Document:

exv10w14

 

Exhibit 10.14

THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AS SET FORTH HEREIN. NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SUCH ACT.

STARVOX COMMUNICATIONS, INC.

Senior Secured Convertible Promissory Note

			
	 	 	 
	«Money»
	 	As of May 24, 2006
	 
	 	San Jose, California

     StarVox Communications, Inc., a California corporation (the “Company”), for value received,
hereby promises to pay to <<Holder>>, with an address
at  <<Adress>>, or its successors or permitted assigns (the
“Holder”), the principal amount of  <<Money Spelled>>

 ($ <<Money>>), in lawful money of the United States of America, with
interest thereon to be computed from the date hereof, on the unpaid principal balance at the rate
and as herein provided.

     All agreements herein made are expressly limited so that in no event whatsoever, whether by
reason of advancement of proceeds hereof, acceleration of maturity of the unpaid balance hereof or
otherwise, shall the amount paid or agreed to be paid to the Holder for the use of the money
advanced or to be advanced hereunder exceed the maximum rate permitted by law (the “Maximum Rate”).
If, for any circumstances whatsoever, the fulfillment of any provision of this Note or any other
agreement or instrument now or hereafter evidencing, securing or in any way relating to the debt
evidenced hereby shall involve the payment of interest in excess of the Maximum Rate, then, ipso
facto, the obligation to pay interest hereunder shall be reduced to the Maximum Rate; and if for
any circumstance whatsoever, the Holder shall ever receive interest, the amount of which would
exceed the amount collectible at the Maximum Rate, such amount as would be excessive interest shall
be applied to the reduction of the principal balance remaining unpaid hereunder and not to the
payment of interest. This provision shall control every other provision in any and all other
agreements and instruments existing or hereafter arising between the Company and the Holder with
respect to the debt evidenced hereby.

     1. Note Purchase Agreement: Security.

     This Note is issued pursuant to, and is entitled to the benefits of, the Secured Convertible
Note and Warrant Purchase Agreement, dated as of May 24, 2006 (the “Note Purchase Agreement”).
This Note and the Company’s obligations hereunder are collateralized by a security interest in the
assets of the Company, pursuant to a Security Agreement, dated as of the same date of this Note
(the “Security Agreement”), by and among the Company and the Holder, as secured party. If an Event
of Default (as hereinafter defined) shall have occurred and the principal amount of this Note shall

 

 

become due and payable, the Holder shall be entitled to exercise, in addition to any right,
power or remedy permitted in law or equity, all its remedies under the Security Agreement or the
Note Purchase Agreement, as applicable.

     2. Interest: Payments.

          (a) Principal of, and any accrued and unpaid interest on, this Note shall be due and payable
on demand by the Holder at any time following six months from the date of this Note (the “Maturity
Date”), unless the principal of, and any accrued and unpaid interest on this Note has been
converted in accordance with the terms hereof.

          (b) Until this Note is converted or paid in full, interest on this Note shall accrue from the
date hereof at the Applicable Rate (calculated on the basis of a 360-day year consisting of twelve
30-day months). For purposes of this Note, the Applicable Rate shall mean 12.0%, except in the
event that the Company fails to pay to the Holder any portion of the principal and/or interest due
on the Maturity Date or if an Event of Default shall have occurred in which case the Applicable
Rate shall thereafter, during the continuance of such failure, be 15%.

          (c) If the Maturity Date would fall on a day that is not a Business Day (as defined below),
the payment due on such Maturity Date will be made on the next succeeding Business Day with the
same force and effect as if made on the Maturity Date. “Business Day” means any day which is not a
Saturday or Sunday and is not a day on which banking institutions are generally authorized or
obligated to close in the city of New York, New York.

          (d) Payment of principal and interest on this Note shall be made by wire transfer of
immediately available funds to an account designated by the Holder or by check sent to the Holder
as the Holder may designate for such purpose from time to time by written notice to the Company, in
such coin or currency of the United States of America as at the time of payment shall be legal
tender for the payment of public and private debts.

          (e) The obligations to make the payments provided for in this Note are absolute and
unconditional and not subject to any defense, setoff, counterclaim, rescission, recoupment or
adjustment whatsoever. The Company hereby expressly waives demand and presentment for payment,
notice of non-payment, notice of dishonor, protest, notice of protest and diligence in taking any
action to collect any amount called for hereunder, and shall be directly and primarily liable for
the payment of all sums owing and to be owing hereon, regardless of and without any notice,
diligence, act or omission with respect to the collection of any amount called for hereunder.

          (f) Notwithstanding anything to the contrary in this Note, the Note Purchase Agreement, the
Security Agreement or any other document executed in connection herewith, the amounts owing under
this Note may be prepaid at any time without penalty or premium. This Note must be prepaid, in
whole, upon the Company (or any affiliated or parent company) completing any debt or equity
financing (in one or a series of closings) in which the Company (or any affiliated or parent
company) receives gross cash proceeds of at least $15 million.

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     3. Ranking of Note.

