EXHIBIT 10.2
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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 LOCATEPLUS HOLDINGS CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
SECURED CONVERTIBLE TERM NOTE
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FOR VALUE RECEIVED, LOCATEPLUS HOLDINGS CORPORATION, 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 (the "HOLDER") or
its registered assigns or successors in interest, on order, the sum of Three
Million Dollars ($3,000,000), together with any accrued and unpaid interest
hereon, on June 17, 2007 (the "MATURITY DATE") if not sooner paid.
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 4.11 and 5.6 hereof, interest
payable on this Note shall accrue at a rate per annum (the "Interest Rate")
equal to the "prime rate" published in The Wall Street Journal from time to
time, plus two percent (2%). The prime 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 such rate. Subject to Section 1.1(b)
hereof, the Interest Rate shall not be less than six percent (6%). Interest
shall be (i) calculated on the basis of a 360 day year, and (ii) payable
monthly, in arrears, commencing on July 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. The Interest Rate shall be calculated on
the last business day of each month hereafter until the Maturity Date (each a
"Determination Date") and shall be subject to adjustment as set forth herein. If
(i) the Borrower shall have registered the shares of the Borrower's Class A
Common Stock underlying each of the conversion of the Note and that certain
warrant issued to Holder on a registration statement declared effective by the
Securities and Exchange
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Commission (the "SEC"), and (ii) the market price (the "Market Price") of the
Class A Common Stock as reported by Bloomberg, L.P. on the Principal Market (as
defined below) for the five (5) trading days immediately preceding a
Determination Date exceeds the then applicable Fixed Conversion Price by at
least twenty five percent (25%), the 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
Class A Common Stock above the then applicable Fixed Conversion Price. If (i)
the Borrower shall not have registered the shares of the Borrower's Class A
Common Stock underlying the conversion of 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 Class A Common Stock
as reported by Bloomberg, L.P. on the principal market for the five (5) trading
days immediately preceding a Determination Date exceeds the then applicable
Fixed Conversion Price by at least twenty five percent (25%), the Interest Rate
for the succeeding calendar month shall automatically be decreased by 100 basis
points (100 b.p.) (1.0.%) for each incremental twenty five percent (25%)
increase in the Market Price of the Class A Common Stock above the then
applicable Fixed Conversion Price. Notwithstanding the foregoing (and anything
to the contrary contained in herein), in no event shall the Interest Rate be
less than zero percent (0%).
1.2 Minimum Monthly Principal Payments. Amortizing payments of the
aggregate principal amount outstanding under this Note at any time (the
"PRINCIPAL AMOUNT") shall begin on October 1, 2004 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 $90,909.09, together with 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 but have not been paid (collectively, the
"MONTHLY AMOUNT"). 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 Class A Common Stock. Each
month 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 B attached hereto converting the Monthly Amount payable on the
next Repayment Date in either cash or Class A 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 101% of the principal portion 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 in shares of Class A Common Stock as provided
herein, the number of such shares to be issued by the Borrower to the Holder on
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such Repayment Date shall be the number determined by dividing (x) the portion
of the Monthly Amount to be paid in shares of Class A Common Stock, by (y) the
then applicable Fixed Conversion Price. For purposes hereof, the initial "FIXED
CONVERSION PRICE" means $0.40.
(b) Monthly Amount Conversion Guidelines. Subject to Sections 2.1(a),
2.2, and 3.2 hereof, the Holder shall convert all or a portion of the Monthly
Amount due on each Repayment Date into shares of Class A Common Stock if the
average closing price of the Class A Common Stock as reported by Bloomberg, L.P.
on the Principal Market for the five (5) trading days immediately preceding such
Repayment Date was greater than or equal to 110% of the Fixed Conversion Price,
provided, however, that such conversions shall not exceed twenty five percent
(25%) of the aggregate dollar trading volume of the Class A Common Stock for the
five (5) day trading period immediately preceding delivery of a Notice of
Conversion to the Borrower. Any part of the Monthly Amount due on a Repayment
Date that the Holder has not converted into shares of Class A 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 (as a result of the
closing price of the Class A Common Stock on one or more of the five (5) trading
days preceding the applicable Repayment Date being less than 110% of the Fixed
Conversion Price) shall be paid in cash at the rate of 101% 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
Class A Common Stock unless (i) either (x) an effective current Registration
Statement (as defined in the Registration Rights Agreement) covering the shares
of Class A Common Stock to be issued in connection with satisfaction of such
obligations exists or (y) an exemption from registration of the Class A 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.
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 the remaining Repayment Dates, in
chronological order.
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 twenty-five percent (125%) of the then outstanding
principal balance 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 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
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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 Class A 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 Class A
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 Class A
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.
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3.3 Mechanics of Xxxxxx's Conversion. (a) In the event that the Holder
elects to convert this Note into Class A 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 either physically
by overnight courier, or 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 Class A Common
Stock, unless the Holder provides the Borrower written instructions to the
contrary.
