NEITHER THIS
CONVERTIBLE PROMISSORY NOTE NOR THE SECURITIES TO BE ISSUED UPON
ITS CONVERSION HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ ACT ”), OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS (I) PURSUANT
TO REGISTRATION UNDER THE ACT OR (II) IN COMPLIANCE WITH AN
EXEMPTION THEREFROM AND ACCOMPANIED, IF REQUESTED BY THE COMPANY,
WITH AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH AN EXEMPTION
THEREFROM.
New Motion,
Inc.
CONVERTIBLE PROMISSORY
NOTE
Subject to the terms and conditions of this
Convertible Promissory Note (this “ Note
”), for good and valuable consideration received, New Motion,
Inc., a Delaware corporation (the “ Company
”), promises to pay to Index Visual & Games Ltd. (the
“ Holder ”) the aggregate amount
advanced by the Holder to the Company under this Note, up to the
maximum sum of TWO MILLION THREE HUNDRED TWENTY THOUSAND UNITED
STATES DOLLARS ($2,320,000), plus interest at the rate of five
percent (5%) per annum accruing from the time amounts are advanced
hereunder, on the earlier of (a) November 30, 2007 or (b) thirty
(30) days after delivery by the Holder of written notice to the
Company demanding payment (the “ Maturity
Date ”), unless this Note is sooner converted into
shares of capital stock of the Company in accordance with this
Note.
This Note is issued by the Company pursuant to
the terms of an Asset Purchase Agreement, dated as of even date
herewith (the “ Asset Purchase Agreement
”), between the Company and the Holder.
Holder has advanced Five Hundred Thousand United
States Dollars ($500,000) of the aggregate maximum principal amount
of this Note to the Company concurrently with the date hereof.
Holder agrees to advance to the Company under this Note: (i) on
January 26, 2007, an amount equal to the portion of the Purchase
Price (as that term is defined in the Asset Purchase Agreement)
associated with all Carrier Contracts (as that term is defined in
the Asset Purchase Agreement) assigned to the Company following the
date of this Note and prior to January 26, 2007; (ii) on March 7,
2007, the portion of the Purchase Price associated with all Carrier
Contracts assigned to Company from January 26, 2007 and by February
28, 2007; and (iii) from and after March 7, 2007, an amount equal
to the portion of the Purchase Price associated with any Carrier
Contract the Company agrees to purchase after February 28, 2007;
all pursuant to the terms of the Asset Purchase
Agreement.
All payments of interest and principal shall be
in lawful money of the United States of America at the principal
office of the Holder or at such other place as the Holder may from
time to time designate in writing to the Company. All payments
shall be applied first to costs of collection, if any, then to
accrued and unpaid interest, and thereafter to principal.
The Company hereby waives demand, notice,
presentment, protest, notice of dishonor and other notice of any
kind, and asserts to extensions of the time of payment, or
forbearance or other indulgence, without notice. The Company agrees
to pay all amounts under this Note without offset, deduction,
claim, counterclaim, defense or recoupment, all of which are hereby
waived.
The following is a statement of the rights of
the Holder and terms and conditions (in addition to those set forth
above) to which this Note is subject and to which the Company and
Holder, by acceptance of this Note, agrees:
1.
Optional
Conversion . From
and after the date hereof, Holder shall have the right at its
option, by giving written notice to the Company at the address set
forth in Section 9 below at any time and from time to time prior to
the full repayment of this Note, to convert in whole or in part the
outstanding principal amount of this Note and all accrued interest
thereon into shares of Common Stock of the Company, par value
$0.001 per share (the “ Conversion Shares
”), at a price equal to $5.00 per share (the “
Conversion Price ”). In the event that the
Company or its stockholders consummate a reverse merger, share
exchange or similar transaction pursuant to which the
Company’s Common Stock is exchanged for or converted into
shares of another company, the Board of Directors of the Company
shall make appropriate adjustment to the Conversion Shares and
Conversion Price so that the Holder shall receive upon conversion
the same type and amount of securities of the surviving company and
with the same economic benefits as if this Note had been converted
into Common Stock immediately prior to such transaction.
Appropriate adjustment to the Conversion Shares and/or Conversion
Price shall also be made for any stock splits, stock dividends,
reclassifications or other reorganizations. The Company shall
notify the Holder in advance in writing of any such event and the
amount of proposed adjustment to the Conversion Shares or
Conversion Price.
2.
Automatic
Conversion . Effective upon the date that the
Conversion Shares are listed on the New York Stock Exchange,
American Stock Exchange, Nasdaq Global Market or Nasdaq Capital
Market, the outstanding principal amount of this Note and all
accrued interest thereon shall automatically convert into the
Conversion Shares at the Conversion Price, without any further
action of the Company or the Holder. The Company shall provide the
Holder at least thirty (30) days’ advance written notice of
any such event requiring the automatic conversion of the Note into
the Conversion Shares.
3.
Delivery of Note and Share
Certificate . As soon as reasonably practicable
following conversion of this Note in whole pursuant to Section 1 or
Section 2 hereto, the Holder shall deliver the executed original of
this Note to the Company. In the event this Note is converted in
part, Holder shall not be obligated to return the ex
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