EXHIBIT 4.14.2
THIS NOTE (THE "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 EPIXTAR CORP. THAT SUCH REGISTRATION IS NOT
REQUIRED.
SECURED CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, EPIXTAR CORP., a Florida corporation (the
"Borrower"), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o M&C
Corporate Services Limited, P.O. Box 309 GT, Xxxxxx House, South Church Street,
Xxxxxx Town, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the "Holder") or
its registered assigns or successors in interest the sum of Six Million Two
Hundred Thousand Dollars ($6,200,000) (the "Maximum Amount") or, if less, the
aggregate outstanding amount of funds advanced to the Borrower hereunder, in
each case, together with any accrued and unpaid interest hereon, on July 22,
2005 (the "Initial Maturity Date"), subject to extension pursuant to Section
6.10 hereof (the Initial Maturity Date as extended hereunder, 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:
ADVANCES & INTEREST
1
Advances. On the Closing Date, Holder shall make an advance to the Borrower in
the amount of Six Hundred Thousand Dollars ($600,000). The Borrower may request
and the Holder may, in its discretion, make additional advances to the Borrower
up to the Maximum Amount. Each request for an additional advance (an "Advance
Request") shall (a) be made by the Borrower to the Holder in writing, (b)
specify to whom and where the Holder shall disburse such funds and (c) specify
the amount of such requested advance. If the Holder elects to make an additional
advance to the Borrower, the Holder, in its sole discretion, may either (a)
disburse the funds in accordance with the Advance Request or (b) deposit the
funds in the Borrower's operating account in which case the Borrower shall
deliver to the Holder, within one (1) business day following the deposit of such
funds, evidence that the funds were disbursed in accordance with the terms of
the Advance Request.
Interest Rate. Subject to Section 6.6 hereof, interest payable on this shall
accrue at a rate per annum (the "Interest Rate") equal to ten percent (10%).
Interest shall be calculated on the basis of a 360 day year and payable monthly,
in arrears, commencing on August 1, 2005 and on the first business day of each
consecutive calendar month thereafter through and including the Maturity Date,
and on the Maturity Date, whether by acceleration or otherwise.
Maturity Date. The principal amount due under this Note (the "Principal
Amount"), all unpaid interest thereon and all other sums due, accrued or payable
to the Holder arising under this Note, the Purchase Agreement or any Related
Agreement shall be due and payable on the Maturity Date (subject to extension
pursuant to Section 6.10 hereof).
PREREPAYMENT
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 percent (100%) of the outstanding principal amount of this Note at the
time of prepayment, 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 day written notice of redemption (the "Notice of Redemption")
is given to the Holder. The 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.
Mandatory Prepayment. In the event the Borrower and/or any of its Subsidiaries
commences any offering of its Common Stock or other equity securities and/or
enters into any financing arrangements with a bank, a financial institution
and/or any other party (other than the Holder), in each case, intended, in whole
or in part, to raise capital for the benefit of the Borrower and/or any of its
Subsidiaries, the proceeds of such offering and/or financing arrangement when
received shall be remitted to the Holder to prepay the outstanding principal
amount of this Note, all unpaid interest hereon and all other sums due, accrued
or payable to the Holder arising under the transactions contemplated by this
Note, up to an aggregate amount of $2,000,000.
CONVERSION RIGHTS
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 of the Borrower 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.
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.
Notwithstanding the foregoing, neither this provision nor any similar provision
contained in any other note issued to Holder by the Company or in any warrant
issued by the Company to Holder or any agreement between the parties hereto
("Similar Provisions") shall have any effect on any irrevocable proxy granted to
Holder or any voting rights contained in any instrument governing any shares of
preferred stock granted to Holder, in each case in connection with the
transactions contemplated hereby. Moreover, such proxies or voting provision
shall not constitute a waiver of the first two sentences of this Section 3.2 or
of any Similar Provision, all of such provisions remaining fully enforceable.
Mechanics of Xxxxxx's Conversion. (12) 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.
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
two (2) 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.
Conversion Mechanics.
The number of shares of Common Stock of the Borrower 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, which for purposes hereof shall initially be $1.00.
