Contract
Exhibit
10.2
THIS
NOTE
AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO CONVERSION SERVICES INTERNATIONAL, INC. THAT SUCH REGISTRATION
IS NOT REQUIRED.
AMENDED
AND RESTATED SECURED CONVERTIBLE TERM NOTE
FOR
VALUE
RECEIVED, CONVERSION SERVICES INTERNATIONAL, INC., a Delaware corporation
(the
“Borrower”),
hereby promises to pay to LAURUS MASTER FUND, LTD., c/o Ogier Fiduciary Services
(Cayman) Limited, P.O. Box 1234, Queensgate House, South Church Street, Xxxxxx
Town, Grand Cayman, Cayman Islands, British West Indies, Fax: 000-000-0000
(the
“Holder”)
or its
registered assigns or successors in interest, on order, the sum of SEVEN
HUNDRED
FORTY NINE THOUSAND DOLLARS ($749,000), together with any accrued and unpaid
interest hereon, on August 15, 2007 (the “Maturity
Date”)
if not
sooner paid. The original principal amount of this Note is subject to amortizing
payments pursuant to Section 1.2 hereof is hereinafter referred to as the
“Amortizing
Principal Amount”.
This
Note amends and restates in its entirety, and is given in substitution for
and
not in satisfaction of, that certain Secured Convertible Term Note in the
original principal amount of $5,000,000 issued by the Company in favor of
the
Holder on August 16, 2004, as amended and restated on July 28,
2005.
Capitalized
terms used herein without definition shall have the meanings ascribed to
such
terms in that certain Securities Purchase Agreement dated as of the date
hereof
between the Borrower and the Holder (the “Purchase
Agreement”).
The
following terms shall apply to this Note:
ARTICLE
I
INTEREST
& AMORTIZATION
1.1 (a) Interest
Rate.
Subject
to Sections 1.1(b), 4.12 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 one percent (1%). 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 five percent (5%). Interest
shall be calculated on the basis of a 360 day year. Interest on the Amortizing
Principal Xxxxxx shall be payable monthly, in arrears, commencing on October
1,
2004 and on the first day of each consecutive calendar month thereafter (each,
a
“Repayment
Date”)
and on
the Maturity Date, whether by acceleration or otherwise. .
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1.1 (b) Interest
Rate Adjustment.
The
Interest Rate shall be subject to adjustment on the last business day of
each
month hereafter until the Maturity Date (each a “Determination Date”). If on any
Determination Date (i) the Borrower shall have registered under the Securities
Act of 1933, as amended (the “Securities
Act”),
the
shares of Common Stock underlying each of the conversion of this Note and
the
exercise of the Warrant issued on a registration statement declared effective
by
the Securities and Exchange Commission (the “SEC”), and (ii) the market price
(the “Market Price”) of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market (as defined below) for the five (5) consecutive trading
days
immediately preceding such 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 Common Stock above the then applicable Fixed Conversion
Price. If on any Determination Date (i) the Borrower shall not have registered
under the Securities Act the shares of Common Stock underlying the conversion
of
this Note and the exercise of the Warrant on a registration statement declared
effective by the SEC or the Borrower shall have registered such shares under
the
Securities Act but on such Determination Date the related registration statement
is not effective, and (ii) the Market Price of the Common Stock as reported
by
Bloomberg, L.P. on the Principal Market for the five (5) consecutive trading
days immediately preceding such 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 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
be made by the Company commencing on October 1, 2005_and on the first business
day of each succeeding month thereafter through and including the Maturity
Date
(each, an “Amortization
Date”).
Subject to Article III below, commencing on the first Amortization Date,
the
Company shall make monthly payments to the Holder on each Repayment Date,
each
such payment in the amount of $32,565 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 Purchase Agreement and/or
any
other Related 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 Company to the
Holder under this Note, the Purchase Agreement and/or any other Related
Agreement shall be due and payable on the Maturity Date.
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CONVERSION
REPAYMENT
2.1 (a) Payment
of Monthly Amount in Cash or Common Stock.
If the
Monthly Amount (or a portion thereof of such Monthly Amount if such portion
of
the Monthly Amount would have been converted into shares of Common Stock
but for
Section 3.2) is required to be paid in cash pursuant to Section 2.1(b), then
the
Borrower shall pay the Holder an
amount
equal to 100% of the Monthly Amount due and owing to the
Holder
on
the Repayment Date
in cash.
