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EXHIBIT 4.14.2
THIS NOTE (THE "NOTE") AND THE COMMON
SHARES ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. THIS NOTE AND
THE COMMON SHARES ISSUABLE UPON
CONVERSION OF THIS NOTE MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS
NOTE UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO EPIXTAR
CORP. THAT SUCH REGISTRATION IS NOT
REQUIRED.
SECURED CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, EPIXTAR CORP., a Florida corporation (the
"Borrower"), hereby promises to pay to
LAURUS MASTER FUND, LTD., c/o M&C
Corporate Services Limited, P.O. Box 309
GT, Ugland House, South Church Street,
George Town, Grand Cayman, Cayman Islands,
Fax: 345-949-8080 (the "Holder") or
its registered assigns or successors in
interest the sum of Six Million Two
Hundred Thousand Dollars ($6,200,000) (the
"Maximum Amount") or, if less, the
aggregate outstanding amount of funds
advanced to the Borrower hereunder, in
each case, together with any accrued and
unpaid interest hereon, on July 22,
2005 (the "Initial Maturity Date"), subject
to extension pursuant to Section
6.10 hereof (the Initial Maturity Date as
extended hereunder, the "Maturity
Date").
Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in that
certain Securities Purchase Agreement
dated as of the date hereof between the
Borrower and the Holder (the "Purchase
Agreement").
The following terms shall apply to this Note:
ADVANCES & INTEREST
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Advances. On the Closing Date, Holder shall
make an advance to the Borrower in
the amount of Six Hundred Thousand Dollars
($600,000). The Borrower may request
and the Holder may, in its discretion, make
additional advances to the Borrower
up to the Maximum Amount. Each request for
an additional advance (an "Advance
Request") shall (a) be made by the Borrower
to the Holder in writing, (b)
specify to whom and where the Holder shall
disburse such funds and (c) specify
the amount of such requested advance. If
the Holder elects to make an additional
advance to the Borrower, the Holder, in its
sole discretion, may either (a)
disburse the funds in accordance with the
Advance Request or (b) deposit the
funds in the Borrower's operating account
in which case the Borrower shall
deliver to the Holder, within one (1)
business day following the deposit of such
funds, evidence that the funds were
disbursed in accordance with the terms of
the Advance Request.
Interest Rate. Subject to Section 6.6
hereof, interest payable on this shall
accrue at a rate per annum (the "Interest
Rate") equal to ten percent (10%).
Interest shall be calculated on the basis
of a 360 day year and payable monthly,
in arrears, commencing on August 1, 2005
and on the first business day of each
consecutive calendar month thereafter
through and including the Maturity Date,
and on the Maturity Date, whether by
acceleration or otherwise.
Maturity Date. The principal amount due
under this Note (the "Principal
Amount"), all unpaid interest thereon and
all other sums due, accrued or payable
to the Holder arising under this Note, the
Purchase Agreement or any Related
Agreement shall be due and payable on the
Maturity Date (subject to extension
pursuant to Section 6.10 hereof).
PREREPAYMENT
Optional Redemption in Cash. The Borrower
will have the option of prepaying this
Note ("Optional Redemption") by paying to
the Holder a sum of money equal to one
hundred percent (100%) of the outstanding
principal amount of this Note at the
time of prepayment, together with accrued
but unpaid interest thereon and any
and all other sums due, accrued or payable
to the Holder arising under this
Note, the Purchase Agreement or any Related
Agreement (the "Redemption Amount")
outstanding on the day written notice of
redemption (the "Notice of Redemption")
is given to the Holder. The Notice of
Redemption shall specify the date for such
Optional Redemption (the "Redemption
Payment Date") which date shall be seven
(7) business days after the date of the
Notice of Redemption (the "Redemption
Period"). A Notice of Redemption shall not
be effective with respect to any
portion of this Note for which the Holder
has a pending election to convert
pursuant to Section 3.1, or for conversions
initiated or made by the Holder
pursuant to Section 3.1 during the
Redemption Period. The Redemption Amount
shall be determined as if such 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 Borrower fails to pay the
Redemption Amount on the Redemption
Payment Date as set forth herein, then such
Redemption Notice will be null and
void.
