Exhibit 99.2
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO RPM TECHNOLOGIES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, RPM TECHNOLOGIES, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o Ironshore
Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church
Street, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (together with its
registered assigns or successors in interest, the "Holder"), the principal sum
of Two Million Five Hundred Thousand Dollars ($2,500,000), together with any
accrued and unpaid interest with respect to this Note, no later than July 9,
2007 (the "Maturity Date").
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Securities Purchase Agreement dated as of
the date hereof between the Borrower and the Holder (the "Purchase Agreement").
The following terms shall apply to this Note:
ARTICLE I
INTEREST & AMORTIZATION
1.1(a) Interest Rate. Subject to Sections 1.1(b), 4.11 and 5.6 hereof, (x)
interest payable on the portion of the aggregate principal amount of this Note
(the "Principal Amount") not maintained in the Restricted Account referred to in
the Restricted Account Agreement (the "Amortizing Principal Amount") shall
accrue at a rate per annum (the "Unrestricted Interest Rate") equal to the
"prime rate" published in The Wall Street Journal from time to time, plus three
percent (3.0%) and (y) interest payable on the portion of the Principal Amount
maintained in the Laurus Restricted Account shall be equal to 1% per annum (the
"Restricted Interest Rate" and, together with the Unrestricted Interest Rate,
the "Interest Rate") until such time any portion of such amount maintained in
the Restricted Account is released for any reason (other than as a result of a
conversion of the Monthly Principal Amount into Common Stock in accordance with
Article II or III below) at which time such released portion shall bear interest
set forth in the foregoing clause (x) of this Section 1.1(a). The
Unrestricted Interest Rate shall be increased or decreased as the case may be
for each increase or decrease in the prime rate in an amount equal to such
increase or decrease in the prime rate; each change to be effective as of the
day of the change in the prime rate, as set forth in Section 1.1(b) below.
Subject to Section 1.1(b), the Unrestricted Interest Rate shall not be less than
seven percent (7%). Interest owing hereunder shall be (i) calculated on the
basis of a 360-day year, and (ii) payable monthly, in arrears, commencing on
August 1, 2004 and on the first business day of each consecutive calendar month
thereafter until the Maturity Date (and on the Maturity Date), whether by
acceleration or otherwise (each, a "Repayment Date").
1.1 (b) Interest Rate Adjustment. If on the last business day of each month
hereafter until the Maturity Date (each a "Determination Date") (i) the Borrower
shall have registered the shares of the Borrower's common stock underlying each
of the Note and that certain warrant issued to Holder on a registration
statement declared effective by the Securities and Exchange Commission (the
"SEC"), and (ii) the market price (the "Market Price") of the Common Stock as
reported by Bloomberg, L.P. on the Principal Market (as defined below) for the
ten (10) trading days immediately preceding a Determination Date exceeds the
then applicable Fixed Conversion Price by at least twenty-five percent (25%),
the Unrestricted Interest Rate for the succeeding calendar month shall
automatically be reduced by 200 basis points (200 b.p.) (2.0%) for each
incremental twenty-five percent (25%) increase in the Market Price of the Common
Stock above the then applicable Fixed Conversion Price. If on a Determination
Date (i) the Borrower shall not have registered the shares of the Borrower's
common stock underlying the Note and that certain warrant issued to Holder on a
registration statement declared effective by the SEC and which remains
effective, and (ii) the Market Price of the Common Stock as reported by
Bloomberg, L.P. on the principal market for the ten (10) trading days
immediately preceding a Determination Date exceeds the then applicable Fixed
Conversion Price by at least twenty-five percent (25%), the Unrestricted
Interest Rate for the succeeding calendar month shall automatically be decreased
by 25 basis points (25 b.p.) (0.25%) for each incremental twenty-five percent
(25%) increase in the Market Price of the Common Stock above the then applicable
Fixed Conversion Price. Notwithstanding the foregoing (and anything to the
contrary contained herein), in no event shall either Interest Rate be less than
zero percent (0%).