If
the
Monthly Amount (or a portion of such Monthly Amount if not all of the Monthly
Amount may be converted into shares of Common Stock pursuant to Section 3.2)
is
required to be paid in shares of Common Stock pursuant to Section 2.1(b),
the
number of such shares to be issued by the Borrower to the Holder on such
Repayment Date (in respect of such portion of the Monthly Amount converted
into
in shares of Common Stock pursuant to Section 2.1(b)), shall be the number
determined by dividing (x) the portion of the Monthly Amount converted into
shares of Common Stock, by (y) the then applicable Fixed Conversion Price.
For
purposes hereof, the initial “Fixed
Conversion Price”
means
$1.00.
(b)
Monthly
Amount Conversion Guidelines.
Subject
to Sections 2.1(a), 2.2 and 3.2 hereof, the Holder shall convert into shares
of
Common Stock all or a portion of the Monthly Amount due on each Repayment
according to the following guidelines (collectively, the “Conversion
Criteria”):
(i)
the average closing price of the Common Stock as reported by Bloomberg, L.P.
on
the Principal Market for the five (5) consecutive trading days immediately
preceding such Notice Date shall be greater than or equal to 110% of the
Fixed
Conversion Price and (ii) the amount of such conversion does not exceed twenty
five percent (25%) of the aggregate dollar trading volume of the Common Stock
for the twenty two (22) day trading period immediately preceding delivery
of a
Repayment Notice. If the Conversion Criteria are not met, the Holder shall
convert only such part of the Monthly Amount that meets the Conversion Criteria.
Any part of the Monthly Amount due on a Repayment Date that the Holder has
not
been able to convert into shares of Common Stock due to failure to meet the
Conversion Criteria, shall be paid by the Borrower in cash on such Repayment
Date, within three (3) business days of the applicable Repayment
Date.
(c) Application
of Conversion Amounts.
Any
amounts converted by the Holder pursuant to Section 2.1(b) shall be deemed
to
constitute payments of, or applied against, (i) first, outstanding fees,
(ii)
second, accrued interest on the Amortizing Principal Xxxxxx, and (iii) third,
the Amortizing Principal Xxxxxx.
2.2 No
Effective Registration.
Notwithstanding anything to the contrary herein, no amount payable hereunder
may
be converted into Common Stock unless (a) either (i) an effective current
Registration Statement (as defined in the Registration Rights Agreement)
covering the shares of Common Stock to be issued in satisfaction of such
obligations exists, or (ii) an exemption from registration of the Common
Stock
is available pursuant to Rule 144 of the Securities Act, and (b) 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.
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2.3 Optional
Redemption of Amortizing Principal Amount.
The
Borrower will have the option of prepaying the outstanding Amortizing Principal
Amount (“Optional
Amortizing Redemption”),
in
whole or in part, by paying to the Holder a sum of money equal to one hundred
fifteen percent (115%) of the Amortizing Principal Amount to be redeemed,
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 “Amortizing
Redemption Amount”)
on the
day written notice of redemption (the “Notice
of Amortizing Redemption”)
is
given to the Holder. The Notice of Amortizing Redemption shall specify the
date
for such Optional Amortizing Redemption (the “Amortizing
Redemption Payment Date”),
which
date shall be not less than seven (7) business days after the date of the
Notice
of Amortizing Redemption (the “Redemption
Period”).
A
Notice of Amortizing Redemption shall not be effective with respect to any
portion of the Amortizing Principal Amount 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
Amortizing Redemption Amount shall be determined as if such Xxxxxx’s conversion
elections had been completed immediately prior to the date of the Notice
of
Amortizing Redemption. On the Amortizing Redemption Payment Date, the Amortizing
Redemption Amount shall be paid in good funds to the Holder. In the event
the
Borrower fails to pay the Amortizing Redemption Amount on the Amortizing
Redemption Payment Date as set forth herein, then such Notice of Amortizing
Redemption will be null and void.
ARTICLE
III
CONVERSION
RIGHTS
3.1. Holder’s
Conversion Rights.