Mandatory Prepayment. In the event the
Borrower and/or any of its Subsidiaries
commences any offering of its Common Stock
or other equity securities and/or
enters into any financing arrangements with
a bank, a financial institution
and/or any other party (other than the
Holder), in each case, intended, in whole
or in part, to raise capital for the
benefit of the Borrower and/or any of its
Subsidiaries, the proceeds of such offering
and/or financing arrangement when
received shall be remitted to the Holder to
prepay the outstanding principal
amount of this Note, all unpaid interest
hereon and all other sums due, accrued
or payable to the Holder arising under the
transactions contemplated by this
Note, up to an aggregate amount of
$2,000,000.
CONVERSION RIGHTS
Holder's Conversion Rights. The Holder
shall have the right, but not the
obligation, to convert all or any portion
of the then aggregate outstanding
principal amount of this Note, together
with interest and fees due hereon, into
shares of Common Stock of the Borrower
subject to the terms and conditions set
forth in this Article III. The Holder may
exercise such right by delivery to the
Borrower of a written notice of conversion
not less than one (1) day prior to
the date upon which such conversion shall
occur.
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Conversion Limitation. Notwithstanding
anything contained herein to the
contrary, the Holder shall not be entitled
to convert pursuant to the terms of
this Note an amount that would be
convertible into that number of Conversion
Shares which would exceed the difference
between the number of shares of Common
Stock beneficially owned by such Holder or
issuable upon exercise of warrants
held by such Holder and 4.99% of the
outstanding shares of Common Stock of the
Borrower. For the purposes of the
immediately preceding sentence, beneficial
ownership shall be determined in accordance
with Section 13(d) of the Exchange
Act and Regulation 13d-3 thereunder. The
Holder may void the Conversion Share
limitation described in this Section 3.2
upon 75 days prior notice to the
Borrower or without any notice requirement
upon an Event of Default.
Notwithstanding the foregoing, neither this
provision nor any similar provision
contained in any other note issued to
Holder by the Company or in any warrant
issued by the Company to Holder or any
agreement between the parties hereto
("Similar Provisions") shall have any
effect on any irrevocable proxy granted to
Holder or any voting rights contained in
any instrument governing any shares of
preferred stock granted to Holder, in each
case in connection with the
transactions contemplated hereby. Moreover,
such proxies or voting provision
shall not constitute a waiver of the first
two sentences of this Section 3.2 or
of any Similar Provision, all of such
provisions remaining fully enforceable.
Mechanics of Holder's Conversion. (12) In
the event that the Holder elects to
convert this Note into Common Stock, the
Holder shall give notice of such
election by delivering an executed and
completed notice of conversion ("Notice
of Conversion") to the Borrower and such
Notice of Conversion shall provide a
breakdown in reasonable detail of the
Principal Amount, accrued interest and
fees being converted. On each Conversion
Date (as hereinafter defined) and in
accordance with its Notice of Conversion,
the Holder shall make the appropriate
reduction to the Principal Amount, accrued
interest and fees as entered in its
records and shall provide written notice
thereof to the Borrower within two (2)
business days after the Conversion Date.
Each date on which a Notice of
Conversion is delivered or telecopied to
the Borrower in accordance with the
provisions hereof shall be deemed a
Conversion Date (the "Conversion Date"). A
form of Notice of Conversion to be employed
by the Holder is annexed hereto as
Exhibit A.
Pursuant to the terms of the Notice of
Conversion, the Borrower will issue
instructions to the transfer agent
accompanied by an opinion of counsel within
two (2) business day of the date of the
delivery to Borrower of the Notice of
Conversion and shall cause the transfer
agent to transmit the certificates
representing the Conversion Shares to the
Holder by crediting the account of the
Holder's designated broker with the
Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission
("DWAC") system within three (3)
business days after receipt by the Borrower
of the Notice of Conversion (the
"Delivery Date"). In the case of the
exercise of the conversion rights set forth
herein the conversion privilege shall be
deemed to have been exercised and the
Conversion Shares issuable upon such
conversion shall be deemed to have been
issued upon the date of receipt by the
Borrower of the Notice of Conversion. The
Holder shall be treated for all purposes as
the record holder of such Common
Stock, unless the Holder provides the
Borrower written instructions to the
contrary.
