Exhibit 10.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. 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 JMAR TECHNOLOGIES, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.
SECURED NON-CONVERTIBLE REVOLVING NOTE
          FOR VALUE RECEIVED, each of JMAR Technologies, Inc., a Delaware (the
“Parent”), and the other companies listed on Exhibit A attached hereto (such
other companies together with the Parent, each a “Company” and collectively, the
“Companies”), jointly and severally, 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 Three
Million Dollars ($3,000,000), or, if different, the aggregate principal amount
of all Loans (as defined in the Security Agreement referred to below), together
with any accrued and unpaid interest hereon, on March 27, 2008 (the “Maturity
Date”) if not sooner indefeasibly paid in full.
          Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Security Agreement among the Companies
and the Holder dated as of the date hereof (as amended, modified and/or
supplemented from time to time, the “Security Agreement”).
          The following terms shall apply to this Secured Non-Convertible
Revolving Note (this “Note”):
ARTICLE I
CONTRACT RATE
          1.1 Contract Rate. Subject to Sections 3.2 and 4.9, interest payable
on the outstanding principal amount of this Note (the “Principal Amount”) shall
accrue at a rate per annum equal to (A)(x) the “prime rate” published in The
Wall Street Journal from time to time (the “Prime Rate”), plus (y) two percent
(2.0%) (the interest rate referred to in the immediately preceding clauses
(x) and (y), collectively, the “Cash Interest Rate”) plus (B) eight percent
(8.0%) (the interest rate referred in this clause (B), the “Advance Interest
Rate”) (the Cash Interest Rate plus the Advance Interest Rate are collectively
referred to herein as the “Contract Rate”). The Cash Interest 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.
Interest shall be calculated on the basis of a 360 day year.

 

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          1.2 Cash Portion of the Contract Rate. The interest accruing and
payable on the Principal Amount of the Note at the Cash Interest Rate shall
hereinafter be referred to as the “Cash Interest Portion”. The Cash Interest
Portion shall be payable monthly, in arrears, commencing on April 1, 2006 and on
the first business day of each consecutive calendar month thereafter (each, a
“Repayment Date”) until and on the Maturity Date, whether by acceleration or
otherwise.
ARTICLE II
ADVANCE INTEREST
          2.1 Advance Interest Portion of the Contract Rate. The interest
accruing and payable on the Principal Amount of the Note at the Advance Interest
Rate shall hereinafter be referred to as the “Advance Interest Portion.” The
Advance Interest Portion shall (i) be nonrefundable and payable annually in
advance (x) on the date hereof for the period from the date hereof to and
including the date immediately preceding the date that is first anniversary of
this and (y) on March 27, 2007 for the period from the date that is the first
anniversary of this Note to and including the Maturity Date (each date referred
to in the immediately preceding clauses (x) and (y), an “Advance Interest
Portion Payment Date”) and be payable in warrants, as set forth below:
                                   (a) On the date hereof, the Company shall
issue a ten year par value exercise price warrant to the Holder to purchase
218,181 shares of the Company’s Common Stock; and
                                   (b) On the date hereof, the Company shall
also issue a ten year par value exercise price warrant to the Holder to purchase
up to 240,000 shares of the Company’s Common Stock with the warrant being
unvested on issuance and vesting on the first anniversary of this Note for a
number of shares equal to (i) eight percent (8.0%) of the average daily balance
outstanding under this Note for the twelve months period ending on the first
anniversary of this Note divided by (ii) the greater of (x) $1.00 and (y) the
average closing price of the Common Stock for the three trading days prior to
the first anniversary of this Note.
ARTICLE III
EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS
          3.1 Events of Default. The occurrence of an Event of Default under the
Security Agreement shall constitute an event of default (“Event of Default”)
hereunder.
          3.2 Default Interest. Following the occurrence and during the
continuance of an Event of Default, the Companies shall, jointly and severally,
pay additional interest on the outstanding principal balance of this Note in an
amount equal to two percent (2%) 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.

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          3.3 Default Payment. If an Event of Default occurs and is continuing,
the Holder, at its option, may elect, in addition to all rights and remedies of
the Holder under the Security Agreement and the other Ancillary Agreements and
all obligations and liabilities of each Company under the Security Agreement and
the other Ancillary Agreements, to require the Companies, jointly and severally,
to make a Default Payment (“Default Payment”) due and payable within ten days
after written notice from the Holder to the Company (“Default Notice Period”) of
an Event of Default. If during the Default Notice Period, the Company cures the
Event of Default, the Event of Default will no longer exist and any rights the
Holder had pertaining to the Event of Default will no longer exist. If after the
Default Notice Period, the Event of Default has not been cured, the Default
Payment shall be immediately due and payable in an amount equal to one hundred
ten 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, the Security Agreement and/or
the Ancillary Agreements, then to accrued and unpaid interest due on the Notes
and then to the outstanding principal balance of the Notes.
ARTICLE IV
MISCELLANEOUS
          4.1 Cumulative Remedies. The remedies under this Note shall be
cumulative.
          4.2 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.
          4.3 Notices. Any notice herein required or permitted to be given shall
be in writing and shall be deemed effective 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 John E.
Tucker, Esq., 825 Third Avenue, 14th Floor, New York, New York 10022, facsimile
number (212) 541-4434, 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.
          4.4 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.

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          4.5 Assignability. This Note shall be binding upon each 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 not assign any of its
obligations under this Note without the prior written consent of the Holder, any
such purported assignment without such consent being null and void.
          4.6 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.
          4.7 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

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                         (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.
          4.8 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.
          4.9 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.
          4.10 Security Interest and Guarantee. 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) pursuant to the Stock Pledge Agreement dated
as of the date hereof. The obligations of the Companies under this Note are
guaranteed by certain Subsidiaries of the Companies pursuant to the Subsidiary
Guaranty dated as of the date hereof.
          4.11 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.
          4.13 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 the 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 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).
[Balance of page intentionally left blank; signature page follows]

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     IN WITNESS WHEREOF, each Company has caused this Secured Non-Convertible
Revolving Note to be signed in its name effective as of this 28th day of
March 2006.

                  JMAR TECHNOLOGIES, INC.    
 
           
 
  By:   /s/ Dennis E. Valentine    
 
      Name: Dennis E. Valentine    
 
      Title: Chief Financial Officer    
 
           
WITNESS:
           
 
           
/s/ Gary Klement
           
 
                JMAR/SAL NANOLITHOGRAPHY, INC.    
 
           
 
  By:   /s/ Dennis E. Valentine    
 
      Name: Dennis E. Valentine    
 
      Title: Chief Financial Officer    
 
           
WITNESS:
           
 
           
/s/ Gary Klement
           
 
                JSI MICROELECTRONICS, INC.    
 
           
 
  By:   /s/ Dennis E. Valentine    
 
      Name: Dennis E. Valentine    
 
      Title: Chief Financial Officer    
 
           
WITNESS:
           
 
           
/s/ Gary Klement
           

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                  JMAR RESEARCH, INC.    
 
           
 
  By:   /s/ Dennis E. Valentine    
 
      Name: Dennis E. Valentine    
 
      Title: Chief Financial Officer    
 
           
WITNESS:
           
 
           
/s/ Gary Klement
           

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EXHIBIT A
OTHER COMPANIES
JMAR/SAL NanoLithography, Inc.
JMAR Research, Inc.
JSI Microelectronics, Inc.