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:
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.
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.
3
Share Issuances. Subject to the provisions of this Section 3.4, if the
Borrower shall (x) in the case of its Common Stock, 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 its Common Stock to a
person other than the Holder (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; or
(iii) pursuant to options that may be issued under any employee incentive
stock option and/or any qualified stock option plan adopted by the
Borrower) for a consideration per share (the "Offer Price") less than the
Fixed Conversion Price in effect at the time of such issuance (any such
issuance, an "Offering"), then the Fixed Conversion Price shall be
immediately reset to such lower Offer Price at the time of issuance of such
securities pursuant to the formula below. 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.
If the Borrower issues any additional shares pursuant to Section 3.4
above then, and thereafter successively upon each such issue, the Fixed
Conversion Price shall be adjusted by multiplying the then applicable Fixed
Conversion Price by the following fraction:
A + B
----------------------------------------
(A + B) + [((C - D) x B) / C]
A = Total amount of shares convertible pursuant to this Note, the
Purchase Agreement and the Related Agreements.
B = Actual shares sold in the Offering
C = Fixed Conversion Price
D = Offering price
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.
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.
EVENTS OF DEFAULT
(13) 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, the amount
due and owing to the Holder shall be 110% 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 this Note, the Purchase Agreement or the
other Related Agreements, then to accrued and unpaid interest due on this Note
and then to outstanding principal balance of this Note.
4
The occurrence of any of the following events set forth in Sections 4.1
through 4.12, inclusive, is an "Event of Default":
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.
Breach of Covenant. The Borrower breaches any covenant or any other term or
condition of this Note or the Purchase Agreement in any material respect, or the
Borrower or any of its Subsidiaries breaches any covenant or any other term or
condition of any Related Agreement in any respect.
Breach of Representations and Warranties. Any representation or warranty made by
the Borrower in this Note or the Purchase Agreement, or by the Borrower or any
of its Subsidiaries in any Related Agreement, shall, in any such case, be false
or misleading in any material respect on the date that such representation or
warranty was made or deemed made.
Receiver or Trustee. The Borrower or any of its Subsidiaries 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.
Judgments. Any money judgment, writ or similar final process shall be entered or
filed against the Borrower or any of its Subsidiaries or any of their respective
property or other assets for more than $150,000.
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 or any of its
Subsidiaries.
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. The "Principal Market" for the
Common Stock shall include the NASD OTC Bulletin Board, 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.
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).
Default Under Related Agreements or Other Agreements. The occurrence and
continuance of any Event of Default (as defined in any Related Agreement) or any
default or event of default (or similar term) under any other indebtedness.
Change in Control. A Change of Control (as defined below) shall occur with
respect to the Company, unless the Holder shall have expressly consented to such
Change of Control in writing. A "Change of Control" shall mean any event or
circumstance as a result of which (i) any "Person" or "group" (as such terms are
defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on the
date hereof), other than the Holder, is or becomes the "beneficial owner" (as
defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of 35% or more on a fully diluted basis of the then outstanding
voting equity interest of the Borrower, (ii) the Board of Directors of the
Borrower (without taking into account any directors on such Board appointed by
the Holder) shall cease to consist of a majority of the Board of Directors of
the Borrower on the date hereof (or directors appointed by a majority of the
Board of Directors of the Borrower in effect immediately prior to such
appointment), (iii) the Borrower sells all or any part of the equity interests
of any Subsidiary (or any securities convertible or exercisable into equity
interests of any Subsidiary), or agrees to issue any equity interests of any
Subsidiary (or any securities convertible or exercisable into equity interests
of any Subsidiary) or permits the sale of all or substantially all of the assets
of any Subsidiary (other than (A) issuances to the Laurus Creditors (as defined
in the Intercreditor Agreement) that are contemplated by the Laurus Documents
(as defined in the Intercreditor Agreement) or (B) issuances to the Sands
Creditors (as defined in the Intercreditor Agreement) that are contemplated by
the Sands Documents (as defined in the Intercreditor Agreement)), or (iii) the
Borrower or any of its Subsidiaries merges or consolidates with, or sells or
transfers all or substantially all of its assets to, any other person or entity.