1.2 Minimum Monthly Principal Payments. Amortizing payments of the Amortizing
Principal Amount shall begin on February 1, 2005 and shall recur on the first
business day of each succeeding month thereafter until the Maturity Date (each,
an "Amortization Date"). Subject to Article 3 below, beginning on the first
Amortization Date, the Borrower shall make monthly payments to the Holder on
each Repayment Date, each in the amount of $10,000.00 (the "Monthly Principal
Amount") plus any accrued and unpaid interest to date on such portion of the
Principal Amount plus any and all other amounts which are then owing under this
Note, the Purchase Agreement or any other Related Agreement (collectively, the
"Monthly Amount"); provided that, following a release of an amount of funds from
the Restricted Account (as defined in the Restricted Account Agreement) for the
purposes set forth in the Restricted Account Side Letter (other than with
respect to a release that occurs as a result of a conversion of any Principal
Amount) (each, a "Release Amount") each Monthly Principal Amount due on any
Repayment Date following any such release shall be increased by an amount equal
to (x) such Release Amount divided by (y) the sum of (I) the number of Repayment
Dates remaining until the Maturity Date plus (II) one (1). Any Principal
Amount that remains outstanding on the Maturity Date shall be due and payable on
the Maturity Date.
ARTICLE II
CONVERSION REPAYMENT
2.1 (a) Payment of Monthly Amount in Cash or Common Stock. By the fifth (5th)
business day prior to each Amortization Date (the "Notice Date"), the Holder
shall deliver to Borrower a written notice in the form of Exhibit A attached
hereto indicating that portion of the Monthly Amount payable on that Repayment
Date to be satisfied by the payment of cash or the issuance of Common Stock upon
conversion of all or a portion of the Monthly Amount into shares of Common
Stock, or a combination of both (each, a "Repayment Notice"). If a Repayment
Notice is not delivered by the Holder on or before the applicable Notice Date
for such Repayment Date, then the Borrower shall pay the Monthly Amount due on
such Repayment Date in cash. Any portion of the Monthly Amount paid in cash on
a Repayment Date, shall be paid to the Holder an amount equal to 102% of the
Monthly Amount due and owing to Holder on the Repayment Date. If the Holder
converts all or a portion of the Monthly Amount into shares of Common Stock as
provided herein, the number of such shares to be issued by the Borrower to the
Holder on such Repayment Date shall be the number determined by dividing (x)
the dollar portion of the Monthly Amount to be paid in shares of Common Stock,
by (y) the then applicable Fixed Conversion Price. Any amounts converted by the
Holder pursuant to this Section 2.2 shall be deemed to constitute payments of
outstanding fees, interest and principal arising in connection with Monthly
Amounts. For purposes hereof, the initial "Fixed Conversion Price" means $0.24.
(b) Monthly Amount Conversion Guidelines. Subject to Sections 2.1(a), 2.2,
and 3.2 hereof, the Holder shall convert all of the Monthly Amount due on each
Repayment Date into shares of Common Stock if the average closing price of the
Common Stock as reported by Bloomberg, L.P. on the Principal Market for the ten
(10) trading days immediately preceding such Repayment Date was greater than or
equal to 115% of the then applicable Fixed Conversion Price; provided, however,
that such conversions shall not exceed twenty-five percent (25%) of the
aggregate dollar trading volume of the Common Stock for the five (5) day trading
period immediately preceding delivery of a Repayment Notice to the Borrower.
Any part of the Monthly Amount due on a Repayment Date that the Holder has not
converted into shares of Common Stock shall be paid by the Borrower in cash on
such Repayment Date. Any part of the Monthly Amount due on such Repayment Date
which must be paid in cash shall be paid in cash at the rate of 102% of the
Monthly Amount otherwise due on such Repayment Date, within three (3) business
days of the applicable Repayment Date.
2.2 No Effective Registration. Notwithstanding anything to the contrary herein,
none of the Borrower's obligations to the Holder may be converted into Common
Stock unless (i) either (x) an effective current Registration Statement (as
defined in the Registration Rights Agreement) covering the shares of Common
Stock to be issued in connection with satisfaction of such obligations exists or
(y) an exemption from registration of the Common Stock is available to pursuant
to Rule 144 of the Securities Act and (ii) no Event of Default hereunder exists
and is continuing, unless such Event of Default is cured within any applicable
cure period or is otherwise waived in writing by the Holder in whole or in part
at the Holder's option.
