EXHIBIT A
IDEAEDGE, INC.
12% SENIOR NOTE
Original Issue Date: March 31,
2009
$750,000
THIS NOTE is the duly authorized and
validly issued 12% Senior Note of IDEAEDGE, INC., a Colorado
corporation (the “ Company ”), having its
principal place of business at 6440 Lusk Blvd., Suite 200, San
Diego, CA 92121, designated as its 12% Senior Note (this “
Note ”).
FOR VALUE RECEIVED, the Company promises
to pay to the order of GEMINI MASTER FUND, LTD. or its registered
assigns (the “ Holder ”) the sum of
Seven-Hundred Fifty Thousand Dollars and No Cents (US$750,000.00)
on the date (the “ Maturity Date ”) which is the
earlier of (a) nine (9) months following the Original Issue Date
hereof and (b) the occurrence of any Fundamental Transaction (as
defined below).
This Note is subject to the following
additional provisions:
Section 1 .
Definitions . For the purposes hereof, in addition to the
terms defined elsewhere in this Note (a) initially capitalized
terms used herein and not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement and (b) the following
terms shall have the following meanings:
“ Bankruptcy Event ”
means any of the following events: (a) the Company or any
Subsidiary commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar law
of any jurisdiction relating to the Company or any Subsidiary; (b)
there is commenced against the Company or any Subsidiary any such
case or proceeding that is not dismissed within 60 days after
commencement; (c) the Company or any Subsidiary is adjudicated
insolvent or bankrupt or any order of relief or other order
approving any such case or proceeding is entered; (d) the Company
or any Subsidiary suffers any appointment of any custodian or the
like for it or any substantial part of its property that is not
discharged or stayed within 60 calendar days after such
appointment; (e) the Company or any Subsidiary makes a general
assignment for the benefit of creditors; (f) the Company or any
Subsidiary calls a meeting of its creditors with a view to
arranging a composition, adjustment or restructuring of its debts;
or (g) the Company or any Subsidiary, by any act or failure to act,
expressly indicates its consent to, approval of or acquiescence in
any of the foregoing or takes any corporate or other action for the
purpose of effecting any of the foregoing.
“ Business Day ” means
any day except any Saturday, any Sunday, any day which shall be a
federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or
required by law or other governmental action to close.
“ California Courts ”
shall have the meaning set forth in Section 7(d).
“ Event of Default ”
shall have the meaning set forth in Section 6.
“ Fundamental Transaction
” means (a) the Company effects any merger or consolidation
of the Company with or into another Person, (b) the Company effects
any sale of all or substantially all of its assets in one
transaction or a series of related transactions,
(c) an acquisition of effective control
(whether through legal or beneficial ownership of capital stock of
the Company, by contract or otherwise) of in excess of 50% of the
voting securities of the Company or its Subsidiaries comprising a
majority of the Company’s assets, (d) any tender offer or
exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of common stock of the Company
are permitted to tender or exchange their shares for other
securities, cash or property, or (e) the Company effects any
reclassification of its common stock or any compulsory share
exchange pursuant to which the common stock is effectively
converted into or exchanged for other securities, cash or property.
For purposes hereof the assets of the Company shall include
the assets of the Company together with its
Subsidiaries.
“ Late Fees ” shall
have the meaning set forth in Section 2.
“ Mandatory Default Amount
” means the sum of (i) 115% of the outstanding amount of this
Note, plus 100% of accrued and unpaid interest hereon, including
all Late Fees, and (ii) all other amounts, costs, expenses and
liquidated damages due in respect of this Note.
“ Original Issue Date
” means the date of the issuance of this Note, regardless of
any transfers of this Note and regardless of the number of
instruments which may be issued to evidence this Note.
“ Permitted Indebtedness
” means (a) the indebtedness evidenced by the Note, (b) lease
obligations and purchase money indebtedness of up to $100,000, in
the aggregate, incurred in connection with the acquisition of
capital assets and lease obligations with respect to newly acquired
or leased assets, and (c) unsecured indebtedness that (i) is
expressly subordinate to the Note pursuant to a written
subordination agreement with the Holder that is acceptable to the
Holder in its sole and absolute discretion and (ii) matures at a
date later than the Maturity Date.
