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THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE ”
ACT ”),
OR ANY STATE SECURITIES LAWS. NO INTEREST IN THIS NOTE MAY BE
OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE LAWS,
(ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER THE
ACT (OR ANY SIMILAR RULE UNDER THE ACT), OR (iii) AN EXEMPTION
FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAWS WHERE
PAYEE HAS FURNISHED TO THE COMPANY AN OPINION OF ITS COUNSEL THAT
AN REGISTRATION IS NOT REQUIRED.
ASKMENOW, INC.
12% JUNIOR CONVERTIBLE PROMISSORY NOTE
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$________________
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____________,
2007
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FOR VALUE RECEIVED, the undersigned, AskMeNow, Inc., a
Delaware corporation (the “
Company ”
or “
Payor ”),
having its executive office and principal place of business at 26
Executive Park, Suite 250, Irvine, CA 92614, hereby promises to pay
to _____________________, a _______________ with its principal
place of business at __________________ (the “
Payee ”)
at such address for Payee (or at such other place as Payee may from
time to time hereafter direct by notice in writing to Payor), the
principal sum of ______________ Dollars ($_____), together with
interest at the Note Rate set forth in Section 2 on the principal
balance outstanding from time to time. Any or all amounts of the
amounts outstanding under this 12% Junior Convertible Promissory
Note (this “
Note ”),
including principal and accrued interest, are convertible into
shares of the Company’s capital stock in accordance with
Section 3 hereof.
This Note is being issued in connection with a bridge
financing (the “
Bridge Offering ”)
by the Company on a “best efforts” no minimum basis, up
to a maximum of $1,000,000 of Bridge Offering units (each a
“
Bridge Unit ”).
Each Bridge Unit consists of $1.00 principal amount of 12% Junior
Convertible Promissory Notes and Warrants to purchase Three (3)
shares of common stock, $.01 par value, of the Company at $.50 per
share (the “
Common Stock ”),
to be offered on a “best efforts” basis. The Bridge
Offering is being made only to investors who qualify as
“accredited investors” as such term is defined in Rule
501 of Regulation D under the Securities Act of 1933, as amended
(the “
Act ”).
Partial Bridge Units may be sold by the Company in its sole
discretion.
All of the proceeds of the Bridge Offering will be used
by the Company for general corporate purposes, including
working capital.
1.
Maturity Date
. Subject
to the provisions of Section 3 below, the entire outstanding
balance of this Note, including principal and unpaid accrued
interest thereon (together, the “
Note Balance ”),
will be due and payable in a single instalment on _______, 2008
(270 days following the issue date of this Note) (the
“
Maturity Date ”).
Notwithstanding the foregoing, the Maturity Date may be extended by
an additional 90 days from the Maturity Date to _________, 2008
(the “
Extended Maturity Date ”)
upon delivery by the Company of written notice thereof to the Payee
no later than 12:00 P.M. EST on the business day immediately
preceding the Maturity Date.
2.
Interest And Payment; Prepayment
.
2.1
The
principal amount of this Note outstanding from time to time
shall bear simple interest at the annual rate (the
“
Note Rate ”)
of twelve (12%) percent from the date hereof through the date of
repayment or conversion, payable upon such date of repayment or
conversion, as applicable.
2.2
The
principal amount of this Note may be prepaid in whole at any
time, or in part from time to time, without penalty or
premium, together with unpaid interest thereon.
2.3
All
payments made by the Payor on this Note, including all
prepayments, shall be applied first to the payment of accrued
unpaid interest on this Note and then to the reduction of the
unpaid principal balance of this Note.
2.4
All
payments made by the Payor on this Note shall be made in such
currency of the United States as shall be legal tender for
the payment of public and private debts at the time of
payment, at the address of the Payee set forth above, or at
such other place as the Payee shall have designated in
advance in writing to the Payor.
2.5
In
the event that the date for the payment of any amount payable
under this Note falls due on a Saturday, Sunday or public
holiday under the laws of the State of California, the time
for payment of such amount shall be extended to the next
succeeding business day and interest at the Note Rate shall
continue to accrue on any principal amount so effected until
the payment thereof on such extended due date.
3.
Conversion .
3.1
Optional Conversion at Any Time .
At the option of the Payee exercised by written notice to the
Company at any time while this Note remains outstanding, all but
not less than all of the Note Balance may be converted into shares
of the Company’s Common Stock, at a per share price equal to
$.50 per share, with the same rights and preferences as the
currently issued and outstanding shares of Common Stock. The number
of shares of Common Stock to which the Payee will be entitled upon
conversion of this Note pursuant to this Section 3.1 will be
determined by dividing the dollar amount of the Note Balance on the
Conversion Date (as defined below) by $.50 per share.
3.2
Optional Conversion at Qualified Investment .
