SECURED CONVERTIBLE NOTEConvertible Promissory Note |
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THIS NOTE
AND THE COMMON
SHARES ISSUABLE UPON
CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS
AMENDED. THIS NOTE AND THE COMMON
SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF
AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER
SAID ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO
DATASCENSION, INC. THAT SUCH REGISTRATION
IS NOT REQUIRED.
PRINCIPAL AMOUNT $
1,702,859.00 ISSUE DATE: June 12
, 2006
PURCHASE PRICE $ 1,250,000.00
SECURED CONVERTIBLE NOTE
FOR VALUE RECEIVED, DATASCENSION,
INC., a Nevada corporation (hereinafter
called "Borrower"), hereby promises to pay to
the LONGVIEW FUND,
LP (the
"Holder") or order,
without demand, the sum of one million seven hundred two
thousand eight hundred fifty nine
Dollars ($1,702,859), with interest accruing
thereon, on June 12 , 2008 (the "Maturity Date"), if not retired
sooner.
This Note has been entered into
pursuant to the terms of a subscription
agreement between the Borrower and the Holder, dated of even date herewith (the
"Subscription
Agreement"), and shall
be governed by
the terms of
such
Subscription Agreement. Unless
otherwise separately defined
herein, all
capitalized terms used in this Note shall have the same meaning as is set forth
in the Subscription Agreement. The
following terms shall apply to this Note:
ARTICLE I
GENERAL PROVISIONS
1.1 Interest Rate. Interest payable on this Note shall accrue at the
annual rate of six percent (6%) and be payable September 30, 2006, on the last
day of each calendar quarter thereafter, at the request of the
Holder upon or
after each conversion of principal pursuant to Article II, and on the Maturity
Date, accelerated or otherwise, when the principal and
remaining accrued but
unpaid interest shall be due and payable, or sooner as described below.
1.2 Payment Grace Period. The Borrower shall have a five (5) day grace
period to pay any monetary amounts due
under this Note,
after which grace
period a default interest rate of ten percent (10%) per annum.
1.3 Conversion
Privileges. The Conversion Privileges set forth
in
Article II shall remain in full force
and effect immediately from
the date
hereof and until the
Note is paid in full regardless of the occurrence of an
Event of Default. The Note shall
be payable in
full on the Maturity Date,
unless previously converted into Common
Stock in accordance with Article
II
hereof; provided, that if an
Event of Default has occurred, the Borrower may
not pay this Note, without the consent
of the Holder, until one year after the
later of the date the Event of Default
has been cured
or one year after the
Maturity Date.
ARTICLE II
CONVERSION RIGHTS
The Holder shall have the right to
convert the principal and any interest
due under this Note into Shares of the Borrower's Common Stock, $.001 par value
per share ("Common Stock") as set forth below.
2.1. Conversion into the Borrower's Common Stock.
(a) The Holder shall have the right from
and after the
date of
the issuance of this Note and then at any time until this
Note is fully paid,
to convert any outstanding and unpaid
principal portion of
this Note, and
accrued interest, at the election of the Holder (the date of
giving of such
notice of conversion
being a "Conversion Date")
into fully paid
and
nonassessable shares of Common Stock
as such stock
exists on the
date of
issuance of this
Note, or any shares of capital stock of Borrower into which
such Common Stock shall hereafter be changed or reclassified, at the conversion
price as defined in Section 2.1(b)
hereof (the "Conversion Price"), determined
as provided herein. Upon delivery to
the Borrower of a completed Notice of
Conversion, a form of which is annexed hereto, Borrower shall issue and deliver
to the Holder within three (3) business
days after the Conversion Date (such
third day being the "Delivery
Date") that number of shares of Common Stock for
the portion of the
Note converted in accordance with
the foregoing. At the
election of the Holder, the Borrower
will deliver accrued but unpaid
interest
on the Note, if any, through the Conversion Date directly
to the Holder on or
before the Delivery
Date (as defined in the Subscription Agreement). The
number of shares of Common Stock to be issued upon each conversion of this Note
shall be determined by dividing that
portion of the principal of the
Note and
interest, if any, to be converted, by the Conversion Price.
