Contract
Exhibit
10.7
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
SILICON MOUNTAIN HOLDINGS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
AMENDED
AND RESTATED SECURED CONVERTIBLE TERM NOTE
FOR
VALUE RECEIVED, each of SILICON MOUNTAIN HOLDINGS, INC., a Colorado
corporation (the “Parent”), SILICON MOUNTAIN MEMORY, INCORPORATED, a Colorado corporation (“SMM”), and the other companies listed on Exhibit A attached hereto (such other companies
together with the Parent and SMM, each a “Company” and collectively, the “Companies”), hereby jointly and
severally 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, sum of Two Million
Five Hundred Thousand Dollars ($2,500,000), together with any accrued and unpaid interest hereon,
on September 25, 2009 (the “Maturity Date”) if not indefeasibly sooner paid in full.
Capitalized terms used herein without definition shall have the meanings ascribed to such
terms in that certain Security and Purchase Agreement dated as of the date hereof by and among the
Companies and the Holder (as amended, modified and/or supplemented from time to time, the “Security
Agreement”).
The following terms shall apply to this Secured Convertible Term Note (this “Note”):
ARTICLE I
CONTRACT RATE AND AMORTIZATION
1.1 Contract Rate. Subject to Sections 4.2 and 5.10, interest payable on the
outstanding principal amount of this Note (the “Principal Amount”) shall accrue at a rate per annum
equal to the “prime rate” published in The Wall Street Journal from time to time (the
“Prime Rate”), plus three percent (3%) (the “Contract Rate”). The Contract 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. The Contract Rate shall not at any time be less than nine percent (9%).
Interest shall be (i) calculated on the basis of a 360 day year, and (ii) payable monthly, in
arrears and in cash, commencing on October 2, 2006, 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.
Amended and Restated Secured Convertible Term Note
1.2 Contract Rate Payments. The Contract Rate shall be calculated on the last
business day of each calendar month hereafter (other than for increases or decreases in the Prime
Rate which shall be calculated and become effective in accordance with the terms of Section 1.1)
until the Maturity Date and shall be subject to adjustment as set forth herein.
1.3 Principal Payments. Amortizing payments of the aggregate principal amount
outstanding under this Note at any time (the “Principal Amount”) shall be made in cash, jointly and
severally, by the Companies on October 1, 2007 and on the first business day of each succeeding
month thereafter through and including the date immediately preceding the Maturity Date (each, an
“Amortization Date”). Commencing on the first
Amortization Date, the Companies shall make monthly
payments to the Holder on each Amortization Date, each such payment in the amount of Fifty Thousand
Dollars ($50,000) together with any accrued and unpaid interest on such portion of the Principal
Amount plus any and all other unpaid amounts which are then owing under this Note, the Security
Agreement and/or any other Ancillary Agreement (collectively, the “Monthly Amount”). Any
outstanding Principal Amount together with any accrued and unpaid interest and any and all other
unpaid amounts which are then owing by the Companies to the Holder under this Note, the Security
Agreement and/or any other Ancillary Agreement shall be due and payable on the Maturity Date.