If a person, business entity, or group of persons or business
entities acting in concert (the “
Qualified Investor ”),
acting after the date hereof and before the Maturity Date or
Extended Maturity Date, as applicable, acquires, in a single
arms-length transaction or in a series of related arms-length
transactions, shares of the Company’s common stock, $.01 par
value (the “
Common Stock ”)
or other equity securities of the Company convertible into or
exercisable for Common Stock, for an aggregate consideration valued
at Five Million Dollars ($5,000,000) or more (the “
Qualified Investment ”),
then at the same time the Qualified Investor pays the consideration
for the Qualified Securities (as defined below), the Payee may
elect by written notice thereof to the Company to convert all but
not less than all of the Note Balance into securities that are the
same series and with the same rights and preferences as the equity
securities purchased by the Qualified Investor (the “
Qualified Securities ”),
at a per share price equal to the per share sale price paid by the
Qualified Investor (the “
Conversion Price ”).
For these purposes, any equity securities of the Company issued in
respect of this Note and any other Notes issued in the Bridge
Offering of which this Note is a part shall not be counted towards
the aforesaid Five Million Dollars ($5,000,000). The number of
Qualified Securities to which the Payee will be entitled upon
conversion of this Note pursuant to this Section 3.2 will be
determined by dividing the dollar amount of the Note Balance on the
Conversion Date by the Conversion Price.
3.3
Mechanics of Conversion; No Fractional Shares
.
In the event of a conversion pursuant to this Section 3, the
Company covenants and agrees to take any and all actions that may
be reasonably necessary or desirable in order to issue the
Qualified Securities or Common Stock under the terms and conditions
of this Note. Before the Payee shall be entitled to receive a
certificate for the shares of the Qualified Securities or Common
Stock into which this Note has been converted, the Payee shall
surrender this Note duly endorsed, at the office of the Company,
and shall execute and deliver to the Company all other agreements
requested by the Company which relate to the Qualified Securities
or Common Stock. The Company shall, as soon as reasonably
practicable thereafter, and in any event within ten (10) business
days of the date of conversion, issue and deliver to the Payee, at
the address specified by the Payee, a certificate or certificates
for the Qualified Securities or Common Stock to which the Payee
shall be entitled. No fractional shares shall be issued upon
conversion of this Note and the number of Qualified Securities or
Common Stock to be issued shall be rounded to the nearest whole
share. Any conversion pursuant to this Section 3 shall be deemed
effective as of immediately prior to the close of business on the
date on which the applicable conversion notice is delivered, and
this Note is surrendered, by the Payee to the Company (the
“
Conversion Date ”).
4.
No Rights as Shareholder
. Nothing
contained in this Note shall be construed as conferring upon the
Payee or its permitted transferees, prior to the conversion of this
Note, the right to vote, receive dividends, consent or receive
notice as a shareholder in respect of any meeting of shareholders
for the election of directors of the Company or of any other
matter, or any other rights as a shareholder of the
Company.
5.
Replacement Of Note
.
5.1
In
the event that this Note is mutilated, destroyed, lost or
stolen, Payor shall, at its sole expense, execute, register
and deliver a new Note, in exchange and substitution for this
Note, if mutilated, or in lieu of and substitution for this
Note, if destroyed, lost or stolen. In the case of
destruction, loss or theft, Payee shall furnish to Payor
indemnity reasonably satisfactory to Payor, and in any such
case, Payee shall also furnish to Payor evidence to its
reasonable satisfaction of the mutilation, destruction, loss
or theft of this Note and of the ownership thereof. Any
replacement Note so issued shall be in the same outstanding
principal amount as this Note and dated the date to which
interest shall have been paid on this Note or, if no interest
shall have yet been paid, dated the date of this
Note.
5.2
Every
Note issued pursuant to the provisions of Section 5.1 above
in substitution for this Note shall constitute a contractual
obligation of the Payor, whether or not this Note shall be
found at any time or be enforceable by anyone.
6.
Covenants of Payor
.
Payor covenants and agrees that, so long as this Note
remains outstanding and unpaid, in whole or in
part:
6.1
Payor
will not sell, transfer or dispose of a material part of its
assets;
6.2
Payor
will not make any loan to any person who is or becomes a
shareholder or executive employee of Payor, other than for
reasonable advances for expenses in the ordinary course of
business;
6.3
Payor
will promptly pay and discharge all lawful taxes, assessments
and governmental charges or levies imposed upon it, its
income and profits, or any of its property, before the same
shall become in default, as well as all lawful claims for
labor, materials and supplies which, if unpaid, might become
a lien or charge upon such properties or any part
thereof;
provided ,
however ,
that Payor or such subsidiary shall not be required to pay and
discharge any such tax, assessment, charge, levy or claim so long
as the validity thereof shall be contested in good faith by
appropriate proceedings and Payor or such subsidiary, as the case
may be, shall set aside on its books adequate reserves (if required
by generally accepted accounting principles) with respect to any
such tax, assessment, charge, levy or claim so
contested;
6.4
Payor
will do or cause to be done all things necessary to preserve
and keep in full force and effect its c
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