3.4 Conversion Mechanics.
(a) The number of shares of Class A 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. In the event that the
Company shall (a) issue additional shares of the Class A Common Stock as a
dividend or other distribution on outstanding Class A Common Stock, (b)
subdivide its outstanding shares of Class A Common Stock,
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or (c) combine (x) its outstanding shares of the Class A Common Stock into a
smaller number of shares of the Class A Common Stock or (y) its outstanding
shares of the Class A Common Stock with another class of equity interests of the
Company, then, in each such event, the Fixed Conversion Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
then Fixed Conversion Price by a fraction, the numerator of which shall be the
sum of the number of shares of Class A Common Stock and Other Securities (as
defined below) outstanding immediately prior to such event and the denominator
of which shall be the sum of the number of shares of Class A Common Stock and
Other Securities outstanding immediately after such event, and the product so
obtained shall thereafter be the Fixed Conversion Price then in effect. The
Fixed Conversion Price, as so adjusted, shall be readjusted in the same manner
upon the happening of any successive event or events described herein in this
Section A. Notwithstanding the foregoing contained in this Section A, in the
event that the Class A Common Stock is combined with the existing Class B Common
Stock of the Company (such combination, the "Common Stock Combination"; the
common stock of the Company that results from the Common Stock Combination, the
"Combined Common Stock"), the Fixed Conversion Price shall not be adjusted in
any manner, so long as the ratio of (A) the sum of (i) the aggregate amount of
shares of Class A Common Stock immediately prior to the Common Stock Combination
plus (ii) the aggregate amount of shares of Class B Common Stock of the Company
immediately prior to the Common Stock Combination to (B) the aggregate amount of
shares of Combined Common Stock immediately after the Common Stock Combination,
is equal to a ratio of 1:1. For the purposes of this Note, the term "OTHER
SECURITIES" shall mean any stock or other securities of the Company or any other
person (corporate or otherwise) which the holder of this Note at any time shall
be entitled to receive, or shall have received, on the conversion of this Note
(or adjustment of this Note pursuant to Section 3.4 hereof), in lieu of or in
addition to Class A Common Stock, or which at any time shall be issuable or
shall have been issued in connection with any exchange or replacement or
combination of Class A Common Stock or Other Securities contemplated by Section
3.4 or otherwise.
B. During the period the conversion right exists, the Borrower will
reserve from its authorized and unissued Class A Common Stock and Other
Securities a sufficient number of shares to provide for the issuance of Class A
Common Stock and/or Other Securities, as the case may be, 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 Class A Common Stock and Other Securities 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 Class A Common Stock or securities
convertible into Class A Common Stock to a person other than the Holder (except
(i) pursuant to Subsection A 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 or any qualified
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employee stock option plan or qualified employee stock purchase 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, 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
Class A 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, combination or otherwise, change the Class A 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 Class A Common Stock immediately prior to such
reclassification, combination 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 125% 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, and such failure shall continue for a period of five (5)
days following the date upon which any such payment was due.
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4.2 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 material respect and,
any such case, 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 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.
4.4 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.
4.5 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 $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 or any
of its Subsidiaries.
4.7 Stop Trade. An SEC stop trade order or Principal Market trading
suspension of the Class A 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 Class A
Common Stock on another Principal Market within sixty (60) days of such notice.
The "Principal Market" for the Class A 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 Class A Common Stock), or
any securities exchange or other securities market on which the Class A Common
Stock is then being listed or traded.
4.8 Failure to Deliver Class A Common Stock or Replacement Note. The
Borrower shall fail (i) to timely deliver Class A 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 Class A Common Stock shall not be
cured within two (2) business days or (ii) to deliver a replacement Note
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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 any Related Agreement) or
any event of default (or similar term) under any other indebtedness.
4.10 Change in Control. The occurrence of a change in the controlling
ownership of the Borrower (it being understood that a combination of the
Company's Class A Common Stock and Class B Common Stock into one class of common
stock shall not be considered a "change of controlling ownership of the
Borrower" for purposes of this Section 4.10 so long as any such combination is
consummated in accordance with Section 11.14 of the Purchase Agreement).
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,
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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 prior written consent of the Holder. So long as no Event of
Default has occurred and is continuing (and has not been cured following any
applicable grace period), this Note shall not be assigned by the Holder (i)
other than to affiliates of the Holder and (ii) without the prior written
consent of the Borrower (such consent not to be unreasonably withheld).
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 and Guarantee. The Holder has been granted a security
interest (i) in certain assets of the Borrower and its Subsidiaries as more
fully described in the Master Security Agreement dated as of the date hereof and
(ii) pursuant to the Stock Pledge Agreement dated as of
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the date hereof. The obligations of the Borrower under this Note are guaranteed
by certain Subsidiaries of the Borrower pursuant to the Subsidiary Guaranty
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.]
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IN WITNESS WHEREOF, the Borrower has caused this Convertible Term Note to
be signed in its name effective as of this 17th day of June, 2004.
LOCATEPLUS HOLDINGS CORPORATION
By: /s/ Xxx X. Xxxxxxxxx
--------------------
Name: Xxx X. Xxxxxxxxx
------------------
Title: President
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WITNESS:
/s/ Xxxxx X. Xxxxxx
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EXHIBIT A
NOTICE OF CONVERSION
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(To be executed by the Holder in order to convert all or part of the Note into
Class A 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 LocatePlus
Holding Corporation dated June 17, 2004 by delivery of Shares of Class A Common
Stock of LocatePLUS Holdings Corporation 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:________________________
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EXHIBIT B
CONVERSION NOTICE
-----------------
(To be executed by the Holder in order to convert all or part of a Monthly
Amount into Class A 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 LocatePLUS
Holdings Corporation dated June 17, 2004 by delivery of Shares of Class A Common
Stock of LocatePLUS Holdings Corporation 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:_____________________
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