          (a) The Company, for itself, its successors and assigns, covenants and agrees, that the
payment of the principal of and interest on this Note is senior in right of payment to the payment
of all existing and future Junior Debt (as hereinafter defined). “Junior Debt” shall mean all
existing and future Indebtedness, except for (i) Indebtedness owing to Sand Hill Finance, LLC in
the amount of $1,500,000 and (ii) future senior Indebtedness incurred by the Company from financial
institutions and/or venture debt lenders with the written consent of Lenders (as defined in the
Note Purchase Agreement) holding at least 75% of the aggregate outstanding principal amount of the
Convertible Notes (as defined in the Note Purchase Agreement) and expressly made senior to the
Company’s obligations under the Convertible Notes and the Note Purchase Agreement. For purposes of
this Section 3 (a), “Indebtedness” shall mean (a) all indebtedness for borrowed money or the
deferred purchase price of property or services, including without limitation reimbursement and
other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced
by notes, bonds, debentures or similar instruments, (c) all capital lease obligations and (d) any
obligation directly or indirectly guaranteed.

          (b) Upon any payment or distribution of the assets of the Company, to creditors upon
dissolution, total or partial liquidation or reorganization of, or similar proceeding relating to
the Company, the Holder of this Note will be entitled to receive payment in full before any holder
of Junior Debt is entitled to receive any payment.

     4. Affirmative Covenants.

     The Company covenants and agrees with the Holder that, so long as any amount remains unpaid on
this Note:

          (a) the Company shall promptly after the Company shall obtain knowledge of the occurrence of
any Event of Default (as hereinafter defined) or any event which with notice or lapse of time or
both would become an Event of Default (an Event of Default or such other event being a “Default”),
a notice specifying that such notice is a “Notice of Default” and describing such Default in
reasonable detail, and, in such Notice of Default or as soon thereafter as practicable, a
description of the action the Company has taken or proposes to take with respect thereto; and

          (b) the Company shall permit any representative Holder authorizes, including, without
limitation, its attorneys and accountants, to inspect, examine and make copies and abstracts of the
books of account and records of the Company at reasonable times and upon reasonable notice during
normal business hours. In addition, any such representative shall have the right to meet with
management and officers of the Company to discuss such books of account and records. In addition,
Holder shall be entitled at reasonable times and intervals to consult with and advise the
management and officers of the Company concerning significant business issues affecting the
Company. Such consultations shall not unreasonably interfere with the Company’s business
operations.

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     5. Conversion.

          (a) At the option of the Holder exercisable, in whole or in part, upon the closing of an
equity financing of the Company with gross proceeds to the Company of at least twelve million
dollars (U.S. $12,000,000) (excluding the conversion of the principal and accrued but unpaid
interest then due on any outstanding convertible promissory notes) or more (the “Next Financing”),
any portion of the principal and accrued but unpaid interest then due on this Note (the “Loan
Amount”) may be converted into that number of shares of the class of equity security issued in the
Next Financing (the “Securities”) determined by dividing (a) the Loan Amount by (b) the lowest
purchase price per share established in the Next Financing (the “Next Per Share Price”). Any
fraction of a share resulting from this calculation shall be rounded upward to the next whole
share. Such Securities shall be identical in all respects to the Securities issued by the Company
in the Next Financing and the Holder shall have all the rights and benefits (including the benefits
of any representations and warranties, preemptive rights, rights of first offer, co-sale rights,
registration rights and other similar rights) accorded to the purchasers of such Securities. In
the event the Holder elects to convert this Note as aforesaid, it shall deliver to the Company
written notice of such election (a “Conversion Notice”). The conversion of this Note into
Securities shall take place at the closing of the Next Financing or on such other date and at such
other time as may be mutually agreed to by the Company and the Holder (such date hereinafter
referred to as the “Conversion Date”).

          (b) Upon conversion of this Note pursuant to Section 5(a), the Holder shall be deemed to be
the holder of record of the shares of Securities issuable upon such conversion (the “Conversion
Shares”), notwithstanding that the transfer books of the Company shall then be closed or
certificates representing such Conversion Shares shall not then have been actually delivered to the
Holder. As soon as practicable after the Conversion Date, the Company shall issue and deliver to
the Holder a certificate or certificates for the Conversion Shares registered in the name of the
Holder or its designee(s); provided, that the Company, by notice given to the Holder promptly after
the Conversion Date may require the Holder, as a condition to the delivery of such certificate or
certificates, to present this Note to the Company.

          (c) The issuance of any Conversion Shares, and the delivery of certificates or other
instruments representing such shares or other securities, shall be made without charge to the
Holder for any tax or other charge in respect of such issuance. The Company shall not, however,
be required to pay any tax which may be payable in respect of any transfer involved in the issue
and delivery of any certificate in a name other than that of the Holder, and the Company shall not
be required to issue or deliver any such certificate unless and until the person or persons
requesting the issue thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

          (d) The Holder shall not have, solely on account of such status as a holder of this Note, any
rights of a shareholder of the Company, either at law or in equity, or any right to any notice of
meetings of shareholders or of any other proceedings of the Company, except as provided in this
Note.

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     6. Events of Default.

     The occurrence of any of the following events shall constitute an event of default (an “Event
of Default”):

          (a) A default in the payment of the principal or interest on the Note, when and as the same
shall become due and payable.

          (b) A default in the performance, or a breach, of any of the covenants or agreements of the
Company contained in this Note, the Note Purchase Agreement or the Security Agreement, which
default (except as provided in Section 6(a)) is not cured within ten (10) days after written notice
thereof.