Subject
to Section 2.2, the Holder shall have the right, but not the obligation,
to
convert all or any portion of the then aggregate outstanding Principal Amount
of
this Note, together with interest and fees due hereon, into shares of Common
Stock, subject to the terms and conditions set forth in this Article III.
The
Holder may exercise such right by delivery to the Borrower of a written Notice
of Conversion pursuant to Section 3.3.
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
(a) be convertible into that number of shares of Common Stock which, when
added
to the number of shares of Common Stock otherwise beneficially owned by such
Holder including those issuable upon exercise of warrants held by such Holder
would exceed 4.99% of the outstanding shares of Common Stock of the Borrower
at
the time of conversion or (b) exceed twenty five percent (25%) of the aggregate
dollar trading volume of the Common Stock for the twenty two (22) day trading
period immediately preceding delivery of a Notice of Conversion to 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 conversion limitation described in this
Section
3.2 shall automatically become null and void without any notice to Borrower
upon
the occurrence and during the continuance beyond any applicable grace period
of
an Event of Default, or upon 75 days prior notice to the Borrower, except
that
at no time shall the beneficial ownership exceed 19.99% of the Common Stock.
Notwithstanding anything contained herein to the contrary, following the
listing
of the Borrower on the NASDAQ SmallCap Market, the Nasdaq National Market
or the
American Stock Exchange, the number of shares of Common Stock issuable by
the
Borrower and acquirable by the Holder at a price below $0.20 per share pursuant
to the terms of this Note, the Security Agreement, any Ancillary Agreement
or
any other agreement between the Company and the Holder, shall not exceed
an
aggregate of 153,149,330 shares of the Borrower’s Common Stock (subject to
appropriate adjustment for stock splits, stock dividends, or other similar
recapitalizations affecting the Common Stock) (the “Maximum
Common Stock Issuance”),
unless the issuance of shares hereunder in excess of the Maximum Common Stock
Issuance shall first be approved by the Borrower’s shareholders. If at any point
in time , following the listing of the Borrower on the NASDAQ SmallCap Market,
the Nasdaq National Market or the American Stock Exchange, the number of
shares
of Common Stock issued pursuant to the terms of this Note, the Security
Agreement, any Ancillary Agreement or any other agreement between the Company
and the Holder, together with the number of shares of Common Stock that would
then be issuable by the Borrower to the Holder in the event of a conversion
or
exercise pursuant to the terms of this Note, the Security Agreement, any
Ancillary Agreement or any other agreement between the Company and the Holder,
would exceed the Maximum Common Stock Issuance but for this Section 3.2,
the
Borrower shall promptly call a shareholders meeting to solicit shareholder
approval for the issuance of the shares of Common Stock hereunder in excess
of
the Maximum Common Stock Issuance.
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3.3 Mechanics
of Xxxxxx’s Conversion.
(a) In
the event that the Holder elects to convert any amounts outstanding under
this
Note into Common Stock, the Holder shall give notice of such election by
delivering an executed and completed notice of conversion (a “Notice
of Conversion”)
to the
Borrower, which 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”.
A form
of Notice of Conversion to be employed by the Holder is annexed hereto as
Exhibit A.
(b)
Pursuant
to the terms of a Notice of Conversion, the Borrower will issue
instructions to the transfer agent accompanied by an opinion of counsel,
if so
required by the Borrower’s transfer agent, within two
(2)
business days
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 shares of
Common
Stock, unless the Holder provides the Borrower written instructions to the
contrary.
3.4 Conversion
Mechanics.
(a) The
number of shares of Common Stock to be issued upon each conversion of this
Note
pursuant to this Article III shall be determined by dividing that portion
of the
Principal Amount and interest and fees to be converted, if any, by the then
applicable Fixed Conversion Price. In the event of any conversions of
outstanding obligations under this Note in part pursuant to this Article
III,
such conversions shall be deemed to constitute conversions (i) first, of
the
Monthly Amount for the current calendar month, and (ii)second, of outstanding
Amortizing Principal Amount, by applying the conversion amount to Monthly
Amounts for the remaining Repayment Dates in chronological order.