5
Federal Trade Commission Action. The Federal Trade Commission or any other
governmental agency shall commence any action against the Borrower or any or its
Subsidiaries, the effect of any such action, or any judgment, order or
settlement resulting therefrom, on the Borrower or any such Subsidiary is to
restrain or deprive the Borrower and its Subsidiaries from utilizing any
substantial portion of their assets determined on a consolidated basis.
Laurus Notes, Laurus Purchase Agreements, Laurus Related Agreements and Sands
Agreements. An Event of Default under and as defined in any of (i) that certain
Secured Convertible Term Note, dated May 14, 2004, issued by the Borrower to the
Holder (as amended, modified or supplemented from time to time, the "May 2004
Note"), (ii) the Purchase Agreement referred to in the May 2004 Note (as
amended, modified or supplemented from time to time, the "May 2004 Purchase
Agreement"), (iii) the Related Agreements referred to in the May 2004 Purchase
Agreement, (iv) that certain Secured Convertible Term Note, dated April 29,
2005, issued by the Borrower and Voxx Corporation ("Voxx") to the Holder (as
amended, modified or supplemented from time to time, the "April 2005 Note"
together with the May 2004 Note and this Note, collectively, the "Laurus
Notes"), (iv) the Purchase Agreement referred to in the April 2005 Note (as
amended, modified or supplemented from time to time, the "April 2005 Purchase
Agreement" together with the May 2004 Purchase Agreement and the Purchase
Agreement, collectively, the "Laurus Purchase Agreements"), (v) the Related
Agreements referred to in the April 2005 Purchase Agreement (the April 2005
Related Agreements together with the May 2004 Related Agreements and the Related
Agreements, collectively, the "Laurus Related Agreements"), (vi) the Sands
Securities Purchase Agreement or (vii) the Related Agreements referred to in the
Sands Securities Purchase Agreement shall have occurred and be continuing.
Fraud Event. The occurrence of a Fraud Event or the Holder's reasonable belief
that a Fraud Event has occurred. For purposes of this Section 4.13, the term
"Fraud Event" shall mean the occurrence of any of the following events: (i) the
Borrower or any of its Subsidiaries have misappropriated (or any Subsidiary or
the Borrower has caused the other to misappropriate) any proceeds of any
Collateral (as defined in the Laurus Related Agreements) or the proceeds of any
advances made by the Holder to the Borrower under the Laurus Notes in each case
in excess of $10,000, (ii) the Borrower or any Subsidiary has embezzled funds
from the other, (iii) any Subsidiary and/or the Borrower has converted (or the
Borrower or any Subsidiary has caused the other to convert) any material real or
personal property of the Borrower or any Subsidiary, including but not limited
to any Collateral, in each case in excess of $10,000 or (iv) any Subsidiary
and/or the Borrower have committed (or the Borrower or any Subsidiary has caused
the other to commit) fraud against the Holder, including any material and
willful misrepresentation made (or caused to be made) by any Subsidiary and/or
by the Borrower with respect to any of the representations and warranties
contained in the Laurus Purchase Agreements or the accuracy of any information
provided to the Holder concerning the Collateral, or in any other document
delivered to the Holder in connection with the making of any advance under the
Laurus Notes, the extension of any credit, the forbearance from taking action or
in connection with any other transaction contemplated thereby.
DEFAULT RELATED PROVISIONS
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.
Cumulative Remedies. The remedies under this Note shall be cumulative.
6
MISCELLANEOUS
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.
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.
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.
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.
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. Except as set forth below in this Section 6.5, any and all disputes,
controversies and claims that the Borrower or any of its Subsidiaries may assert
against the Holder arising out of or relating to this Note, the Purchase
Agreement or any other Related Agreement shall be determined exclusively by
arbitration (each such arbitration, an "Arbitration") in New York City before a
panel of three neutral arbitrators agreed to by the Holder and the Borrower
(collectively, the "Arbitrators") in accordance with and pursuant to the then
existing commercial arbitration rules of the American Arbitration Association.
