THE SECURITY
REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”). THIS SECURITY CANNOT
BE SOLD OR OTHERWISE TRANSFERRED UNLESS THIS SECURITY IS REGISTERED
UNDER THE ACT OR THE COMPANY IS FURNISHED WITH AN ACCEPTABLE
OPINION OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
THIS NOTE
AND THE INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER
AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT
(THE “SUBORDINATION AGREEMENT”) DATED AS OF THE DATE
HEREOF AMONG THE BORROWERS, VICIS CAPITAL MASTER FUND, AND CHATHAM
CREDIT MANAGEMENT III, LLC TO THE SENIOR INDEBTEDNESS (AS SUCH TERM
IS DEFINED IN THE SUBORDINATION AGREEMENT); AND EACH HOLDER OF THIS
NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF
THE SUBORDINATION AGREEMENT.
SUBORDINATED PROMISSORY
NOTE
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U.S.
$1,500,000.00
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September 23, 2008
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Tampa, FL
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FOR VALUE
RECEIVED, Brookside Technology Holdings Corp.
(“Borrower”) hereby unconditionally promises to pay to
the order of Vicis Capital Master Fund (the “Holder”)
the principal sum of One Million Five Hundred Thousand and No/100
DOLLARS ($1,500,000.00) in lawful money of the United States of
America and in immediately available funds on the later of
(i) April 15, 2010; or (ii) fifteen (15) days after
the Borrower delivers a copy of its audit report for the fiscal
year ended 2009 to Chatham Credit Management III, LLC (the
“Maturity Date”) plus interest as described herein.
This Note has been executed and delivered pursuant to the
Securities Purchase and Conversion Agreement dated as of
September 23, 2008 (the “ Purchase Agreement
”) by and among the Borrower and Holder. Capitalized terms
used and not otherwise defined herein shall have the meanings
ascribed to such terms in the Purchase Agreement.
1) Interest
. The unpaid principal evidenced by this Note shall bear interest
at a rate per annum equal to 10%. Interest shall accrue from the
date hereof on the unpaid portion of the principal amount from time
to time outstanding and shall be due and payable on the Maturity
Date. Interest on amounts evidenced by this Note shall be computed
on the basis of a 360-day year of twelve 30-day months and paid for
actual days elapsed.
2) Default
. Events of Default . The occurrence and continuance of any
of the following events shall constitute an event of default under
this Agreement (each, an “Event of Default” and,
collectively, “Events of Default”):
a)
if the Borrower shall default in the payment of principal or
interest when the same shall become due and payable; and in each
case such default shall have continued without cure for ten
(10) days after written notice (a “Default
Notice”) is given to the Borrower of such default;
b)
the Borrower’s notice to the Holder, including by way of
public announcement, at any time, of its inability to comply for
any reason or its intention not to comply with proper requests for
issuance of, or its failure to timely deliver, Conversion Shares
upon conversion of Acquired Shares;
c)
if the Borrower shall default in the performance of any covenant
contained in the Purchase Agreement or Transaction Documents and
such default; (i) shall not have been remedied to the
satisfaction of the Holder within thirty-five (35) days after
a Default Notice shall have been given to the Borrower; or
(ii) shall have materially adversely affected the Holder
regardless of any action taken by the Borrower to cure such
default;
d)
if any of the Borrower or its subsidiaries shall default in the
observance or performance of any term or provision of a material
agreement to which it is a party or by which it is bound, which
default will have a Material Adverse Effect and such default is not
waived or cured within the applicable grace period provided for in
such agreement;
e)
if any representation or warranty made in the Purchase Agreement,
any Transaction Document or in or any certificate delivered by the
Borrower or its subsidiaries pursuant hereto or thereto shall prove
to have been incorrect in any material respect when
made;
f)
the Borrower shall (i) default in any payment of any amount or
amounts of principal of or interest on any Indebtedness and the
aggregate principal amount of which Indebtedness is in excess of
$250,000 or (ii) default in the observance or performance of
any other agreement or condition relating to any such Indebtedness
or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is
to cause, or to permit the holder or holders or beneficiary or
beneficiaries of such Indebtedness to cause with the giving of
notice if required, such Indebtedness to become due prior to its
stated maturity;
g)
if a final judgment which, either alone or together with other
outstanding final judgments against the Borrower and its
subsidiaries, exceeds an aggregate of $250,000 shall be rendered
against the Borrower or any subsidiary and such judgment shall have
continued undischarged or unstayed for thirty-five (35) days
after entry thereof;
h)
the Borrower or any of its subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property or assets, (ii) make a
general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the United States
Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic),
(iv) file a petition seeking to take advantage of any
bankruptcy, insolvency, moratorium, reorganization or other similar
law affecting the enforcement of c
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