ARTICLE II
FORCED CONVERSION AND REDEMPTION
FORCED CONVERSION AND REDEMPTION
2.1 Forced Conversion. On or after the Public Transaction Closing Date, in
the event that (i) the Common Stock is listed or quoted on a Principal Market, (ii) no Event of
Default has occurred and is continuing and (iii) the VWAP of the Common Stock on the Principal
Market is equal to or greater than one hundred seventy five percent (175%) of the Fixed Conversion
Price (as defined below) for a period of at least twenty (20) out of the immediately preceding
thirty (30) trading days, then the Parent may, at its sole option, so long as no Event of Default
(as defined below) has occurred and is continuing, provide the Holder written notice (a “Forced
Conversion Notice”) requiring the conversion (the “Forced Conversion”) at the Fixed Conversion
Price of all or a portion of the outstanding principal of this Note (subject to compliance with
Sections 2.2 and 3.2 of this Note and the other terms and conditions of this Note), together with
accrued interest on the amount being prepaid, as of the date set forth in such Forced Conversion
Notice (the “Forced Conversion Date”). The Forced Conversion Date shall be the date immediately
succeeding the date of the Forced Conversion Notice. No later than three (3) Business Days
following the Forced Conversion Date, the Parent shall deliver to the Holder the shares of Common
Stock issued in satisfaction of the principal amount of this Note being converted as set forth in
the Forced Conversion Notice. Notwithstanding the foregoing, the Parent’s right to provide a
Forced Conversion Notice in accordance with the terms and conditions of this Section 2.1 shall be
subject to the limitation that the number of shares of Common Stock issued in connection with any
Forced Conversion Notice shall not exceed twenty percent (20%) of the aggregate dollar trading
volume of the Common Stock for the thirty (30) trading days immediately preceding the Forced
Conversion Date (as such volume is reported by
Amended and Restated Secured Convertible Term Note
2
Bloomberg L.P.). The Parent shall not be permitted to give the Holder more than one Forced
Conversion Notice under this Note during any thirty (30) trading day period. Any principal amount
of this Note which is prepaid pursuant to this Section 2.1 shall be deemed to constitute payments
of outstanding principal applying to Monthly Amounts for the remaining Amortization Dates in
chronological order. For the purpose of this Note, “VWAP” means, for any trading day, the
daily volume weighted average sale price of the Common Stock for such date (or, if there is no
trading on that day,the nearest preceding date) on the Principal Market on which the Common Stock
is then listed or quoted for trading as reported by Bloomberg L.P.
2.2 No Effective Registration. Notwithstanding anything to the contrary
herein, the Parent shall not be permitted to pay any part of its obligations or the obligations of
any other Company to the Holder hereunder in shares of Common Stock if (i) there fails to exist an
effective current Registration Statement (as defined in the Registration Rights Agreement) covering
the resale of the shares of Common Stock to be issued in connection with such payment or there
fails to exist an exemption from registration for resale available pursuant to Rule 144 of the
Securities Act and in respect of the Common Stock to be issued in connection with such payment or
(ii) an Event of Default (as hereinafter defined) exists and is continuing, unless such Event of
Default is cured within any applicable cure period or otherwise waived in writing by the Holder.
2.3 Optional Redemption in Cash. The Companies may prepay this Note
(“Optional Redemption”) by paying to the Holder a sum of money equal to one hundred fifteen percent
(115%) of the Principal Amount outstanding at such time 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 Security Agreement or any other Ancillary Agreement (the “Redemption Amount”) outstanding on
the Redemption Payment Date (as defined below). The Companies shall deliver to the Holder a
written notice of redemption (the “Notice of Redemption”) specifying the date for such Optional
Redemption (the “Redemption Payment Date”), which date shall be ten (10) 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 Parent has provided a Forced
Conversion Notice in accordance with Section 2.1 or the Holder has previously delivered a Notice of
Conversion (as hereinafter defined) or for conversions elected to be made by the Holder pursuant to
Section 3.3 during the Redemption Period. The Redemption Amount shall be determined as if the
Holder’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 Companies fail 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
HOLDER’S CONVERSION RIGHTS
HOLDER’S CONVERSION RIGHTS
3.1 Optional Conversion. Subject to the terms set forth in this Article III,
the Holder shall have the right, but not the obligation, to convert all or any portion of the
issued and outstanding Principal Amount and/or accrued interest and fees due and payable into fully
paid
Amended
and Restated Secured Convertible Term Note
3
and nonassessable shares of Common Stock at the Fixed Conversion Price. The shares of Common
Stock to be issued upon such conversion are herein referred to as, the “Conversion Shares.” For
purposes of this Note, subject to Section 3.6 hereof, the initial “Fixed Conversion Price” means
$3.69.