          (c) Any representation, warranty or certification made by the Company in or pursuant to this
Note, the Note Purchase Agreement or the Security Agreement is untrue when made.

          (d) A final judgment or judgments for the payment of money in excess of $50,000 in the
aggregate shall be rendered by one or more courts, administrative or arbitral tribunals or other
bodies having jurisdiction against the Company and the same shall not be discharged (or provision
shall not be made for such discharge), or a stay of execution thereof shall not be procured, within
60 days from the date of entry thereof and the Company shall not, within such 60-day period, or
such longer period during which execution of the same shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal.

          (e) The entry of a decree or order by a court having jurisdiction adjudging the Company a
bankrupt or insolvent, or approving a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company, under federal bankruptcy law, as now or hereafter
constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law,
and the continuance of any such decree or order unstayed and in effect for a period of 60 days; or
the commencement by the Company of a voluntary case under federal bankruptcy law, as now or
hereafter constituted, or any other applicable federal or state bankruptcy, insolvency, or other
similar law, or the consent by the Company to the institution of bankruptcy or insolvency
proceedings against it, or the filing by the Company of a petition or answer or consent seeking
reorganization or relief under federal bankruptcy law or any other applicable federal or state law,
or the consent by the Company to the filing of such petition or to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator or similar official of the Company or of any
substantial part of the property of the Company, or the making by the Company of an assignment for
the benefit of creditors, or the admission by the Company in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by the Company in furtherance
of any such action.

     7. Remedies Upon Default.

     Upon the occurrence of an Event of Default referred to in Sections 6(a) through (e), the
Holder, by notice in writing given to the Company, may declare the entire principal amount then
outstanding of, and the accrued interest on, this Note to be due and payable immediately, and upon
any such declaration the same shall become and be due and payable immediately, without

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presentation, demand, protest or other formalities of any kind, all of which are expressly
waived by the Company; provided, however, that if an event described in Section
6(e) above shall occur, the result that would otherwise occur only upon giving of notice by the
Holder to the Company as specified above shall occur automatically, without the giving of any such
notice. The Holder may institute such actions or proceedings in law or equity as it shall deem
expedient for the protection of its rights and may prosecute and enforce its claims against all
assets of the Company, and in connection with any such action or proceeding shall be entitled to
receive from the Company payment of the principal amount of this Note plus accrued interest to the
date of payment plus reasonable expenses of collection, including, without limitation, reasonable
attorneys’ fees and expenses actually incurred.

     8. Representations and Warranties of the Company. The representations and warranties
of the Company set forth in the Note Purchase Agreement and Security Agreement are incorporated
herein by reference.

     9. Miscellaneous.

          (a) The terms and conditions of this Note shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties; provided, however, that neither party may
assign any of its rights or obligations hereunder without the prior written consent of the other,
except that the Holder may assign all or a portion of its rights hereunder to an affiliate of the
Holder without such consent. Nothing in this Note, expressed or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Note, except as expressly provided
in this Note.

          (b) Any notice or other communication required or permitted to be given hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested, or by Federal Express,
Express Mail or similar overnight delivery or courier service or delivered (in person or by
telecopy, telex or similar telecommunications equipment) against receipt to the party to whom it is
to be given, (i) if to the Company, at its address at 2728 Orchard Parkway, San Jose, California
95134, Attention: Chief Executive Officer, (ii) if to the Holder, at its address set forth on the
first page hereof, or (iii) in either case, to such other address as the party shall have furnished
in writing in accordance with the provisions of this Section 9(b). Notice to the estate of any
party shall be sufficient if addressed to the party as provided in this Section 9(b). Any notice
or other communication given by certified mail shall be deemed given at the time of certification
thereof, except for a notice changing a party’s address which shall be deemed given at the time of
receipt thereof. Any notice given by other means permitted by this Section 9(b) shall be deemed
given at the time of receipt thereof.

          (c) Upon receipt of evidence satisfactory to the Company, of the loss, theft, destruction or
mutilation of this Note (and upon surrender of this Note if mutilated), including an affidavit of
the Holder thereof that this Note has been lost, stolen, destroyed or mutilated together with an
indemnity against any claim that may be made against the Company on account of such lost, stolen,
destroyed or mutilated Note, and upon reimbursement of the Company’s reasonable

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incidental expenses, the Company shall execute and deliver to the Holder a new Note of like
date, tenor and denomination.

          (d) No course of dealing and no delay or omission on the part of the Holder or the Company in
exercising any right or remedy shall operate as a waiver thereof or otherwise prejudice the
Holder’s or the Company’s rights, powers or remedies, as the case may be. No right, power or
remedy conferred by this Note upon the Holder or the Company shall be exclusive of any other right,
power or remedy referred to herein or now or hereafter available at law, in equity, by statute or
otherwise, and all such remedies may be exercised singly or concurrently.

          (e) If one or more provisions of this Note are held to be unenforceable under applicable law,
such provision shall be excluded from this Note and the balance of this Note shall be interpreted
as if such provision were so excluded and shall be enforceable in accordance with its terms. This
Note may be amended only by a written instrument executed by the Company and the Holder hereof.
Any amendment shall be endorsed upon this Note, and all future Holders shall be bound thereby.