2.3 Optional Redemption in Cash. The Borrower will have the option of prepaying
this Note ("Optional Redemption") by paying to the Holder a sum of money equal
to one hundred thirty percent (130%) of the principal amount of this Note
together with accrued but unpaid interest thereon and any and all other sums
due, accrued or payable to the Holder arising under this Note, the Purchase
Agreement, or any Related Agreement (the "Redemption Amount"), outstanding on
the Redemption Payment Date (as defined below). The Borrower shall give the
Holder written notice of its intent to effect an Optional Redemption (a "Notice
of Redemption"), which Notice of Redemption shall specify the date for such
Optional Redemption (the "Redemption Payment Date") which date shall be seven
(7) business days after the date of the Notice of Redemption (the "Redemption
Period"). A Notice of Redemption shall not be effective with respect to any
portion of this Note for which the Holder has a pending election to convert
pursuant to Section 3.1, or for conversions initiated or made by the Holder
pursuant to Section 3.1 during the Redemption Period. The Redemption Amount
shall be determined as if such Xxxxxx's conversion elections had been completed
immediately prior to the date of the Notice of Redemption. On the Redemption
Payment Date, the Redemption Amount must be paid in good funds to the Holder.
In the event the Borrower fails to pay the Redemption Amount on the Redemption
Payment Date as set forth herein, then such Redemption Notice will be null and
void.
ARTICLE III
CONVERSION RIGHTS
3.1. Holder's Conversion Rights. The Holder shall have the right, but not the
obligation, to convert all or any portion of the then aggregate outstanding
principal amount of this Note, together with interest and fees due hereon, into
shares of Common Stock subject to the terms and conditions set forth in this
Article III. The Holder may exercise such right by delivery to the Borrower of
a written notice of conversion not less than one (1) day prior to the date upon
which such conversion shall occur.
3.2 Conversion Limitation. Notwithstanding anything contained herein to the
contrary, the Holder shall not be entitled to convert pursuant to the terms of
this Note an amount that would be convertible into that number of Conversion
Shares which would exceed the difference between the number of shares of Common
Stock beneficially owned by such Holder or issuable upon exercise of warrants
held by such Holder and 4.99% of the outstanding shares of Common Stock of the
Borrower. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and Regulation 13d-3 thereunder. The Holder may void the Conversion Share
limitation described in this Section 3.2 upon 75 days prior notice to the
Borrower or without any notice requirement upon an Event of Default.
3.3 Mechanics of Xxxxxx's Conversion. (a) In the event that the Holder elects to
convert this Note into Common Stock, the Holder shall give notice of such
election by delivering an executed and completed notice of conversion ("Notice
of Conversion") to the Borrower and such Notice of Conversion shall provide a
breakdown in reasonable detail of the Principal Amount, accrued interest and
fees being converted. On each Conversion Date (as hereinafter defined) and in
accordance with its Notice of Conversion, the Holder shall make the appropriate
reduction to the Principal Amount, accrued interest and fees as entered in its
records and shall provide written notice thereof to the Borrower within two (2)
business days after the Conversion Date. Each date on which a Notice of
Conversion is delivered or telecopied to the Borrower in accordance with the
provisions hereof shall be deemed a Conversion Date (the "Conversion Date"). A
form of Notice of Conversion to be employed by the Holder is annexed hereto as
Exhibit A.
(b) Pursuant to the terms of the Notice of Conversion, the Borrower will issue
instructions to the transfer agent accompanied by an opinion of counsel within
one (1) business day of the date of the delivery to Borrower of the Notice of
Conversion and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within three (3)
business days after receipt by the Borrower of the Notice of Conversion (the
"Delivery Date"). In the case of the exercise of the conversion rights set
forth herein the conversion privilege shall be deemed to have been exercised and
the Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Borrower of the Notice of Conversion.
The Holder shall be treated for all purposes as the record holder of such Common
Stock, unless the Holder provides the Borrower written instructions to the
contrary.