3.2 Conversion Limitation. Notwithstanding anything herein to the contrary, in
no event shall the Holder be entitled to convert, or be forced to convert pursuant to a Forced
Conversion, any portion of this Note in excess of that portion of this Note upon exercise of which
the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its
Affiliates (other than shares of Common Stock which may be deemed beneficially owned through the
ownership of the unconverted portion of this Note or the unexercised or unconverted portion of any
other security of the Holder subject to a limitation on conversion analogous to the limitations
contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the
portion of this Note with respect to which the determination of this proviso is being made, would
result in beneficial ownership by the Holder and its Affiliates of
any amount greater than 9.99% of
the then outstanding shares of Common Stock (whether or not, at the time of such conversion, the
Holder and its Affiliates beneficially own more than 9.99% of the then outstanding shares of Common
Stock). As used herein, the term “Affiliate” means any person or entity that, directly or
indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a person or entity, as such terms are used in and construed under Rule 144 under the
Securities Act. For purposes of the proviso to the second preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of
such proviso. The limitations set forth herein (x) may be waived by the Holder upon provision of
no less than sixty-one (61) days prior notice to the Company and (y) shall automatically become
null and void (i) following notice to the Company upon the occurrence and during the continuance of
an Event of Default (as defined in the Security and Purchase Agreement dated as of the date hereof
among the Holder, the Company and various subsidiaries of the Company (as amended, modified,
restated and/or supplemented from time to time, the “Security Agreement”)), or (ii) upon receipt by
the Holder of a Notice of Redemption.
3.3 Mechanics of Xxxxxx’s Conversion. 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 in substantially the form of Exhibit B hereto
(appropriate completed) (“Notice of Conversion”) to the Parent and such Notice of Conversion shall
provide a breakdown in reasonable detail of the Principal Amount, accrued interest and fees that
are 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
Parent within two (2) business days after the Conversion Date. Each date on which a Notice of
Conversion is delivered or telecopied to the Parent in accordance with the provisions hereof shall
be deemed a Conversion Date (the “Conversion Date”). Pursuant to the terms of the Notice of
Conversion,
the Parent will issue instructions to the transfer agent accompanied by an opinion of counsel
within three (3) business day of the date of the delivery to the Parent of the
Amended
and Restated Secured Convertible Term Note
4
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 Parent 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 Parent of the Notice of
Conversion. The Holder shall be treated for all purposes as the record holder of the Conversion
Shares, unless the Holder provides the Parent written instructions to the contrary.
3.4 Late Payments. The Companies understand that a delay in the delivery of the
Conversion Shares in the form required pursuant to this Article beyond the Delivery Date could
result in economic loss to the Holder. As compensation to the Holder for such loss, in addition to
all other rights and remedies which the Holder may have under this Note, applicable law or
otherwise, the Companies shall, jointly and severally, pay late payments to the Holder for any late
issuance of Conversion Shares in the form required pursuant to this Article II upon conversion of
this Note, in the amount equal to $100 per business day after the Delivery Date. The Companies
shall, jointly and severally, make any payments incurred under this Section in immediately
available funds upon demand.
3.5 Conversion Mechanics. 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 a portion of the outstanding Principal Amount pursuant to this Article III, such
conversions shall be deemed to constitute conversions of the outstanding Principal Amount applying
to Monthly Amounts for the remaining Amortization Dates in chronological order.
3.6 Adjustment Provisions. The Fixed Conversion Price and number and kind of shares
or other securities to be issued upon conversion determined pursuant to this Note shall be subject
to adjustment from time to time upon the occurrence of certain events during the period that this
conversion right remains outstanding, as follows:
(a) Reclassification. If the Parent 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 (i) immediately prior to or (ii) immediately after, such reclassification or other
change at the sole election of the Holder.
(b) 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 or any preferred stock issued by
Amended
and Restated Secured Convertible Term Note
5
the Parent in shares of Common Stock, the Fixed Conversion Price 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.
3.7 Reservation of Shares. During the period the conversion right exists, the Parent
will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of Conversion Shares upon the full conversion of this Note and the Warrants. The
Parent represents that upon issuance, the Conversion Shares will be duly and validly issued, fully
paid and non-assessable. The Parent 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 the Conversion
Shares upon the conversion of this Note.
3.8 Registration Rights. The Holder has been granted registration rights with respect
to the Conversion Shares as set forth in the Registration Rights Agreement.
3.9 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 Companies to the Holder for the principal balance of this Note and interest which shall not
have been converted or paid. Subject to the provisions of Article IV of this Note, the Companies
shall not pay any costs, fees or any other consideration to the Holder for the production and
issuance of a new Note.