          (f) This Note shall be governed by and construed in accordance with the laws of the State of
California, without giving effect to principles governing conflicts of law.

          (g) The Company promises to pay any and all reasonable attorneys’ and other out of pocket
professionals’ fees and expenses incurred by Holder after the date hereof in connection with or
related to: (i) this Note, the Warrant issued pursuant to the Note Purchase Agreement (the
“Warrant”), the Note Purchase Agreement or the Security Agreement; (ii) the collection or
enforcement of this Note; (iii) the amendment or modification of this Note, the Note Purchase
Agreement, the Warrant or the Security Agreement; (iv) any waiver, consent, release, or termination
under this Note, the Note Purchase Agreement, the Warrant or the Security Agreement; (v) the
protection, preservation, sale, lease, liquidation, or disposition of collateral under the Security
Agreement or the exercise of remedies with respect to such collateral; (vi) any legal, litigation,
administrative, arbitration, or out of court proceeding in connection with or related to the
Company or the collateral under the Security Agreement, and any appeal or review thereof; and (vii)
any bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout,
foreclosure, or other action related to the Company, this Note, the Warrant or the Security
Agreement, including representing Holder in any adversary proceeding or contested matter commenced
or continued by or on behalf of the Company’s estate, and any appeal or review thereof. Holder’s
professional fees and expenses shall include out of pocket fees or expenses for Holder’s attorneys,
accountants, auctioneers, liquidators, appraisers, investment advisors, environmental and
management consultants, or experts engaged by Holder in connection with the foregoing. The
Company’s promise to pay all of Holder’s professional fees and expenses is part of the obligations
under this Note. All of the foregoing costs and expenses shall be payable within thirty (30) days
of written demand by Holder. The Company agrees that Holder’s written demand need not consist of
more detail than a separate line item for each general category of expense and corresponding
amount, such as legal fees and costs $100.00, filing fees $100.00, or courier services $100.00,
etc., provided that reasonable detail will be provided upon request by the Company.

* * * * *

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     IN WITNESS WHEREOF, the Company has caused this Note to be executed on December ___, 2006 and
effective as of the day and year first above written.

	 	 	 	 	 
	 	STARVOX COMMUNICATIONS, INC.

 	 
	 	By:  	 	 
	 	 	Tom Rowley, President and CEO 	 
	 	 	 	 
	 

Signature Page to the May 24th Note for «Holder»exv10w15

 

Exhibit 10.15

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON ANY EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED TO ANY PERSON, INCLUDING A
PLEDGEE, UNLESS (i) EITHER (A) A REGISTRATION STATEMENT WITH RESPECT THERETO SHALL BE EFFECTIVE
UNDER THE SECURITIES ACT, OR (B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE, AND (ii)
THERE SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES OR “BLUE-SKY” LAWS.

			
	 	 	 
	No. WS-«WarrantNo»
	 	For the Purchase

of up to «Shares»shares

of Common Stock

WARRANT TO PURCHASE

COMMON STOCK

OF

STARVOX COMMUNICATIONS, INC.

(A CALIFORNIA CORPORATION)

     StarVox Communications, Inc., a California corporation (the “Company”), for value received,
the sufficiency of which is hereby acknowledged, certifies that «Holder», or his, her or its
permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase
from the Company, at any time or from time to time on or after the Escrow Release Date (as defined
below) and at or before 5:00 p.m. New York City local time on May 24, 2009 (the “Expiration Date”),
up to «SharesSpelled» («Shares») shares of common stock, par value $0,001 per share, of the Company
(“Common Stock”), at a purchase price per share equal to $0.01 per share (the “Base Price”), as
adjusted upon the occurrence of certain events as set forth in Section 2 of this Warrant. The
shares of Common Stock issuable upon exercise of this Warrant, and the purchase price per share,
are hereinafter referred to as “Warrant Stock” and the “Purchase Price,” respectively. The “Escrow
Release Date” shall mean the date that the loan proceeds are released to the Company pursuant to
that certain Escrow Agreement dated May 24, 2006.

     1. Exercise.

          1.1 Manner of Exercise: Payment in Cash. This Warrant may be exercised by the Holder,
in whole or in part, by surrendering this Warrant, with the purchase form appended hereto as
Exhibit A duly executed by the Holder, at the principal office of the Company, or at such
other place as the Company may designate, accompanied by payment in full of the Purchase Price
payable

 

 

in respect of the number of shares of Warrant Stock purchased upon such exercise. Payment of
the Purchase Price shall be in cash or by certified or official bank check payable to the order of
the Company.

          1.2 Effectiveness. Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this Warrant shall have
been surrendered to the Company as provided in Section 1.1 above. At such time, the person or
persons in whose name or names any certificates for Warrant Stock shall be issuable upon such
exercise as provided in Section 1.3 below shall be deemed to have become the holder or holders of
record of the Warrant Stock represented by such certificates.

          1.3 Delivery of Certificated(s). As soon as practicable after the exercise of this
Warrant in full or in part, and in any event within three (3) business days thereafter, the
Company, at its sole expense, will cause to be issued in the name of, and delivered to, the Holder,
or, subject to the terms and conditions hereof, as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:

               (a) A certificate or certificates for the number of full shares of Warrant Stock to which such
Holder shall be entitled upon such exercise, plus, in lieu of any fractional share to which such
Holder would otherwise be entitled, cash in an amount determined pursuant to Section 1.4 hereof,
and

               (b) In case such exercise is in part only, a new warrant or warrants (dated the date hereof)
of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of
Warrant Stock (without giving effect to any adjustment therein) equal to the number of such shares
called for on the face of this Warrant minus the number of such shares purchased by the Holder upon
such exercise as provided in Section 1.1 above.