3.4 Conversion Mechanics.
(a) The number of shares of Common Stock to be issued upon each conversion of
this Note shall be determined by dividing that portion of the principal and
interest and fees to be converted, if any, by the then applicable Fixed
Conversion Price. In the event of any conversions of outstanding principal
amount under this Note in part pursuant to this Article III, such conversions
shall be deemed to constitute conversions of outstanding principal amount
applying to Monthly Amounts for the remaining Repayment Dates in chronological
order.
(b) The Fixed Conversion Price and number and kind of shares or other securities
to be issued upon conversion is subject to adjustment from time to time upon the
occurrence of certain events, as follows:
A. Stock Splits, Combinations and Dividends. If the shares of Common Stock are
subdivided or combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock in shares of Common Stock,
the Fixed Conversion Price or the Conversion Price, as the case may be, shall be
proportionately reduced in case of subdivision of shares or stock dividend or
proportionately increased in the case of combination of shares, in each such
case by the ratio which the total number of shares of Common Stock outstanding
immediately after such event bears to the total number of shares of Common Stock
outstanding immediately prior to such event.
B. During the period the conversion right exists, the Borrower will reserve
from its authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of Common Stock upon the full conversion of this Note.
The Borrower represents that upon issuance, such shares will be duly and validly
issued, fully paid and non-assessable. The Borrower agrees that its issuance of
this Note shall constitute full authority to its officers, agents, and transfer
agents who are charged with the duty of executing and issuing stock certificates
to execute and issue the necessary certificates for shares of Common Stock upon
the conversion of this Note.
C. Share Issuances. Subject to the provisions of this Section 3.4, if the
Borrower shall at any time prior to the conversion or repayment in full of the
Principal Amount issue any shares of Common Stock or securities convertible into
Common Stock to a person other than the Holder or its affiliates (except (i)
pursuant to Subsections A or B above; (ii) pursuant to options, warrants, or
other obligations to issue shares outstanding on the date hereof as disclosed to
Holder in writing; (iii) pursuant to options that may be issued under any
employee incentive stock option and/or any qualified stock option plan approved
by Borrower's Board of Directors, (iv) with respect to up to 1,000,000 shares of
Common Stock (as calculated on the date hereof and appropriately adjusted for
any subdivision, combination or similar event), so long as (x) such shares of
Common Stock do not become freely tradeable (following the filing of an S-8 or
otherwise) until such time as the initial Registration Statement referred to in
the Registration Rights Agreement has been declared effective by the SEC and (y)
no more than 200,000 of such shares of Common Stock are issued in any fiscal
quarter of the Company, and (v) with respect to up to 2,000,000 shares of Common
Stock (as calculated on the date hereof and appropriately adjusted for any
subdivision, combination or similar event) so long as such shares are restricted
and do not become freely or publicly traded in any respect prior to the two year
anniversary of the issuance thereof) for a consideration per share (the "Offer
Price") less than the Fixed Conversion Price in effect at the time of such
issuance, then the Fixed Conversion Price shall be immediately reset to such
lower Offer Price at the time of issuance of such securities. For purposes
hereof, the issuance of any security of the Borrower convertible into or
exercisable or exchangeable for Common Stock shall result in an adjustment to
the Fixed Conversion Price at the time of issuance of such securities.
D. Reclassification, etc. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of securities as would have been issuable as the result of such change with
respect to the Common Stock immediately prior to such reclassification or other
change.
3.5 Issuance of New Note. Upon any partial conversion of this Note, a new Note
containing the same date and provisions of this Note shall, at the request of
the Holder, be issued by the Borrower to the Holder for the principal balance of
this Note and interest which shall not have been converted or paid. The Borrower
will pay no costs, fees or any other consideration to the Holder for the
production and issuance of a new Note.