(b) Subject to adjustment as provided in Section 2.1(c) hereof, the
Conversion Price per
share shall be $0.35. In the event the Borrower does
not timely file
an annual report
on Form 10-KSB with the Securities and
Exchange Commission for
the year ended
December 31, 2006
containing
certified audited financial statements showing net revenues of
not less than
$12,000,000 for the 2006 calendar year
with EBITDA of not less than $500,000,
the Conversion Price then in effect
shall be reduced
by one-third from and
after the actual filing
date of the above described Form
10-KSB or if not
filed by April 15, 2007, then from and
after April 15, 2007.
(c) The Conversion Price and number and kind of
shares or other
securities to be issued upon conversion
determined pursuant to Section 2.1(a),
shall be subject to adjustment from time
to time upon the happening of certain
events while this conversion right remains outstanding, as follows:
A. Merger,
Sale of Assets, etc.
If the Borrower at any
time shall consolidate
with or merge
into or sell
or convey all or
substantially all its assets to any other corporation, this
Note, as to the
unpaid principal portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to
purchase such number and kind of shares
or
other securities and property as would have been issuable or
distributable on
account of such consolidation, merger, sale or conveyance, upon or with respect
to the securities subject to the conversion or purchase right immediately prior
to such consolidation, merger, sale
or conveyance. The foregoing provision
shall similarly apply to successive transactions of
a similar nature by any
such successor or purchaser. Without
limiting the generality of the foregoing,
the anti-dilution provisions of this Section shall apply to such
securities of
such successor or
purchaser after any
such consolidation, merger, sale or
conveyance.
B. Reclassification, etc. If
the Borrower at any time
shall, by reclassification or otherwise, change the Common Stock into the same
or a different number of securities of any class or classes that may be issued
or outstanding, this
Note, as to the
unpaid principal portion thereof and
accrued interest thereon, shall thereafter
be deemed to evidence the right
to
purchase an adjusted number of such securities and kind of securities as would
have been issuable as the result of such
change with respect to the Common
Stock immediately prior to such reclassification or other change.
C. Stock
Splits, Combinations and
Dividends. If the
shares of Common
Stock are subdivided or combined
into a greater or smaller
number of shares of Common Stock, or if
a dividend is paid on the Common Stock
in shares of
Common Stock, the Conversion
Price shall be
proportionately
reduced in case of subdivision of shares or stock dividend or
proportionately
increased in the case of combination of
shares, in each such case by the ratio
which the total number of shares of Common
Stock outstanding immediately after
such event bears to the total number of
shares of Common
Stock outstanding
immediately prior to such event..
D. Share
Issuance. So long as this Note
is outstanding,
if the Borrower shall issue or agree to issue any shares of Common Stock except
for the Excepted Issuances (as defined
in the Subscription
Agreement) for a
consideration less than
the Conversion Price in effect at the time of
such
issue, then, and thereafter
successively upon each such
issue, the Conversion
Price shall be reduced to such other lower issue price.
For purposes of this
adjustment, the issuance of any security
carrying the right to convert
such
security into shares of
Common Stock or of any warrant, right or option to
purchase Common Stock shall result in an adjustment to
the Conversion Price
upon the
issuance of the above-described security and again upon the issuance
of shares of Common Stock upon exercise of such conversion or
purchase rights
if such issuance is at a price lower than the then applicable Conversion Price.
The reduction of the Conversion Price
described in this
paragraph is in
addition to other
rights of the
Holder described in
this Note and the
Subscription Agreement.
(d) Whenever the Conversion Price is adjusted
pursuant to Section
2.1(c) above, the Borrower shall
promptly mail to the Holder a notice
setting
forth the Conversion Price after such
adjustment and setting forth a statement
of the facts requiring such adjustment.
(e)