          1.4 Fractional Shares. The Company shall not be required upon the exercise of this
Warrant to issue any fractional shares, but shall make an adjustment therefor in cash on the basis
of the fair market value of the Warrant Stock reasonably determined by the Board of Directors of
the Company (and, in the case of a conversion of this Warrant, in accordance with Section 1.5(c)).

          1.5 Right to Convert Warrant into Stock: Net Issuance.

               (a) Right to Convert. In addition to and without limiting the rights of the Holder
under the terms of this Warrant, the Holder shall have the right to convert this Warrant or any
portion thereof (the “Conversion Right”) into shares of Warrant Stock as provided in this Section
1.5 at any time or from time to time during the term of this Warrant. Upon exercise of the
Conversion Right with respect to a particular number of shares subject to this Warrant (the
"Converted Warrant Shares”), the Company shall deliver to the Holder (without payment by the Holder
of any Purchase Price or any cash or other consideration) that number of shares of fully paid and
nonassessable Warrant Stock equal to the quotient obtained by dividing (X) the value of this
Warrant (or the specified portion hereof) on the Conversion Date (as defined in subsection (b)
hereof), which value shall be determined by subtracting (A) the aggregate Purchase Price of the
Converted Warrant Shares immediately prior to the exercise of the Conversion Right

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from (B) the aggregate fair market value of the Converted Warrant Shares issuable upon
exercise of this Warrant (or the specified portion hereof) on the Conversion Date (as herein
defined) by (Y) the fair market value of one share of Warrant Stock on the Conversion Date (as
herein defined).

     Expressed as a formula, such conversion shall be computed as follows:

	 	 	 	 	 
	N =

	 	B – A
 

Y
	 	 

	 	 	 
	where:

	 	N = the number of shares of Warrant Stock that may be issued to Holder
	 
	 	 
	 

	 	Y = the fair market value (FMV) of one share of Warrant Stock
	 
	 	 
	 

	 	A = the aggregate Warrant Price (Converted Warrant Shares x Purchase Price)
	 
	 	 
	 

	 	B = the aggregate FMV (i.e., FMV x Converted Warrant Shares)

No fractional shares shall be issuable upon exercise of the Conversion Right, and, if the number of
shares to be issued determined in accordance with the foregoing formula is other than a whole
number, the Company shall pay to the Holder an amount in cash equal to the fair market value of the
resulting fractional share of the Conversation Date (as herein defined).

               (b) Method of Exercise. The Conversion Right may be exercised by the Holder by the
surrender of this Warrant at the principal office of the Company together with the Subscription
Form in the form attached hereto, duly completed and executed and indicating the number of shares
subject to this Warrant which are being surrendered (referred to in Section 1.5(a) hereof as the
Converted Warrant Shares) in exercise of the Conversion Right. Such conversion shall be effective
upon receipt by the Company of this Warrant, together with the aforesaid written statement, or on
such later date as is specified therein (the “Conversion Date”), and, at the election of the Holder
hereof, may be made contingent upon the occurrence of any of the events specified in Section 2.4.
Certificates for the shares issuable upon exercise of the Conversion Right and, if applicable, a
new warrant (dated the date hereof) evidencing the balance of the shares remaining subject to this
Warrant, shall be issued as of the Conversion Date and shall be delivered to the Holder within
thirty (30) days following the Conversion Date.

               (c) Determination of Fair Market Value. For purposes of this Section 1.5, “fair
market value” of a share of Warrant Stock as of a particular date (the “Determination Date”) shall
mean:

                    (1) If the Company’s Common Stock is traded on an exchange or is quoted on the Nasdaq National
or Small Cap Market, then the average closing prices over the three-day period ending on the day
prior to the Determination Date;

                    (2) If the Company’s Common Stock is not traded on an exchange or on the Nasdaq National or
Small Cap Market but is traded in the over-the-counter market, then the average closing prices over
the three-day period ending on the day prior to the Determination Date;

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                    (3) In the event that the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or winding up with respect to the
Warrant Stock under the Company’s Articles of Incorporation, then the fair market value per share
of the Warrant Stock shall be determined by aggregating all amounts to be payable per share to
holders of the Warrant Stock in the event of such liquidation, dissolution or winding up; or

                    (4) In all other cases, the fair market value per share of the Warrant Stock shall be
determined in good faith by the Company’s Board of Directors upon review of relevant factors.

     2. Certain Adjustments. The Purchase Price and the number of shares of Warrant Stock
deliverable upon exercise of the Warrant shall be subject to adjustment from time to time as
follows:

          2.1 Subdivision, Reclassification or Change in Common Stock. In the event of any
subdivision, reclassification or change of the Common Stock into a greater number or different
class or classes of stock, the number of shares of Warrant Stock deliverable upon exercise of this
Warrant shall be determined in accordance with the terms of the Articles of Incorporation, and the
Purchase Price for such Warrant Stock shall be proportionately reduced.