ARTICLE IV
EVENTS OF DEFAULT
EVENTS OF DEFAULT
4.1 Events of Default. The occurrence of an Event of Default under the Security
Agreement shall constitute an event of default (“Event of Default”) hereunder.
4.2 Default Interest. Following (i) the occurrence and during the continuance of an
Event of Default and (ii) written notice by the Holder to the Companies, each Company shall be
jointly and severally obligated to pay additional interest on the outstanding principal balance of
this Note in an amount equal to one percent (1%) per month, and all outstanding Obligations,
including unpaid interest, shall continue to accrue interest at such additional interest rate from
the date of such Event of Default until the date such Event of Default is cured or waived.
4.3 Default Payment. Following the occurrence and during the continuance of an Event
of Default, the Holder, at its option, may elect (after providing written notice to the Companies),
in addition to all rights and remedies of the Holder under the Security Agreement and the Ancillary
Agreements and all obligations of each Company under the Security Agreement and the Ancillary
Agreements, to require the Companies, jointly and severally, to
make a Default Payment (“Default Payment”). The Default Payment shall be one hundred ten
Amended
and Restated Secured Convertible Term Note
6
percent (110%) of the outstanding principal amount of the Note, plus accrued but unpaid interest,
all other fees then remaining unpaid, and all other amounts payable hereunder. The Default Payment
shall be applied first to any fees due and payable to the Holder pursuant to the Notes and/or the
Ancillary Agreements, then to accrued and unpaid interest due on the Notes, the Security Agreement
and then to the outstanding principal balance of the Notes. The Default Payment shall be due and
payable immediately on the date that the Holder has demanded payment of the Default Payment
pursuant to this Section 4.3.
ARTICLE V
MISCELLANEOUS
MISCELLANEOUS
5.1 Conversion Privileges. The conversion privileges set forth in Article III
shall remain in full force and effect immediately from the date hereof until the date this Note is
indefeasibly paid in full and irrevocably terminated.
5.2 Cumulative Remedies. The remedies under this Note shall be cumulative.
5.3 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.
5.4 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 respective Company at the address
provided for such Company in the Security Agreement executed in connection herewith, and to the
Holder at the address provided in the Security Agreement for the Holder, with a copy to Laurus
Capital Management, LLC, Attn: Portfolio Services, 000 Xxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000, or at such other address as the respective
Company 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 Parent pursuant to the Security
Agreement.
5.5 Amendment Provision. The term “Note” and all references 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 as such successor
instrument may be amended or supplemented.
Amended and Restated Secured Convertible Term Note
7
5.6 Assignability. This Note shall be binding upon the Company 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 Security
Agreement. No Company may assign any of its obligations under this Note without the prior written
consent of the Holder, except as permitted in the Security Agreement, any such purported assignment
without such consent being null and void.
5.7 Cost of Collection. In case of any Event of Default under this Note, the
Companies shall, jointly and severally, pay the Holder the Holder’s reasonable costs of collection,
including reasonable attorneys’ fees.
5.8 Governing Law, Jurisdiction and Waiver of Jury Trial.
(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(b) EACH COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN ANY COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,
PERTAINING TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY
AGREEMENTS PROVIDED, THAT EACH COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY
HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND
FURTHER PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE
THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE
OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE HOLDER. EACH COMPANY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
EACH COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH COMPANY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES
THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE SECURITY AGREEMENT AND THAT SERVICE
SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S ACTUAL RECEIPT THEREOF OR THREE
(3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID
Amended and Restated Secured Convertible Term Note
8
(c) EACH COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE
LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, EACH COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
THE HOLDER, AND/OR ANY COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, THE SECURITY AGREEMENT, ANY
OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.
5.9 Severability. 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 enforceability of any other provision of this Note.
5.10 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 rate permitted by such law, any payments in excess of such maximum
rate shall be credited against amounts owed by the Companies to the Holder and thus refunded to the
Companies.
5.11 Security Interest. The Holder has been granted a security interest (i)
in certain assets of the Companies as more fully described in the Security Agreement and (ii) in
the equity interests of the Parent’s Subsidiaries pursuant to the Stock Pledge Agreement dated as
of the date hereof. The obligations of the Companies under this Note are guaranteed by Xxxxxxx
(Tré). Xxxxx XXX., the chief executive officer of the Parent, pursuant to the Guaranty dated as of
the date hereof.
