THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF THE ACT.
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
FOR
VALUE RECEIVED,
SAYSWAP, INC. ,
a Delaware corporation (“Borrower”) promises to pay to
the order of
DIGITALFX INTERNATIONAL, INC. ,
a Florida corporation (“Lender”), the sum of Two
Hundred Twenty-Five Thousand Dollars and No One-Hundredths
($225,000.00) together with interest thereon at a rate of eight
percent (8%) per annum on the unpaid balance, with interest to be
compounded semi-annually.
The
Borrower and Lender hereby further set forth their rights and
obligations to one another under this Note and agree to be
legally bound as follows:
1.
Repayment Terms; Mandatory Prepayment .
Borrower hereby agrees to pay in full all unpaid principal and
unpaid accrued interest due hereunder, on April 24, 2008 (the
“Maturity Date”);
provided tha t,
in the event of the consummation of a transaction pursuant to which
the Borrower or any of its subsidiaries receives any cash from the
issuance of any equity securities
(including
pursuant
to an initial public offering of equity securities) in excess of
$2,500,000 (a “Qualified Financing”),
prior to the
Maturity Date, then on a date no later than ten (10) business days
following the consummation of the Qualified Financing (the
“Mandatory Prepayment Date”), Borrower shall
immediately prepay in full the outstanding amount of the all unpaid
principal and interest due hereunder. The earlier to occur of
Maturity Date or the Mandatory Prepayment Date shall be referred to
herein as the “Loan Termination Date”).
Notwithstanding the foregoing ,
with respect to Borrower’s repayment on the Loan Termination
Date, Lender shall notify the Borrower in writing (the
“Election Notice”), not less than thirty (30) days
prior to the Maturity Date or three (3) days prior to the date of
the consummation of the Qualified Financing, as applicable, as to
whether the Lender desires to (i) obtain a cash payment in full for
the amount of the unpaid principal and interest due under this
Note, or (ii) convert the unpaid principal and interest of this
Note (the “Conversion”) into shares of common stock, no
par value per share, of Borrower (the “Common Stock”)
(with anti-dilution protection to the same extent provided to
holders of Warrants issued by Borrower on even date herewith), at
the rate of 26.1 shares of common stock for each $100,000 of
principal and interest due hereunder (the “Conversion
Option”). In the event that Lender’s Election Notice
specifies that Lender chooses the Conversion Option, then on the
Loan Termination Date, Borrower shall issue stock certificate(s) to
Lender and execute such other documents and take such further
action as is necessary to consummate the Conversion.
In
the event Lender chooses the Conversion Option as provided
herein, then, notwithstanding anything in the foregoing, for
purposes of calculating the number of shares to be issued to
Lender as a result of such conversion, the interest rate of
this Note shall be deemed to be 12% per annum from the date of
issuance of this Note to the date the conversion is
effective.
In
the event Lender chooses the Conversion Option as provided
herein, Lender agrees that Lender shall, concurrent with such
conversion, become a signatory to and be bound by all of the
terms and conditions of that certain Shareholders Agreement,
dated as of April 25, 2006, by and among Borrower and the
shareholders set forth therein.
2.
Optional Prepayment of Note. Borrower
may, at its discretion and without penalty, elect to prepay all or
any portion of the amount of principal and interest due under the
Note at any time prior to the Loan Termination Date.
3.
Security Interest. To
secure the prompt payment and performance to Lender of the
Obligations (as hereinafter defined), Borrower hereby assigns,
pledges and grants to Lender for its benefit and for the ratable
benefit of Lender a continuing first priority security interest in
and to and lien on all of its assets (the
“Collateral”), whether now owned or existing or
hereafter acquired or arising and wheresoever located. Borrower
shall mark its books and records as may be necessary or appropriate
to evidence, protect and perfect Lender’s security interest
and lien and shall cause its financial statements to reflect such
security interest and lien.
“
Obligations ”
shall mean all amounts due hereunder of any kind or nature, present
or future. This term includes all principal, interest (including
all interest that accrues after the commencement of any case or
proceeding by or against Borrower in bankruptcy, whether or not
allowed in such case or proceeding), expenses, attorneys’
fees and any other sum chargeable to Borrower
hereunder.
Borrower
shall take all action that may be necessary or desirable, or
that Lender may reasonably request, so as at all times to
maintain the validity, perfection, enforceability and priority
of Lender’s security interest in and lien on the
Collateral or to enable Lender to protect, exercise or enforce
its rights hereunder and in the Collateral, including, but not
limited to, (i) immediately discharging all liens other than
encumbrances reasonably permitted by Lender, (ii) obtaining
landlords’ or mortgagees’ lien waivers, (iii)
delivering to Lender, endorsed or accompanied by such
instruments of assignment as Lender may specify, and stamping
or marking, in such manner as Lender may specify, any and all
chattel paper, instruments, letters of credits and advices
thereof and documents evidencing or forming a part of the
Collateral, (iv) delivering to Lender, such lien, judgment,
litigation and bankruptcy searches as Lender shall request,
(v) entering into warehousing, blocked account and other
custodial arrangements satisfactory to Lender, and (vi)
executing and delivering financing statements, control
agreements, instruments of pledge, mortgages, notices and
assignments, in each case in form and substance satisfactory
to Lender, relating to the creation, validity, perfection,
maintenance or continuation of Lender’s security
interest and lien under the Uniform Commercial Code or other
applicable law. Lender is hereby authorized to file financing
statements signed by Lender instead of Borrower in accordance
with the Uniform Commercial Code. By its signature hereto,
Borrower hereby authorizes Lender to file against Borrower,
one or more financing continuation or amendment statements
pursuant to the Uniform Commercial Code in form and substance
satisfactory to Lender (which statements may have a
description of collateral which is broader than that set forth
herein).
4.
Representations and Warranties of Borrower.
Borrower
represents
and warrants to the Lender that (i) it is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization, (ii) it has the requisite power and authority to
enter into and carry out the terms of, and to perform its
ob