The Borrower (on its behalf and on behalf of its subsidiaries) hereby
irrevocably waives any right to assert such claims in any other forum. The
Arbitrators shall have the power in their discretion to award specific
performance or injunctive relief (but shall not have the power to render any
incidental, special or punitive damages) and reasonable attorneys' fees and
expenses to any party in any arbitration. The Arbitrators may not change, modify
or alter any express condition, term or provision of this Note, the Purchase
Agreement or of any other Related Agreement nor shall they have the power to
render any award against the Holder that would have such effect. Each
Arbitration award shall be final and binding upon the parties subject thereto
and judgment may be entered thereon in any court of competent jurisdiction. The
service of any notice, process, motion or other document in connection with an
Arbitration or for the enforcement of any Arbitration award may be made in the
same manner as communications may be given under Section 6.2 hereof.
Notwithstanding the foregoing, the provisions of this Section 6.5 nor any other
provision contained in this Note, the Purchase Agreement or in any other Related
Agreement shall limit in any manner whatsoever the Holder's right to commence an
action against or in connection with the Borrower, any of its Subsidiaries or
their respective properties in any court of competent jurisdiction or otherwise
utilize judicial process in connection with or arising out of the Holder's
rights and remedies under this Note, the Purchase Agreement and/or any Related
Agreement or otherwise (any such action, a "Court Action"). Court Actions may be
brought by the Holder in any state or federal court of competent jurisdiction
and the Borrower (on its behalf and on behalf of its Subsidiaries) irrevocably
submits to the jurisdiction of such state and federal courts and irrevocably
waives any claim or defense of inconvenient forum or lack of personal
jurisdiction in such forum or right of removal or right to jury trial under any
applicable law or decision or otherwise. Service of any notice, process, motion
or other document in connection with a Court Action may be made in the same
manner as communications may be given under Section 6.2. In addition, the Holder
may serve process in any other manner permitted under applicable law. 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.
7
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.
Security Interest and Guarantee. Pursuant to the terms of the Laurus Related
Agreements and the Reaffirmation Agreement, the Holder has been granted a
security interest in the assets of the Borrower and its Subsidiaries and the
obligations of the Borrower under this Note are guaranteed by certain
Subsidiaries of the Borrower.
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.
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.
Extension of Maturity Date.
On the Initial Maturity Date, the Maturity Date shall be extended to October 15,
2005 (the "Extended Maturity Date") upon the determination by the Holder, in its
sole discretion, that the following conditions have been satisfied: (i) no Event
of Default has occurred and is continuing and (ii) each item set forth on
Schedule A to the Post-Closing Letter dated as of the date hereof by and between
the Holder and the Borrower is satisfied within the time periods and under the
conditions set forth thereon, all in a manner (and when applicable, amended by
agreements, instruments and documents) satisfactory in form and substance to the
Holder.
On the Extended Maturity Date, the Maturity Date shall be extended to November
15, 2005 upon the determination by the Holder, in its sole discretion, that the
following conditions have been satisfied: (i) no Event of Default has occurred
and is continuing and (ii) the Holder has received not less than $2,000,000 of
proceeds during the period from the date hereof through and including November
15, 2005 from the offering of the Borrower's and/or any of its Subsidiaries'
common stock or other equity securities or from the Borrower's and/or its
Subsidiaries' financing arrangement with a bank, financial institution or any
other party to repay amounts outstanding under this Note and all other sums due,
accrued or payable to the Holder arising under the transactions contemplated by
this Note.
[Balance of page intentionally left blank; signature page follows.]
8
IN WITNESS WHEREOF, the Borrower has caused this Secured Convertible
Term Note to be signed in its name effective as of this 15th day of July, 2005.
EPIXTAR CORP.
By:
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Name:
-----------------------------------------
Title:
----------------------------------------
WITNESS:
-------------------------------
AGREED AND ACKNOWLEDGED:
LAURUS MASTER FUND, LTD.
By:
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Name:
--------------------------------------------
Title:
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9
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 Secured Convertible Term Note issued by
Epixtar Corp. dated as of July 15, 2005 by delivery of Shares of Common Stock of
Epixtar Corp. 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:_____________________________
10
