Exhibit 10.18
PROMISSORY NOTE
June 24, 2003
Jersey City, New Jersey
$400,000.00
FOR VALUE RECEIVED, the undersigned, NEOMEDIA TECHNOLOGIES INC., a
Delaware
corporation (the "Company"), promises to pay CORNELL CAPITAL
PARTNERS, LP (the
"Holder") at 101 Hudson Street, Suite 3606, Jersey City, New Jersey
07302 or
other address as the Holder shall specify in writing, the principal
sum of Four
Hundred Thousand (U.S.) Dollars and 00/100 ($400,000.00) and will
be payable
pursuant to the following terms:
1. Amount of Note. The face amount of this Promissory Note (this
"Note") shall
be payable out of the net proceeds to be received by the Company
under that
certain Equity Line of Credit Agreement (the "Equity Line of Credit
Agreement")
dated as November 12, 2002 between the Company and the Holder,
provided that all
amounts due under this Note shall be paid in full within sixty nine
(69)
calendar days of the date hereof, unless an extension is mutually
agreed to by
the parties in writing. The Company agrees to escrow eight (8)
requests for
advances under the Equity Line of Credit Agreement in an amount not
less than
Fifty Thousand Dollars ($50,000) (individually referred to as
"Advance Notice"
collectively referred to "Advance Notices") as well as an amount of
shares of
the Company's Common Stock as required under Section 2.2(c) of the
Equity Line
of Credit Agreement (the "Escrowed Shares"). The Escrowed Shares
are only an
estimation of the shares of the Company's common stock necessary to
repay the
principal amount and interest due hereunder. In the event that
during the life
of this Note the Escrowed Shares are insufficient to repay all
amounts due
hereunder the Company shall immediately escrow, pursuant to the
irrevocable
transfer agent instructions dated the date hereof (the "Irrevocable
Transfer
Agent Instructions") such number of shares of the Company's common
stock
sufficient to repay all amounts due hereunder. The Advance Notices
and the
shares of the Company's Common Stock will be held in escrow by the
law firm of
Butler Gonzalez LLP, which shall release such requests to the
Holder every seven
(7) calendar days commencing on July 7, 2003. The Holder may at its
sole
discretion retain and apply the net proceeds of each advance (after
deducting
any fees owed to the Holder under the terms of the Equity Line of
Credit) to the
outstanding balance of this Note as existing from time to time. If
this Note is
not paid in full when due, the outstanding principal owed hereunder
shall be due
and payable in full together with interest thereon at the rate of
twenty-four
percent (24%) per annum or the highest permitted by applicable law,
if lower.
During the term of this Note the Company shall have the option to
repay the
amounts due hereunder in immediately available funds and withdraw
any Advance
Notices yet to be effected. At the Holder's option the interest due
hereunder
shall be paid when due either in Common Stock or cash.
2. Additional Financing. If at any time during the term of this
Note the
principal amount together with interest is less than Two Hundred
Thousand
Dollars ($200,000) the
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Holder may, in its sole discretion, offer to the Company either a
promissory
note or an Advance pursuant to the Equity Line of Credit Agreement
in an amount
that will result all amounts, including all amounts due pursuant to
this Note,
owed to the Holder by the Company equal to Two Hundred Thousand
Dollars
($200,000).
3. Waiver and Consent. To the fullest extent permitted by law and
except as
otherwise provided herein, the Company waives demand, presentment,
protest,
notice of dishonor, suit against or joinder of any other person,
and all other
requirements necessary to charge or hold the Company liable with
respect to this
Note.
4. Costs, Indemnities and Expenses. In the event of default as
described herein,
the Company agrees to pay all reasonable fees and costs incurred by
the Holder
in collecting or securing or attempting to collect or secure this
Note,
including reasonable attorneys' fees and expenses, whether or not
involving
litigation, collecting upon any judgments and/or appellate or
bankruptcy
proceedings. The Company agrees to pay any documentary stamp taxes,
intangible
taxes or other taxes which may now or hereafter apply to this Note
or any
payment made in respect of this Note, and the Company agrees to
indemnify and
hold the Holder harmless from and against any liability, costs,
attorneys' fees,
penalties, interest or expenses relating to any such taxes, as and
when the same
may be incurred.
5. Event of Default. Upon an Event of Default (as defined below),
the entire
principal balance and accrued interest outstanding under this Note,
and all
other obligations of the Company under this Note, shall be
immediately due and
payable without any action on the part of the Holder, and the
Holder shall be
entitled to seek and institute any and all remedies available to
it. No remedy
conferred under this Note upon the Holder is intended to be
exclusive of any
other remedy available to the Holder, pursuant to the terms of this
Note or
otherwise. No single or partial exercise by the Holder of any
right, power or
remedy hereunder shall preclude any other or further exercise
thereof. The
failure of the Holder to exercise any right or remedy under this
Note or
otherwise, or delay in exercising such right or remedy, shall not
operate as a
waiver thereof. An "Event of Default" shall be deemed to have
occurred upon the
occurrence of any of the following: (i) the Company should fail for
any reason
or for no reason to make payment of the outstanding principal
balance plus
accrued interest pursuant to this Note within the time prescribed
herein or the
Company fails to satisfy any other obligation or requirement of the
Company
under this Note; or (ii) any proceedings under any bankruptcy laws
of the United
States of America or under any insolvency, not disclosed to the
Holder,
reorganization, receivership, readjustment of debt, dissolution,
liquidation or
any similar law or statute of any jurisdiction now or hereinafter
in effect
(whether in law or at equity) is filed by or against the Company or
for all or
any part of its property.
6. Maximum Interest Rate. In no event shall any agreed to or actual
interest
charged, reserved or taken by the Holder as consideration f