          2.2 Consolidation, Reclassification or Change in Common Stock. In the event of any
consolidation, reclassification or change of the Common Stock into a lesser number or different
class or classes of stock, the number of shares of Warrant Stock deliverable upon exercise of this
Warrant shall be determined in accordance with the terms of the Articles of Incorporation, and the
Purchase Price for such Warrant Stock shall be proportionately increased.

          2.3 Reorganizations. If there shall occur any capital reorganization of the Common
Stock (other than a subdivision, combination, reclassification or change in par value), then, as
part of any such reorganization, lawful provision shall be made so that the Holder shall have the
right thereafter to receive upon the exercise of this Warrant the kind and amount of shares of
stock or other securities or property which such Holder would have been entitled to receive if,
immediately prior to any such reorganization, such Holder had held the number of shares of Common
Stock which were then purchasable upon the exercise of this Warrant. In any such case, appropriate
adjustment (as reasonably determined by the Board of Directors of the Company) shall be made in the
application of the provisions set forth herein with respect to the rights and interests thereafter
of the Holder such that the provisions set forth in this Section 2 (including provisions with
respect to adjustment of the Purchase Price) shall thereafter be applicable, as nearly as is
reasonably practicable, in relation to any shares of stock or other securities or property
thereafter deliverable upon the exercise of this Warrant.

          2.4 Merger, Consolidation or Sale of Assets. If there shall be a merger or
consolidation of the Company with or into another corporation (other than a merger or
reorganization involving only a change in the state of incorporation of the Company or the
acquisition by the Company of other businesses where the Company survives as a going concern), or
the sale of all or substantially all of the Company’s capital stock or assets to any other person,
then as a part of such transaction, provision shall be made so that the Holder shall thereafter be
entitled to

-4-

 

receive the number of shares of stock or other securities or property of the Company, or of
the successor corporation resulting from the merger, consolidation or sale, to which the Holder
would have been entitled if the Holder had exercised its rights pursuant to this Warrant
immediately prior thereto. Notwithstanding anything to the contrary set forth in this Warrant, in
the event that the Company completes a transaction described in this Section 2.4 with U.S. Wireless
Data, Inc., then the terms of such transaction shall provide that this Warrant be assumed by the
parent corporation surviving such transaction so that the Holder shall thereafter be entitled to
receive the number of shares of stock or other securities or property of such corporation to which
the Holder would have been entitled if the Holder had exercised its rights pursuant to this Warrant
immediately prior thereto. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 2 to the end that the provisions of this Section 2
shall be applicable after that event in as nearly equivalent a manner as may be practicable.

          2.5 Certificate of Adjustment. When any adjustment is required to be made in the
Purchase Price, the Company shall promptly mail to the Holder a certificate setting forth the
Purchase Price after such adjustment and setting forth a brief statement of the facts requiring
such adjustment. Such certificate shall also set forth the kind and amount of stock or other
securities or property into which this Warrant shall be exercisable following the occurrence of any
of the events specified in this Section 2.

     3. Compliance with Securities Act.

          3.1 Unregistered Securities. The Holder acknowledges that this Warrant and the
Warrant Stock have not been registered under the Securities Act, and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Stock in
the absence of (i) an effective registration statement under the Securities Act covering this
Warrant or such Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock under any applicable “blue-sky” or state securities law then in effect, or (ii) an opinion of
counsel, satisfactory to the Company, that such registration and qualification are not required.
The Company may delay issuance of the Warrant Stock until completion of any action or obtaining of
any consent, which the Company deems necessary under any applicable law (including without
limitation state securities or “blue-sky” laws).

          3.2 Legend. Certificates delivered to the Holder pursuant to Section 1.3 shall bear
the following legend or a legend in substantially similar form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR (B) AN
OPINION OF COUNSEL, IN A REASONABLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE

-5-

 

STATE SECURITIES LAWS, OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.”

     4. Reservation of Stock. The Company agrees that, prior to the expiration of this
Warrant, the Company will at all times have authorized and in reserve, and will keep available,
solely for issuance or delivery upon the exercise of this Warrant, the shares of Common Stock and
other securities and properties as from time to time shall be receivable upon the exercise of this
Warrant, free and clear of all restrictions on sale or transfer and free and clear of all
preemptive rights and rights of first refusal.

     5. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss,
theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required)
in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender
and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like
tenor.

     6. Registration Rights.

          6.1 “Piggy Back” Registration. If at any time the Company shall determine to register
under the Securities Act, any of its Common Stock, other than on Form S-8 or its then equivalent,
it shall send to the Holder written notice of such determination and, if within thirty (30) days
after receipt of such notice, the Holder shall so request in writing, the Company shall use its
best efforts to include in such registration statement all or any part of the Warrant Stock except
that if, in connection with any offering involving an underwriting of Common Stock to be issued by
the Company, the managing underwriter shall impose a limitation on the number of shares of such
Common Stock which may be included in any such registration statement because, in its judgment,
such limitation is necessary to effect an orderly public distribution, and such limitation is
imposed pro rata among the holders of such Common Stock having an incidental
(“piggy back”) right to include such Common Stock in the registration statement according to the
amount of such Common Stock which each holder had requested to be included pursuant to such right,
then the Company shall be obligated to include in such registration statement only such limited
portion of the Warrant Stock with respect to which the Holder has requested inclusion hereunder.

