Contract
THIS
NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY OTHER APPLICABLE
SECURITIES LAWS AND MAY NOT BE TRANSFERRED ABSENT REGISTRATION THEREUNDER OR
AN
APPLICABLE EXEMPTION THEREFROM.
MAGNITUDE
INFORMATION SYSTEMS, INC.
DUE______,
2007
| $__________________ |
Branchburg,
New Jersey
|
|
________________,
2007
|
Magnitude
Information Systems, Inc., a Delaware corporation (the “Company”),
for
value received hereby promises to pay to _____________, (“Holder”),
the
principal sum of FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00) on July 27,
2007, in such coin or currency of the United States of America as at the time
of
payment shall be legal tender for the payment of public and private debts,
and
to pay interest at the rate of 1% per month on the principal amount of
$50,000.00, accruing from April 27, 2007, or so much thereof as shall be
outstanding at maturity, plus an origination fee of $5,000.00 and a grant of
shares, in accordance with Section 2 below, also due at maturity.
In
case
one or more of the following “Events
of Default”
shall
have occurred and be continuing:
(a) default
in the due and punctual payment of the principal, the accrued interest and
origination fee due under this Note upon maturity; or
(b) a
decree
or order by a court shall have been entered adjudging the Company a bankrupt
or
insolvent, or appointing a receiver or trustee for the affairs or assets of
the
Company, and such decree or order shall have remained in force undischarged
or
unstayed for a period of 60 days; or
(c) the
Company shall institute proceedings to be adjudicated a voluntary bankrupt,
or
shall consent to the filing of any such petition or to the appointment of a
receiver or trustee or shall make an assignment for the benefit of
creditors.
Except
in
the cases under 1(b) or 1(c), if, for whatsoever reason, the Company fails
to
pay all of the principal, accrued interests and origination fee upon maturity,
this Note and the payment obligations hereunder shall be automatically extended
for an additional 90 days and the Company shall issue five hundred thousand
(500,000) shares of its common stock to the Holder as a penalty (the “penalty
shares”) , subject, however, to postponement as provided in Section 2(c)
below.
(a) The
Company, as partial consideration for the loan upon which this Note is based,
shall deliver to the Holder a stock grant of five hundred thousand (500,000)
shares of the common stock of the Company at the maturity date.
(b)
The
Holder hereof shall have the option to convert part or all of the outstanding
principal balance, accrued interest and origination fee into shares of the
common stock of the Company at maturity at a conversion rate that is the lower
of (i) $.05 per share, or (ii) the investment rate utilized in any private
placement consummated anytime following the date of this Note and continuing
until maturity.
(c)
The
issuance of the stock grant at maturity, (a) above, the issuance of any shares
pursuant to the exercise by the Holder of his election to convert at maturity
,
(b) above, and the issuance of the penalty shares at maturity shall not be
made
at the time of maturity if the Company has a public offering in registration
with the Securities and Exchange Commission under the Securities Act, in which
event the stock grant, the issuance of any shares through the exercise of the
Holder’s right of conversion and the issuance of the penalty shares shall be
postponed until the 31st
day
following the date the subject registration statement has been declared
effective or withdrawn.
3. Governing
Law.
This
Note shall be governed by and construed in accordance with the laws of the
State
of New Jersey, without regard to the conflicts of laws principles thereof.
Venue
for any action pursuant hereto shall be in the appropriate state or federal
court in New Jersey.
(a) Prior
to
due presentment for registration of transfer of this Note, the Company may
deem
and treat the registered holder hereof as the absolute owner of the Note
(whether or not the Note shall be overdue and notwithstanding any notes of
ownership or writing hereof made by anyone other than the Company), for the
purpose of receiving payment of or on account of the principal hereof (and
premium, if any) and interest hereon, for the conversion hereof and for all
other purposes, and the Company shall not be affected by any notice to the
contrary. All such payments or conversions shall be valid and effectual to
satisfy and discharge the liability upon the Note to the extent of the sum
or
sums so paid, or the conversions so made.
(b) No
recourse shall be had for the payment of the principal of (or premiums, if
any)
or the interest on the Note, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, stockholder, officer or director,
as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or otherwise, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment,
or penalty or otherwise, all such liability being, by the acceptance hereof
and
as part of the consideration for the issuance hereof, expressly waived and
released.
| AGNITUDE INFORMATION SYSTEMS, INC. | ||
| |
|
|
| By: | ||
|
Xxxxxx Xxxxxx, President and |
||
| Chef Executive Office | ||