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(b) The
Fixed
Conversion Price and number and kind of shares or other securities to be
issued
upon conversion is subject to adjustment from time to time upon the occurrence
of certain events, as follows:
A. Stock
Splits, Combinations and Dividends.
If the
shares of Common Stock are subdivided or combined into a greater or smaller
number of shares of Common Stock, or if a dividend is paid on the Common
Stock
in shares of Common Stock, the Fixed Conversion Price or the Conversion Price,
as the case may be, shall be proportionately reduced in case of subdivision
of
shares or stock dividend or proportionately increased in the case of combination
of shares, in each such case by the ratio which the total number of shares
of
Common Stock outstanding immediately after such event bears to the total
number
of shares of Common Stock outstanding immediately prior to such
event.
B. During
the period the conversion right exists, the Borrower will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of Common Stock upon the full conversion of this Note. The
Borrower represents that upon issuance, such shares will be duly and validly
issued, fully paid and non-assessable. The Borrower agrees that its issuance
of
this Note shall constitute full authority to its officers, agents, and transfer
agents who are charged with the duty of executing and issuing stock certificates
to execute and issue the necessary certificates for shares of Common Stock
upon
the conversion of this Note.
C. Share
Issuances.
Subject
to the provisions of this Section 3.4, if the Borrower shall at any time
prior
to the conversion or repayment in full of the Principal Amount issue any
shares
of Common Stock or securities convertible into Common Stock to
a
person other than the Holder (except (i) pursuant to Subsections A or B above;
or (ii) 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, then
the
Fixed Conversion Price shall be immediately reset to such lower Offer Price
at
the time of issuance of such securities. For purposes hereof, the issuance
of
any security of the Borrower convertible into or exercisable or exchangeable
for
Common Stock shall result in an adjustment to the Fixed Conversion Price
at the
time of issuance of such securities.
D.
Reclassification,
etc.
If the
Borrower at any time shall, by reclassification or otherwise, change the
Common
Stock into the same or a different number of securities of any class or classes,
this Note, as to the unpaid Principal Amount and accrued interest thereon,
shall
thereafter be deemed to evidence the right to purchase an adjusted number
of
such securities and kind of securities as would have been issuable as the
result
of such change with respect to the Common Stock immediately prior to such
reclassification or other change.
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3.5 Issuance
of Replacement Note.
Upon
any partial conversion of this Note, a replacement Note containing the same
date
and provisions of this Note shall, at the written request of the Holder,
be
issued by the Borrower to the Holder for the outstanding Principal Amount
of
this Note and accrued interest which shall not have been converted or paid.
Subject to the provisions of Article IV, the Borrower will pay no costs,
fees or
any other consideration to the Holder for the production and issuance of
a
replacement Note.
ARTICLE
IV
EVENTS
OF DEFAULT
Upon
the
occurrence and continuance of an Event of Default beyond any applicable grace
period, the Holder may accelerate
all obligations outstanding under the Purchase Agreement and the Related
Agreements and, in connection therewith, 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 130% of the outstanding principal
amount of the Note (plus accrued and unpaid interest and fees, if any) (the
“Default
Payment”).
The
Default Payment shall be applied first to any fees due and payable to Holder
pursuant to this Note, the Purchase Agreement or the Related Agreements,
then to
accrued and unpaid interest due on the Note and then to outstanding principal
balance of the Note.
The
occurrence of any of the following events set forth in Sections 4.1 through
4.10, inclusive, is an “Event
of Default”:
4.1 Failure
to Pay Principal, Interest or other Fees.
The
Borrower fails to pay when due any installment of principal, interest or
other
fees hereon in accordance herewith, or the Borrower fails to pay when due
any
amount due under any other promissory note issued by Borrower, and in any
such
case, such failure shall continue for a period of three (3) days following
the
date upon which any such payment was due.
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 thirty (30) 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.
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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 $150,000, 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 Common Stock
shall be in effect for fifteen (15) consecutive days or fifteen (15) days
during
a period of thirty (30) consecutive days, excluding in all cases a suspension
of
all trading on a Principal Market, provided
that the
Borrower shall not have been able to cure such trading suspension within
thirty
(30) days of the notice thereof or list the Common Stock on another Principal
Market within sixty (60) days of such notice. The “Principal Market” for the
Common Stock shall include the 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.