ARTICLE IV
EVENTS OF DEFAULT
Upon the occurrence and continuance of an Event of Default beyond any applicable
grace period, the Holder may make all sums of principal, interest and other fees
then remaining unpaid hereon and all other amounts payable hereunder immediately
due and payable. In the event of such an acceleration, within five (5) days
after written notice from Holder to Borrower (each occurrence being a "Default
Notice Period") the amount due and owing to the Holder shall be 130% of the
outstanding principal amount of the Note (plus accrued and unpaid interest and
fees, if any) (the "Default Payment"). If, with respect to any Event of Default,
the Borrower cures the Event of Default, the Event of Default will be deemed to
no longer exist and any rights and remedies of Holder pertaining to such Event
of Default will be of no further force or effect. The Default Payment shall be
applied first to any fees due and payable to Holder pursuant to the Note or the
Related Agreements, then to accrued and unpaid interest due on the Note and then
to outstanding principal balance of the Note.
The occurrence of any of the following events set forth in Sections 4.1 through
4.10, inclusive, is an "Event of Default":
4.1 Failure to Pay Principal, Interest or other Fees. The Borrower fails to pay
when due any installment of principal, interest or other fees hereon in
accordance herewith, or the Borrower fails to pay when due any amount due under
any other promissory note issued by Borrower, and in any such case, such failure
shall continue for a period of three (3) business days following the date upon
which any such payment was due.
4.2 Breach of Covenant. The Borrower breaches any covenant or other term or
condition of this Note, the Purchase Agreement or any Related Agreement in any
material respect and such breach, if subject to cure, continues for a period of
fifteen (15) days after the occurrence thereof.
4.3 Breach of Representations and Warranties. Any representation or warranty of
the Borrower made herein, in the Purchase Agreement, or in any Related Agreement
shall be false or misleading in any material respect on the date that such
representation or warranty was made or deemed made.
4.4 Receiver or Trustee. The Borrower shall make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver or
trustee for it or for a substantial part of its property or business; or such a
receiver or trustee shall otherwise be appointed.
4.5 Judgments. Any money judgment, writ or similar final process shall be
entered or filed against the Borrower or any of its property or other assets for
more than $100,000, and shall remain unvacated, unbonded or unstayed for a
period of thirty (30) days.
4.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower.
4.7 Stop Trade. An SEC stop trade order or Principal Market trading suspension
of the Common Stock shall be in effect for five (5) consecutive days or five (5)
days during a period of ten (10) consecutive days, excluding in all cases a
suspension of all trading on a Principal Market, provided that the Borrower
shall not have been able to cure such trading suspension within thirty (30) days
of the notice thereof or list the Common Stock on another Principal Market
within sixty (60) days of such notice. The "Principal Market" for the Common
Stock shall include the OTCBB, NASDAQ SmallCap Market, NASDAQ National Market
System, American Stock Exchange, or New York Stock Exchange (whichever of the
foregoing is at the time the principal trading exchange or market for the Common
Stock, or any securities exchange or other securities market on which the Common
Stock is then being listed or traded.
4.8 Failure to Deliver Common Stock or Replacement Note. The Borrower shall
fail (i) to timely deliver Common Stock to the Holder pursuant to and in the
form required by this Note, and Section 9 of the Purchase Agreement, if such
failure to timely deliver Common Stock shall not be cured within two (2)
business days or (ii) to deliver a replacement Note to Holder within seven (7)
business days following the required date of such issuance pursuant to this
Note, the Purchase Agreement or any Related Agreement (to the extent required
under such agreements).
4.9 Default Under Related Agreements or Other Agreements. The occurrence and
continuance of any Event of Default as defined in the Related Agreements or any
event of default (or similar term) under any other indebtedness.
4.10 Change in Control. The occurrence of a Change of Control. For the
purposes of this Note a "Change of Control" shall be deemed to to have occured
if (i) there occurs any consolidation, merger or other business combination of
the Borrower with or into any other corporation or other entity or person
(whether or not the Borrower is the surviving corporation), or any other
corporate reorganization or transaction or series of related transactions in
which in any of such events the voting stockholders of the Borrower prior to
such event cease to own 50% or more of the voting stock of the Borrower, or
corresponding voting equity interests, of the surviving corporation after such
event (including without limitation any "going private" transaction under Rule
13e-3 promulgated pursuant to the Exchange Act), (ii) in one or a series of
related transactions, there is a sale or transfer of all or substantially all of
the assets of the Borrower and its Subsidiaries, taken as a whole, or (iii)
there is a replacement of more than one-half of the members of the Borrower's
Board of Directors which is not approved by those individuals who are members of
the Borrower's Board of Directors on the date thereof.