          6.2 Effectiveness. The Company will use its best efforts to maintain the
effectiveness for up to twelve (12) months of any registration statement pursuant to which any of
the Warrant Stock is being offered, and from time to time will amend or supplement such
registration statement and the prospectus contained therein as and to the extent necessary to
comply with the Securities Act and any applicable state securities statute or regulation. The
Company will also provide the Holder with as many copies of the prospectus contained in any such
registration statement as it may reasonably request.

          6.3 Indemnification of Holder. In the event that the Company registers any of the
Warrant Stock under the Securities Act, the Company will indemnify and hold harmless the Holder
from and against any and all losses, claims, damages, expenses or liabilities, to which it becomes
subject under the Securities Act or under any other statute or at common law or otherwise, and,
except as hereinafter provided, will reimburse the Holder for any legal or other expenses
reasonably

-6-

 

incurred by it in connection with investigating or defending any actions whether or not
resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, in any preliminary or amended preliminary
prospectus or in the prospectus (or the registration statement or prospectus as from time to time
amended or supplemented by the Company) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or necessary in order to
make the statements therein not misleading or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the Company and relating to action or
inaction required of the Company in connection with such registration, unless such untrue statement
or omission was made in such registration statement, preliminary or amended, preliminary prospectus
or prospectus in reliance upon and in conformity with information furnished in writing to the
Company in connection therewith by the Holder expressly for use therein. Promptly after receipt by
the Holder of notice of the commencement of any action in respect of which indemnity may be sought
against the Company, the Holder will notify the Company in writing of the commencement thereof,
and, subject to the provisions hereinafter stated, the Company shall assume the defense of such
action (including the employment of counsel, who shall be counsel reasonably satisfactory to the
Holder), and the payment of expenses insofar as such action shall relate to any alleged liability
in respect of which indemnity may be sought against the Company. The Holder shall have the right
to employ separate counsel in any such action and to participate in the defense thereof but the
fees and expenses of such counsel shall not be at the expense of the Company unless representation
of the Holder by the counsel retained by the Company would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party represented by
such counsel in such proceeding or employment of such counsel has been specifically authorized by
the Company. The Company shall not be liable to indemnify any person for any settlement of any
such action effected without the Company’s consent, which consent shall not be unreasonably
withheld, conditioned or delayed. The failure to deliver written notice to the Company within a
reasonable time of the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve the Company of liability to the Holder under this Section 6.3 to the
extent of such prejudice, but the omission so to deliver written notice to the Company will not
relieve it of any liability that it may have to any Holder otherwise than under this Section 6.3.

          6.4 Indemnification of Company. In the event that the Company registers any of the
Warrant Stock under the Securities Act, the Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed the registration statement, each
underwriter of the shares so registered (including any broker or dealer through whom such of the
shares may be sold) and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages, expenses or
liabilities, joint or several, to which they or any of them may become subject under the Securities
Act or under any other statute or at common law or otherwise, and, except as hereinafter provided,
will reimburse the Company and each such director, officer, underwriter or controlling person for
any legal or other expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any liability, insofar as such
losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the registration statement,
in any preliminary or amended preliminary prospectus or in the prospectus (or in the registration
statement

-7-

 

or prospectus as from time to time amended or supplemented) or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, but only insofar as any such
statement or omission was made in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by the Holder expressly for use therein. Promptly
after receipt of notice of the commencement of any action in respect of which indemnity may be
sought against the Holder, the Company will notify the Holder in writing of the commencement
thereof, and the Holder shall, subject to the provisions hereinafter stated, assume the defense of
such action (including the employment of counsel, who shall be counsel reasonably satisfactory to
the Company) and the payment of expenses insofar as such action shall relate to the alleged
liability in respect of which indemnity may be sought against the Holder. The Company and each
such director, officer, underwriter or controlling person shall have the right to employ separate
counsel in any such action and to participate in the defense thereof but the fees and expenses of
such counsel shall not be at the expense of the Holder unless representation of the Company by the
counsel retained by the Holder would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such counsel in such
proceeding or employment of such counsel has been specifically authorized by the Holder. The
Holder shall not be liable to indemnify any person for any settlement of any such action effected
without the Holder’s consent, which consent shall not be unreasonably withheld, conditioned or
delayed. The failure to deliver written notice to the Holder within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such action, shall relieve
the Holder of liability to the Company under this Section 6.4 to the extent of such prejudice, but
the omission so to deliver written notice to the Holder will not relieve it of any liability that
it may have to the Company otherwise than under this Section 6.4.

          6.5 Termination of Obligation. The Company’s obligation to register Holder’s Warrant
Stock pursuant to this Section 6 shall terminate at such time as the Company’s shares are publicly
traded and all shares of Common Stock of the Company issuable or issued upon conversion of the
Warrant Stock held by Holder (and its affiliates) may be sold pursuant to Rule 144 during any
ninety (90) day period.

     7. Transferability. Except as otherwise set forth in Section 3, this Warrant is not
transferable by the Holder. Any attempted transfer, assignment, pledge, hypothecation or other
disposition of this Warrant or of any rights granted hereunder contrary to the provisions of this
Section 7, or the levy of any attachment or similar process upon this Warrant or such rights, shall
be null and void.