5.12 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.
5.13 Registered Obligation. This Note is intended to be a registered
obligation within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i) and the Company (or
its agent) shall register this Note (and thereafter shall maintain such registration) as to both
principal and any stated interest. Notwithstanding any document, instrument or agreement relating
to this Note to the contrary, transfer of this Note (or the right to any payments of principal or
stated interest thereunder) may only be effected by (i) surrender of this Note and either the
reissuance by the Company of this Note to the new holder or the issuance by the Company of a new
Amended and Restated Secured Convertible Term Note
9
instrument to the new holder, or (ii) transfer through a book entry system maintained by the
Company (or its agent), within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).
5.14
Amendment and Restatement. This Note amends and restates in its
entirety, as of August 28, 2007, that certain Secured
Convertible Term Note, dated September 25, 2006, made by SMM and
VCI Systems, Inc. in favor of Laurus Master Fund, Ltd. The Companies
acknowledge that on a date of such amendment and restatement,
Laurus Master Fund, Ltd. has assigned a portion of the outstanding
principal amount of this Note to each of Valens U.S. SPV I, LLC
and Valens Offshore SPV I, Ltd.
[Balance of page intentionally left blank; signature page follows]
Amended and Restated Secured Convertible Term Note
10
IN WITNESS WHEREOF, each Company has caused this Secured Convertible Term Note to be signed in
its name effective as of this 28th day of September, 2006.
SILICON MOUNTAIN HOLDINGS, INC. |
||||
| By: | /s/ Xxxxxxx (Tré) X. Xxxxx XXX | |||
| Xxxxxxx (Tré) X. Xxxxx III | ||||
| President and Chief Executive Officer | ||||
| WITNESS: |
||||
| /s/ Xxxx Xxxxx | ||||
| SILICON MOUNTAIN MEMORY,
INCORPORATED |
||||
| By: | /s/ Xxxxxxx (Tré) X. Xxxxx XXX | |||
| Xxxxxxx (Tré) X. Xxxxx III | ||||
| President and Chief Executive Officer | ||||
| WITNESS: |
||||
| /s/ Xxxx Xxxxx | ||||
| VCI SYSTEMS, INC. |
||||
| By: | /s/ Xxxxxxx (Tré) X. Xxxxx XXX | |||
| Xxxxxxx (Tré) X. Xxxxx III | ||||
| President and Chief Executive Officer | ||||
| WITNESS: |
||||
| /s/ Xxxx Xxxxx | ||||
| Acknowledged and Agreed
to by: |
||||
| LAURUS MASTER FUND, LTD. | ||||
| By: | /s/ Xxxxx Xxxx | |||
| Name: Xxxxx Xxxx | ||||
| Title: Director | ||||
| VALEN U.S. SPV I, LLC | ||||
| By: | /s/ Xxxxx Xxxx | |||
| Name: Xxxxx Xxxx | ||||
| Title: Authorized Signatory | ||||
| VALENS OFFSHORE SPV I, LLC | ||||
| By: | /s/ Xxxxx Xxxx | |||
| Name: Xxxxx Xxxx | ||||
| Title: Authorized Signatory | ||||
Amended and Restated Secured Convertible Term Note
11
EXHIBIT A
OTHER COMPANIES
VCI Systems, Inc., a Colorado corporation
Amended and Restated Secured Convertible Term Note
EXHIBIT B
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert all or part of
the Secured Convertible Term Note into Common Stock)
the Secured Convertible Term Note into Common Stock)
[Name and Address of Parent]
The undersigned hereby converts $ of the principal due on [specify applicable
Repayment Date] under the Secured Convertible Term Note dated as of September ___, 2006 (the “Note”)
issued by Silicon Mountain Memory, Incorporated (the “Parent”) and certain of its Subsidiaries by
delivery of shares of Common Stock of the Parent (“Shares”) on and subject to the conditions set
forth in the Note.
1.
|
Date of Conversion | |||||
2.
|
Shares To Be Delivered: | |||||
| [HOLDER] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
Amended and Restated Secured Convertible Term Note
2
