for the Company, that such registration and
qualification are not required.
9. No Stockholder
Rights. Except as otherwise specifically provided herein, the
Holder, solely in his capacity as a holder of this Note, shall not be entitled
to vote or receive dividends or be deemed the holder of shares of capital stock
of QSGI for any purpose, nor shall anything contained in this Note be construed
to confer upon the Holder, solely in his capacity as the Holder of this Note,
any of the rights of a stockholder of QSGI or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the shares of
restricted Common Stock of QSGI which such Person is then entitled to receive
upon conversion of this Note.
10.
Restrictive
Covenants. For
so long as this Note shall be outstanding, without the prior written consent of
the Holder, which consent shall not be unreasonably withheld, the Company will
not:
(a) issue any shares of capital stock, or any rights,
warrants or options to purchase capital stock, or any securities convertible
into capital stock, except:
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(i)
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shares, rights, warrants, options or convertible
securities (A) outstanding on the date hereof, or (B) issued or issuable
to the Holder,
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(ii)
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shares issuable upon the exercise or
conversion of rights, warrants, options or convertible securities
outstanding on the date
hereof,
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(iii)
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shares or options issued to any officer,
employee, director or consultant to the Company pursuant to any agreement,
plan or arrangement approved by the Board of Directors of the Company,
and
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(iv)
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shares of common stock of QSGI-CCSI issued
to QSGI;
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(b) create,
incur, assume, guarantee or suffer to exist any indebtedness for borrowed money
or the deferred purchase price of property or evidenced by any note, bond,
debenture or any debt security, except:
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(i)
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Senior Debt,
and
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(ii)
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indebtedness (A) outstanding on the Effective
Date, and any refinancing, replacement, modification or amendment thereof,
provided that the principal amount thereof shall not thereby be increased,
or (B) in favor of the
Holder,
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(c) prepay, repurchase, redeem, retire or otherwise acquire
any indebtedness (other than Senior Debt), except to make scheduled payments of
principal and interest and except as the Company shall otherwise be obligated on
the Effective Date,
(d) enter into any merger, consolidation or other
reorganization with or into any Person or acquire all of a portion of the assets
or equity interests of any Person or permit any other person to consolidate or
merge with it, other than acquisitions of assets in the ordinary course of
business,
(e) materially change the nature of the business in which it
is presently, and following the Closing will be, engaged, or
(f) sell, lease, transfer or otherwise dispose of all or any
substantial portion of its assets or properties, except (A) to or from QSGI-CCSI
and QSGI, or (B) in the ordinary course of business.
11. Stock Pledge. This Note is secured by
(a) a pledge of 100% of the capital stock of Contemporary Computer Services,
Inc., a New York corporation, which stock shall be purchased by the Company
contemporaneously herewith pursuant to the terms of the Purchase Agreement,
pursuant to the terms of that certain Pledge Agreement of even date herewith
(the “Stock
Pledge”) executed by the Company in favor of the Holder, and (b) a
security interest in other assets of the Company pursuant to the terms of that
certain Security Agreement of even date herewith executed by the Company and the
Holder (“Security
Agreement”) (the Security Agreement, the Stock Pledge and any other
document now or hereafter given to evidence or secure payment of this Note or
delivered to induce the Holder to disburse the proceeds of the loan evidenced by
this Note, as such documents may hereafter be amended, restated or replaced from
time to time, are hereinafter collectively referred to as the “Loan Documents”).
Reference is hereby made to the Loan Documents (which are incorporated herein by
reference as fully and with the same effect as if set forth herein at length)
for a statement of the covenants and agreements contained therein, a statement
of the rights, remedies, and security afforded thereby, and all matters therein
contained.
12. Miscellaneous
(a) Notice. All
notices required or permitted to be given hereunder shall be in writing
(including electronic communications) and shall be deemed to have been duly
given (i) when personally delivered, (ii) two days after mailing if mailed by
registered or certified mail (return receipt requested, postage prepaid), or
(iii) one day after being sent by facsimile transmission, e-mail or overnight
courier, in each case to the address of the intended recipient as set forth in
the notice provisions of the Purchase Agreement.
(b) Governing
Law. This Note and the obligations of the Company and the
rights of the Holder shall be governed by and construed in accordance with the
substantive laws of the State of Florida without giving effect to the principles
of conflict of laws or rules of choice of laws rules that would cause the
application of domestic substantive laws of any other jurisdiction.
(c) Binding
Effect. This Note shall bind the Company and the Holder and
their respective successors and assigns.
(d) No
Waiver. No forbearance, indulgence, delay or failure to
exercise any right or remedy with respect to this Note shall operate as a waiver
or as acquiescence in any default, nor shall any single or partial exercise of
any right or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy.
(e) Modification;
Discharge. This Note may not be modified or discharged (other
than by payment) except by a writing duly executed by the Company and the
Holder.
(f) Severability. If
any provision of this Note should be found to be invalid or unenforceable, all
other provisions of this Note shall nevertheless remain in full force and effect
to the maximum extent permitted by law.
EACH
PARTY TO THIS NOTE HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE OR ANY AGREEMENTS OR TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT IN THE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR NEW YORK COUNTY, NEW YORK AND OF ALL NEW YORK STATE
COURTS SITTING IN NEW YORK COUNTY, NEW YORK, AND HEREBY EXPRESSLY SUBMITS TO THE
PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND
EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE
AN INCONVENIENT FORUM. IT IS FURTHER AGREED THAT VENUE FOR ANY SUCH
ACTION SHALL LIE EXCLUSIVELY WITH COURTS SITTING IN NEW YORK COUNTY, NEW YORK,
UNLESS XXXXXX AGREES TO THE CONTRARY IN WRITING. EACH PARTY HEREBY
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS IN THE MANNER
SET FORTH IN SECTION 11(A), SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH
MAILING.
EACH PARTY TO THIS NOTE HEREBY WAIVES
ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS.
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[SIGNATURE PAGE
FOLLOWS]
IN
WITNESS WHEREOF, this Subordinated Secured Convertible Note has been issued by
the Company as of the date first set forth above.
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QSGI-CCSI,
INC
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By:
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Name:
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Title:
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QSGI
INC.
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By:
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Name:
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Title:
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Acknowledged
and Agreed:
_______________________________________
XXXX X.
XXXXXXX
EXHIBIT
A
QSGI-CCSI,
INC.
CONVERSION
NOTICE
Reference
is made to the Subordinated Secured Convertible Note (the "Note"), made by
QSGI-CCSI, INC. AND QSGI INC, each a Delaware corporation, jointly and severally
(the "Company"), to the order of XXXX X. XXXXXXX. In accordance with
and pursuant to the Note, the undersigned hereby elects to convert the amount
under this Note indicated below into shares of Common Stock, no par value of
QSGI INC. (the "Common Stock"), as of the date specified below.
Date of
Conversion: ___________________________
Outstanding Principal Amount of Note
and accrued interest to be
Converted:
Principal:
$___________________________
Interest: $___________________________
Please
confirm the following information:
Conversion
Price: ___________________________
Number of shares of Common
Stock
to be
issued: ___________________________
Please
issue the Common Stock and, if applicable, any check drawn on an account of the
Company into which Note is being convened in the following name and to the
following address:
Issue
to: _________________________________
_________________________________
_________________________________
_________________________________
Facsimile
Number: _________________________________
Authorization: _________________________________
By:______________________________
Title:___________________________
Dated:
_________________________________