     8. No Rights as Shareholder. Until the exercise of this Warrant, the Holder shall not
have or exercise any rights by virtue hereof as a shareholder of the Company.

     9. Notices. All notices, requests and other communications hereunder shall be in
writing, shall be either (i) delivered by hand, (ii) made by telex, telecopy or facsimile
transmission, (iii) sent by overnight courier, or (iv) sent by registered mail, postage prepaid,
return receipt requested. In the case of notices from the Company to the Holder, they shall be
sent to the address furnished to the Company in writing by the last Holder who shall have furnished
an address to the Company in writing. All notices from the Holder to the Company shall be
delivered to the Company

-8-

 

at its offices at 2728 Orchard Parkway, San Jose, California 95134, Attention: Chief Executive
Officer, or such other address as the Company shall so notify the Holder. All notices, requests
and other communications hereunder shall be deemed to have been given (i) by hand, at the time of
the delivery thereof to the receiving party at the address of such party described above, (ii) if
made by telex, telecopy or facsimile transmission, at the time that receipt thereof has been
acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the
next business day following the day such notices is delivered to the courier service, or (iv) if
sent by registered mail, on the fifth business day following the day such mailing is made.

     10. Waivers and Modifications. Any term or provision of this Warrant may be waived
only by written document executed by the party entitled to the benefits of such terms or
provisions. The terms and provisions of this Warrant may be modified or amended only by written
agreement executed by the parties hereto.

     11. Headings. The headings in this Warrant are for convenience of reference only and
shall in no way modify or affect the meaning or construction of any of the terms or provisions of
this Warrant.

     12. Governing Law. This Warrant will be governed by and construed in accordance with
and governed by the laws of California without giving effect to the conflict of law principles
thereof.

[Signature Page Follows]

-9-

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed on December ___,
2006, by one of its officers thereunto duly authorized.

	 	 	 	 	 
	 	STARVOX COMMUNICATIONS, INC.

 	 
	 	By:  	 	 
	 	 	Tom Rowley, President and CEO 	 
	 	 	 	 
	 

Signature Page to the May 24th Warrant for «Holder»

 

 

EXHIBIT A

PURCHASE FORM

     To: STARVOX COMMUNICATIONS, INC.

     The undersigned pursuant to the provisions set forth in the attached Warrant hereby irrevocably
elects to (check one):

	 	 	 	 	 
	 

	 	                    
	 	(A) purchase                                                     shares of Common Stock, par value $0,001 per
share, of StarVox Communications, Inc. (the “Common Stock”), covered by such Warrant
and herewith makes payment of $                    , representing the full purchase price for
such shares at the price per share provided for in such Warrant; or
	 
	 	 	 	 
	 

	 	                    
	 	(B) convert                                          Warrant Shares into that number of shares
of fully paid and nonassessable shares of Common Stock, determined pursuant to the
provisions of Section 1.5 of the Warrant.

     Common Stock for which the Warrant may be exercised or converted shall be known herein as
"Warrant Stock.”

     The undersigned is aware that Warrant Stock has not been and will not be registered under the
Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws. The
undersigned understands that reliance by the Company on exemptions under the Securities Act is
predicated in part upon the truth and accuracy of the statements of the undersigned in this
Purchase Form.

     The undersigned represents and warrants that (i) he has been furnished with all information
which he deems necessary to evaluate the merits and risks of the purchase of Warrant Stock, (ii) he
has had the opportunity to ask questions concerning Warrant Stock and the Company and all questions
posed have been answered to his satisfaction, (iii) he has been given the opportunity to obtain any
additional information he deems necessary to verify the accuracy of any information obtained
concerning Warrant Stock and the Company and (iv) he has such knowledge and experience in financial
and business matters that he is able to evaluate the merits and risks of purchasing Warrant Stock
and to make an informed investment decision relating thereto.

     The undersigned hereby represents and warrants that he is purchasing Warrant Stock for his own
account for investment and not with a view to the sale or distribution of all or any part of
Warrant Stock.

     The undersigned understands that because Warrant Stock has not been registered under the
Securities Act, he must continue to bear the economic risk of the investment for an indefinite
period of time and Warrant Stock cannot be sold unless it is subsequently registered under
applicable federal and state securities laws or an exemption from such registration is available.

 

 

     The undersigned agrees that he will in no event sell or distribute or otherwise dispose of all
or any part of Warrant Stock unless (i) there is an effective registration statement under the
Securities Act and applicable state securities laws covering any such transaction involving Warrant
Stock, or (ii) the Company receives an opinion of legal counsel reasonably acceptable to the
Company stating that such transaction is exempt from registration. The undersigned consents to the
placing of a legend on his certificate for Warrant Stock stating: (i) that the resale or transfer
of the Warrant Stock has not been registered and setting forth the restriction on transfer
contemplated hereby; and (ii) to the placing of a stop-transfer order on the books of the Company
and with any transfer agents against Warrant Stock until Warrant Stock may be legally resold or
distributed without restriction.

     The undersigned has considered the federal and state income tax implications of the exercise
of the Warrant and the purchase and subsequent sale of the Warrant Stock.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Signature	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Print Name	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	or	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Entity Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Signature	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Print Name	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Title	 	 

-2-

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