DEFAULT RELATED PROVISIONS
4.11 Payment Grace Period. Following the occurrence and continuance of an
Event of Default beyond any applicable cure period hereunder, the Borrower shall
pay the Holder a default interest rate of two percent (2%) per month on all
amounts due and owing under the Note, which default interest shall be payable
upon demand.
4.12 Conversion Privileges. The conversion privileges set forth in Article III
shall remain in full force and effect immediately from the date hereof and until
this Note is paid in full.
4.13 Cumulative Remedies. The remedies under this Note shall be cumulative.
ARTICLE V
MISCELLANEOUS
5.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the
Holder hereof in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.
5.2 Notices. Any notice herein required or permitted to be given shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to
the party notified, (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day,
(c) five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Borrower at the address provided in the Purchase Agreement executed in
connection herewith, and to the Holder at the address provided in the Purchase
Agreement for such Holder, with a copy to Xxxx X. Xxxxxx, Esq., 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000,
or at such other address as the Borrower or the Holder may designate by ten days
advance written notice to the other parties hereto. A Notice of Conversion
shall be deemed given when made to the Borrower pursuant to the Purchase
Agreement.
5.3 Amendment Provision. The term "Note" and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented, and any
successor instrument issued pursuant to Section 3.5 hereof, as it may be amended
or supplemented.
5.4 Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Purchase Agreement. This Note shall not be assigned by the
Borrower without the consent of the Holder.
5.5 Governing Law. This Note shall be governed by and construed in accordance
with the laws of the State of New York, without regard to principles of
conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the state of
New York. Both parties and the individual signing this Note on behalf of the
Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or unenforceability of any other provision of this
Note. Nothing contained herein shall be deemed or operate to preclude the Holder
from bringing suit or taking other legal action against the Borrower in any
other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court in favor of the Holder.
5.6 Maximum Payments. Nothing contained herein shall be deemed to establish or
require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Borrower to the Holder and thus refunded to the Borrower.
5.7 Security Interest. The holder of this Note has been granted a security
interest in certain assets of the Borrower more fully described in a Security
Agreement dated as of the date hereof.
5.8 Construction. Each party acknowledges that its legal counsel participated
in the preparation of this Note and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Note to favor any party
against the other.
5.9 Cost of Collection. If default is made in the payment of this Note, the
Borrower shall pay to Holder reasonable costs of collection, including
reasonable attorney's fees.
[Balance of page intentionally left blank; signature page follows.]
IN WITNESS WHEREOF, the Borrower has caused this Convertible Term Note to be
signed in its name effective as of this 9th day of July, 2004.
RPM TECHNOLOGIES, INC.
By:________________________________
Name:______________________________
Title:_______________________________
WITNESS:
_______________________________
EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert all or part of the Note into
Common Stock
[Name and Address of Holder]
The Undersigned hereby converts $_________ of the principal due on [specify
applicable Repayment Date] under the Convertible Term Note issued by RPM
Technologies, Inc. dated July 8, 2004 by delivery of Shares of Common Stock of
RPM Technologies, Inc. on and subject to the conditions set forth in Article III
of such Note.
1. Date of Conversion _______________________
2. Shares To Be Delivered: _______________________
By:_______________________________
Name:_____________________________
Title:______________________________
EXHIBIT B
CONVERSION NOTICE
(To be executed by the Holder in order to convert all or part of a Monthly
Amount into Common Stock)
[Name and Address of Holder]
Holder hereby converts $_________ of the Monthly Amount due on [specify
applicable Repayment Date] under the Convertible Term Note issued by RPM
Technologies, Inc. dated July 8, 2004 by delivery of Shares of Common Stock of
RPM Technologies, Inc. on and subject to the conditions set forth in Article III
of such Note.
1. Fixed Conversion Price: $_______________________
2. Amount to be paid: $_______________________
3. Shares To Be Delivered (2 divided by 1): __________________
4. Cash payment to be made by Borrower : $_____________________
Date: ____________ LAURUS MASTER FUND, LTD.
By:_______________________________
Name:_____________________________
Title:____________________________
