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) During
the period the
conversion right exists, Borrower will
reserve from its authorized and unissued Common Stock not less
than an amount
of Common Stock equal to 150% of the amount of shares of Common Stock
issuable
upon the full conversion of this Note. Borrower represents that upon
issuance,
such shares will be duly and validly issued, fully paid and non-assessable.
Borrower agrees that its issuance of this Note shall constitute
full authority
to its officers,
agents, and transfer agents who are charged with the duty
of
executing and
issuing stock certificates to execute and issue
the necessary
certificates for shares of Common Stock upon the conversion
