EXHIBIT 10.4
THIS SECURED RECOURSE PROMISSORY NOTE IS A FULL RECOURSE NOTE AND PAYMENT OF
PRINCIPAL AND ACCRUED INTEREST IS SECURED BY A PLEDGE OF THE SHARES (AS
DEFINED BELOW).
SECURED RECOURSE PROMISSORY NOTE
$1,000,000 May 5, 2006
FOR VALUE RECEIVED, the undersigned Rapid Link, Incorporated, a
Delaware corporation ("Borrower") hereby promises to pay to the order of
Apex Acquisitions, Inc., a Delaware corporation ("Payee"), the principal sum
of $1,000,000 together with interest on the unpaid balance of such principal
amount from the date hereof at a rate of interest equal to eight percent per
annum (this "Promissory Note"). The principal balance of, and all accrued
and unpaid interest on, this Promissory Note shall be due and payable in
full by Borrower on the earlier to occur of (i) that date which is 18 months
from the date hereof, or (ii) upon the Borrower's closing of an equity
funding or debt financing with gross proceeds to the Borrower of at least
$2,000,000.
Payments of principal and interest on this Promissory Note shall be
made in legal tender of the United States of America and shall be made at
such place as Payee shall have designated to Borrower. If the date set for
any payment of principal or interest on this Promissory Note is a Saturday,
Sunday or legal holiday, then such payment shall be due on the next
succeeding business day.
As of the date hereof, Borrower has purchased all of the issued and
outstanding shares of common stock of the Payee, par value $0.0001 per
share (the "Shares") pursuant to the terms of that certain Stock Purchase
Agreement dated as of May 3, 2006, as amended by that certain Amendment No.
1 of Stock Purchase Agreement dated as of May 5, 2006, by and between Payee
and Borrower (the "Purchase Agreement"). Payment of this Promissory Note
shall be secured by all of the Shares as provided in that certain Stock
Pledge Agreement of even date herewith by and between Payee and Borrower
(the "Pledge Agreement").
The principal balance of, and accrued and unpaid interest on, this
Promissory Note may be prepaid at any time, in whole or in part, without
premium or penalty. Any such prepayment shall be first applied to the
payment of any accrued and unpaid interest and then to the unpaid balance
of the principal amount.
Upon the occurrence and during the continuation of any Event of Default
(as defined below), Payee may, at its sole discretion, upon written notice
to Borrower, declare immediately due and payable the entire unpaid principal
amount of this Note, together with accrued and unpaid interest thereon;
provided, however, that in the case of any Event of Default described in
clause (f) or clause (g) below with respect to Borrower, no such notice
shall be required. Each of the following constitutes an "Event of Default":
(a) Borrower shall fail to make complete payment of any
installment of accrued interest under this Promissory Note within ten
days of the date such installment of accrued interest is due;
(b) Borrower shall fail to make complete payment of principal
when due under this Promissory Note within ten days of the date such
payment is due;
(c) Borrower (i) becomes insolvent or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due,
(ii) voluntarily commences any proceeding or files any petition under
any bankruptcy, insolvency or similar law seeking reorganization or
the appointment of a receiver, trustee, custodian or liquidator for
Borrower or a substantial portion of its property, assets or business,
or to effect a plan or other arrangement with its creditors, (iii)
files any answer admitting the jurisdiction of the court and the
material allegations of an involuntary petition filed against
Borrower in any bankruptcy, insolvency or similar proceeding, (iv) is
adjudicated bankrupt, or (v) makes a general assignment for the benefit
of creditors of, or appoints a receiver, trustee, custodian or
liquidator for a substantial portion of, its property, assets or
business; or
(d) Both (i) involuntary proceedings or an involuntary petition
shall be commenced or filed against Borrower under any bankruptcy,
insolvency or similar law or seeking the appointment of a receiver,
trustee, custodian or liquidator for Borrower or a substantial part of
Borrower's property, assets or business, or any writ, judgment, warrant
of attachment, execution or similar process shall be issued or levied
against a substantial part of Borrower's property, assets or business
and (ii) such proceedings or petition shall not be dismissed, or such
writ, judgment, warrant or attachment, execution or similar process
shall not be released, vacated or fully bonded, within 60 days after
commencement, filing or levy, as the case may be, or any order for
relief shall be entered in any such proceeding.
The failure of Payee to accelerate this Promissory Note shall not
constitute a waiver of any of Payee's rights under this Promissory Note
as long as Borrower's default under this Promissory Note continues.
The provisions of this Promissory Note shall be governed by and
construed in accordance with the laws of the State of Delaware without
regard to the conflicts of law rules thereof. In the event that Payee is
required to take any action to collect or otherwise enforce payment of this
Promissory Note, Borrower agrees to pay such reasonable attorneys' fees,
court costs and other expenses as Payee may incur as a result thereof,
whether or not suit is commenced.
The terms and provisions of this Promissory Note shall be binding upon
the parties hereto and their respective successors and assigns and shall
inure to the benefit of the parties hereto and the successors and assigns of
Payee and any assignee or transferee of this Promissory Note. In the event
of such transfer or assignment, the rights and privileges conferred upon
Payee shall automatically extend to and be vested in such assignee or
transferee, all subject to the terms and conditions hereof. Borrower's
obligations, rights or any interest hereunder may not be delegated or
assigned without the written consent of Payee.
All notices, requests, demands or other communications under this
Promissory Note shall be delivered in accordance with the provisions of
Section 12(b) of the Pledge Agreement to the addresses set forth therein.
IN WITNESS WHEREOF, this Promissory Note has been duly executed and
delivered by Borrower on the date first above written.
BORROWER:
Rapid Link, Incorporated,
a Delaware corporation
By:
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John Jenkins, Chief Executive Officer