THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. 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
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO PIPELINE DATA INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED TERM NOTE
FOR VALUE RECEIVED, MILLENNIUM MERCHANT SERVICES, INC. a Delaware
corporation and XXXX XXXXXXX (the "Borrowers"), hereby promises to pay to
PIPELINE DATA INC., a Delaware corporation (the "Holder") or its registered
assigns or successors in interest, on order, the sum of FIVE HUNDRED DOLLARS
($500,000.00), together with any accrued and unpaid interest hereon, on July7,
2007 (the "Maturity Date") if not sooner paid.
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Asset Purchase Agreement dated as of the
date hereof between the Borrower and the Holder (the "Purchase Agreement").
The following terms shall apply to this Note:
ARTICLE I
INTEREST & PAYMENT
Interest Rate and Payment. Interest shall be calculated at the simple
interest rate of 6% per annum. This loan shall mature on July 7, 2007 but may be
repaid at any time without penalty in cash or with Residual Rights from Merchant
Accounts valued with a share price of $1.20 per share as set forth in Section
2.1.3 of the Asset Purchase Agreement. Residual Rights from Merchant Agreements
used to repay the loan shall be subject to the provisions of Section 3.1 and 3.2
of the Asset Purchase Agreement. The loan shall be personally guaranteed by the
Sellers and collateralized by 1,000,000 Shares, subject to calls for additional
Shares in the event of for additional Shares in the event of a reduction in
Share value.
ARTICLE II
EVENTS OF DEFAULT
Upon the occurrence and continuance of an Event of Default beyond any
applicable grace period, the Holder may make all sums of principal, interest and
other fees then remaining unpaid hereon and all other amounts payable hereunder
due and payable within five (5) days after written notice from Holder to
Borrower (each occurrence being a "Default Notice Period") or be subject to
forced sale of the Shares held as security subject to Article I or Xxxx Xxxxxxx
shall be held personally liable therefor. If, with respect to any Event of
Default other than a payment default described in Section 2.1 below, within the
Default Notice Period the Borrower cures the Event of Default, the Event of
Default will be deemed to no longer exist and any rights and remedies of Holder
pertaining to such Event of Default will be of no further force or effect.
The occurrence of any of the following events is an "Event of Default":
2.1 Failure to Pay Principal, Interest or other Fees. The Borrower fails to
pay when due any installment of principal, interest or other fees hereon in
accordance herewith, or the Borrower fails to pay when due any amount due under
any other promissory note issued by Borrower and such failure continues for a
period of ten (10) days after such payment is the due.
2.2 Breach of Covenant. The Borrower breaches any material covenant or
other term or condition of this Asset Purchase Agreement in any material respect
and such breach, if subject to cure, continues for a period of thirty (30) days
after the occurrence thereof, except where a longer cure period has been
provided.
2.3 Breach of Representations and Warranties. Any material representation
or warranty of the Borrower made herein, in the Asset Purchase Agreement, or in
any Related Document (as defined in the Purchase Agreement) shall be materially
false or misleading and shall not be cured for a period of fifteen (15) days
after the occurrence thereof.
2.4 Receiver or Trustee. The Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed.
2.5 Judgments. Any money judgment, writ or similar final process shall be
entered or filed against the Borrower or any of its property or other assets for
more than $250,000, and shall remain unvacated, unbonded or unstayed for a
period of ninety (90) days.
2.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower which
is not vacated within ninety (90) days.
ARTICLE III
MISCELLANEOUS
3.1 Failure or Indulgence Not Waiver. No failure or delay on the part of
the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
3.2 Notices. Any notice herein required or permitted to be given shall be
in writing and shall be deemed effectively given: (a) upon receipt of succesful
transmission by facsimile, with original deposited with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt, (b) upon personal delivery to the party notified, (c) one day after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the Borrower shall be sent as sest
forth in the Asset Purchase Agreement.
3.3 Amendment Provision. The term "Note" and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented, and any
successor instrument issued pursuant to Section 3.5 hereof, as it may be amended
or supplemented.
3.4 Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Purchase Agreement.
3.5 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the state of
New York. Both parties and the individual signing this Note on behalf of the
Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or unenforceability of any other provision of this
Note. Nothing contained herein shall be deemed or operate to preclude the Holder
from bringing suit or taking other legal action against the Borrower in any
other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court in favor of the Holder.
3.6 Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.
3.7 Cost of Collection. If default is made in the payment of this Note, the
borrower shall pay to Holder reasonable costs of collection, including
reasonable attorney's fees.
[Balance of page intentionally left blank; signature page follows.]
IN WITNESS WHEREOF, Borrower has caused this Secured Term Note to be signed
in its name effective as of this ____th day of May, 2004.
MILLENNIUM MERCHANT SERVICES, INC.
By:/s/ XXXX XXXXXXX
Name:______________________________
Title:_______________________________
WITNESS:
-------------------------------
/s/ XXXX XXXXXXX
------------------------------------
XXXX XXXXXXX
WITNESS:
-------------------------------
EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert all or part of the Note
into Common Stock
[Name and Address of Holder]
The Undersigned hereby elects to convert $_________ of the principal due on
[specify applicable Repayment Date] under the Convertible Term Note issued by
PIPELINE DATA INC. dated February 26, 2004 by delivery of Shares of Common Stock
of PIPELINE DATA INC. on and subject to the conditions set forth in Article III
of such Note.
1. Date of Conversion _______________________
2. Shares To Be Delivered: _______________________
By:_______________________________
Name:_____________________________
Title:______________________________
EXHIBIT B
CONVERSION ELECTION NOTICE
(To be executed by the Holder in order to convert all or part of a Monthly
Amount into Common Stock)
[Name and Address of Holder]
Holder hereby elects to convert $_________ of the Monthly Amount due on
[specify applicable Repayment Date] under the Convertible Term Note issued by
PIPELINE DATA INC. dated February 26, 2004 by delivery of Shares of Common Stock
of PIPELINE DATA INC. on and subject to the conditions set forth in Article III
of such Note.
1. Fixed Conversion Price: $_______________________
2. Amount to be paid: $_______________________
3. Shares To Be Delivered (2 divided by 1): __________________
4. Cash payment to be made by Borrower : $_____________________
Date: ____________
LAURUS MASTER FUND, LTD.
By:_______________________________
Name:_____________________________
Title:______________________________