Conversion Mechanics.
The number of shares of Common Stock of the
Borrower to be issued upon each
conversion of this Note shall be determined
by dividing that portion of the
principal and interest and fees to be
converted, if any, by the then applicable
Fixed Conversion Price, which for purposes
hereof shall initially be $1.00.
The Fixed Conversion Price and number and
kind of shares or other securities to
be issued upon conversion is subject to
adjustment from time to time upon the
occurrence of certain events, as
follows:
Stock Splits,
Combinations and Dividends. If the shares of Common Stock are
subdivided or
combined into a greater or smaller number of shares of Common
Stock, or if a
dividend is paid on the Common Stock in shares of Common
Stock, the Fixed
Conversion Price or the Conversion Price, as the case may
be, shall be
proportionately reduced in case of subdivision of shares or
stock dividend
or proportionately increased in the case of combination of
shares, in each
such case by the ratio which the total number of shares of
Common Stock
outstanding immediately after such event bears to the total
number of shares
of Common Stock outstanding immediately prior to such
event.
During the
period the conversion right exists, the Borrower will reserve
from its
authorized and unissued Common Stock a sufficient number of
shares
to provide for
the issuance of Common Stock upon the full conversion of
this Note. The
Borrower represents that upon issuance, such shares will be
duly and validly
issued, fully paid and non-assessable. The Borrower agrees
that its
issuance of this Note shall constitute full authority to its
officers,
agents, and transfer agents who are charged with the duty of
executing and
issuing stock certificates to execute and issue the necessary
certificates for
shares of Common Stock upon the conversion of this Note.
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Share Issuances.
Subject to the provisions of this Section 3.4, if the
Borrower shall
(x) in the case of its Common Stock, at any time prior to
the conversion
or repayment in full of the Principal Amount issue any
shares of Common
Stock or securities convertible into its Common Stock to a
person other
than the Holder (except (i) pursuant to Subsections A or B
above; (ii)
pursuant to options, warrants, or other obligations to issue
shares
outstanding on the date hereof as disclosed to Holder in writing;
or
(iii) pursuant
to options that may be issued under any employee incentive
stock option
and/or any qualified stock option plan adopted by the
Borrower) for a
consideration per share (the "Offer Price") less than the
Fixed Conversion
Price in effect at the time of such issuance (any such
issuance, an
"Offering"), then the Fixed Conversion Price shall be
immediately
reset to such lower Offer Price at the time of issuance of such
securities
pursuant to the formula below. For purposes hereof, the
issuance
of any security
of the Borrower convertible into or exercisable or
exchangeable for
Common Stock shall result in an adjustment to the Fixed
Conversion Price
at the time of issuance of such securities.
If the Borrower issues any additional shares pursuant to Section
3.4
above then, and thereafter successively
upon each such issue, the Fixed
Conversion Price shall be adjusted by
multiplying the then applicable Fixed
Conversion Price by the following
fraction:
A + B
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(A + B) + [((C - D) x B) / C]
A = Total amount of shares convertible pursuant to this Note,
the
Purchase Agreement and the Related
Agreements.
B = Actual shares sold in the Offering
C = Fixed Conversion Price
D = Offering price
Reclassification, etc. If the Borrower at any time shall, by
reclassification
or otherwise, change the Common Stock into the same or a
different number
of securities of any class or classes, this Note, as to
the unpaid
Principal Amount and accrued interest thereon, shall thereafter
be deemed to
evidence the right to purchase an adjusted number of such
securities and
kind of securities as would have been issuable as the result
of such change
with respect to the Common Stock immediately prior to such
reclassifi