4.8
Failure
to Deliver Common Stock or Replacement Note.
The
Borrower shall fail (i) to timely deliver Common Stock to the Holder pursuant
to
and in the form required by this Note, and Section 9 of the Purchase Agreement,
if such failure to timely deliver Common Stock shall not be cured within
two (2)
business days or (ii) to deliver a replacement Note to Holder within seven
(7)
business days following the required date of such issuance pursuant to this
Note, the Purchase Agreement or any Related Agreement (to the extent required
under such agreements).
4.9 Default
Under Related Agreements or Other Agreements.
The
occurrence and continuance of any Event of Default (as defined in the Purchase
Agreement or any Related Agreement) or any event of default (or similar term)
under any other indebtedness.
4.10 Change
in Control.(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) 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 45% or more on a fully diluted basis of the then
outstanding voting equity interest of the Borrower or (ii) the Board of
Directors of the Borrower 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 in effect immediately prior to such
appointment).
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DEFAULT
RELATED PROVISIONS
4.11 Default
Interest Rate.
Following the occurrence and during the continuance of an Event of Default,
the
Borrower shall pay additional interest on this Note in an amount equal to
two
percent (2%) per month, and all outstanding obligations under this Note,
including unpaid interest, shall continue to accrue such additional interest
from the date of such Event of Default until the date such Event of Default
is
cured or waived.
4.12 Conversion
Privileges.
The
conversion privileges set forth in Article III shall remain in full force
and
effect immediately from the date hereof and until this Note is paid in
full.
4.13 Cumulative
Remedies.
The
remedies under this Note shall be cumulative.
ARTICLE
V
MISCELLANEOUS
5.1 Failure
or Indulgence Not Waiver.
No
failure or delay on the part of the Holder hereof in the exercise of any
power,
right or privilege hereunder shall operate as a waiver thereof, nor shall
any
single or partial exercise of any such power, right or privilege preclude
other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not exclusive
of,
any rights or remedies otherwise available.
5.2 Notices.
Any
notice herein required or permitted to be given shall be in writing and shall
be
deemed effectively given: (a) upon personal delivery to the party notified,
(b)
when sent by confirmed telex or facsimile if sent during normal business
hours
of the recipient, if not, then on the next business day, (c) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification
of
receipt. All communications shall be sent to the Borrower at the address
provided in the Purchase Agreement executed in connection herewith, and to
the
Holder at the address provided in the Purchase Agreement for such Holder,
with a
copy to Xxxx X. Xxxxxx, Esq., 000 Xxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000, or at such other
address as the Borrower or the Holder may designate by ten days advance written
notice to the other parties hereto. A Notice of Conversion shall be deemed
given
when made to the Borrower pursuant to the Purchase Agreement.
5.3 Amendment
Provision.
The
term “Note” and all reference thereto, as used throughout this instrument, shall
mean this instrument as originally executed, or if later amended or
supplemented, then as so amended or supplemented, and any successor instrument
issued pursuant to Section 3.5 hereof, as it may be amended or
supplemented.
5.4 Assignability.
This
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and assigns,
and may
be assigned by the Holder in accordance with the requirements of the Purchase
Agreement. This Note shall not be assigned by the Borrower without the consent
of the Holder.
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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 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.]
10
of
12
IN
WITNESS WHEREOF,
the
Borrower has caused this Amended and Restated Secured Convertible Term Note
to
be signed in its name effective as of this 30th
day of
November 2005.
| CONVERSION SERVICES INTERNATIONAL, INC. | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxxx | |
|
Name: Xxxxx Xxxxxx |
||
|
Title:
President and Chief Executive
Officer
|
||
WITNESS:
/s/
Xxxxxxxx X. Xxxx
11
of
12
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 Amended and Restated Secured Convertible
Term Note issued by Conversion Services International, Inc. dated August
16,
2004, as amended and restated on July 28, 2005 and further amended and restated
on November 30, 2005, by delivery of Shares of Common Stock of Conversion
Services International, Inc. on and subject to the conditions set forth in
Article III of such Note.
1. Date
of
Conversion _______________________
2. Shares
To
Be Delivered:
_______________________
By:_______________________________
Name:_____________________________
Title:______________________________
12
of
12