“ Permitted Lien ”
means the individual and collective reference to the following: (a)
Liens for taxes, assessments and other governmental charges or
levies not yet due or Liens for taxes, assessments and other
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves (in the good
faith judgment of the management of the Company) have been
established in accordance with GAAP; (b) Liens imposed by law which
were incurred in the ordinary course of the Company’s
business, such as carriers’, warehousemen’s and
mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Company’s
business, and which (x) do not individually or in the aggregate
materially detract from the value of such property or assets or
materially impair the use thereof in the operation of the business
of the Company and its consolidated Subsidiaries or (y) are being
contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing for the foreseeable
future the forfeiture or sale of the property or asset subject to
such Lien; (c) Liens incurred in connection with Permitted
Indebtedness under clauses (a) and (b) thereunder, provided that
such Liens are not secured by assets of the Company or its
Subsidiaries other than the assets so acquired or
leased.
“ Purchase Agreement ”
means the Securities Purchase Agreement, dated on or about the date
hereof, among the Company and the original Holder hereof, as
amended, modified or supplemented from time to time in accordance
with its terms.
Section 2 .
Interest; Late Fees
.
a)
Interest Rate . Interest shall accrue daily on the
outstanding principal amount of this Note at a rate per annum equal
to 12%.
b)
Payment of Interest
. The Company shall pay to the
Holder any accrued but unpaid interest hereunder on the then
outstanding principal amount of this Note on a monthly basis in
accordance with the provisions of this paragraph. On the
Closing Date, from the proceeds received by the Company from the
Holder, the full amount of interest to be accrued hereunder through
the Maturity Date, equal to $67,500.00, shall be retained by the
Holder. In the event of any prepayment of this Note, the
Holder agrees to disburse to the Company an amount equal to (i) 12%
of such prepayment amount, times (ii) the number of days between
the prepayment date and the Maturity Date using 30-day months,
divided by (iii) 360 days.
c)
Default Interest
. All overdue accrued and unpaid
amounts to be paid hereunder shall entail a late fee at an interest
rate equal to the lesser of 20% per annum or the maximum rate
permitted by applicable law (“ Late Fees ”)
which shall accrue daily from the date such amount is due hereunder
through and including the date of actual payment in
full.
d)
Calculations . All interest calculations shall be on the
basis of a 360-day year with 30-day months.
Section 3.
Different Denominations
. This Note is exchangeable for an equal
aggregate principal amount of Notes (not to exceed four in total)
of different authorized denominations, as requested by the Holder
surrendering the same. No service charge will be payable for
such exchange.
Section 4 .
Prepayment .
a)
Optional . The Company may prepay this Note in whole or
in part without the prior written consent of the Holder at any time
and from time to time.
b)
Mandatory . If after the date hereof the Company and/or
its Subsidiaries in one or more transactions issues Common Stock or
Common Stock Equivalents or other debt or equity securities in
connection with any capital raising transaction in excess of
$100,000 in the aggregate for all such transactions, the Company
shall repay a portion of the outstanding principal amount hereunder
at least equal to 50% of the gross proceeds received by the Company
or such Subsidiary in such transaction(s). Each such repayment
shall be made with one (1) Business Day following the date of
receipt by the Company of such proceeds.
Section 5 .
Negative Covenants
. As long as any portion of this Note
remains outstanding, unless the Holder shall have otherwise given
prior written consent, the Company shall not, and shall not permit
any of its subsidiaries (whether or not a Subsidiary on the
Original Issue Date) to, directly or indirectly:
c)
other than Permitted Indebtedness, enter
into, create, incur, assume, guarantee or suffer to exist any
Indebtedness of any kind, including but not limited to, a
guarantee, on or with respect to any of its property or assets now
owned or hereafter acquired or any interest therein or any income
or profits therefrom;
d)
other than Permitted Liens, enter into,
create, incur, assume or suffer to exist any Lie
