Exhibit 99.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. 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 LAW OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO DATASCENSION, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.
PRINCIPAL AMOUNT $2,065,458.00 ISSUE DATE: DECEMBER ___, 2006
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SECURED PROMISSORY NOTE
FOR VALUE RECEIVED, DATASCENSION, INC., a Nevada corporation (hereinafter
called "Borrower"), hereby promises to pay to LONGVIEW FUND, LP, 000 Xxxxxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, XX 00000, Fax: (000) 000-0000, (the
"Holder") or its registered assigns or successors in interest or order, without
demand, the sum of Two Million and Sixty-Five Thousand Four Hundred and Forty-
Eight Dollars ($2,065,458.00) ("Principal Amount"), with simple and unpaid
interest thereon, on December ____, 2008 (the "Maturity Date"), if not sooner
paid.
This Note has been entered into pursuant to the terms of a subscription
agreement between the Borrower, the Holder (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
INTEREST; SECURITY AGREEMENT
1.1. Payment Grace Period. The Borrower shall have a five (5) business
day grace period to pay any monetary amounts due under this Note, after which
grace period and during the pendency of an Event of Default (as defined in
Article III) a default interest rate of eighteen percent (18%) per annum shall
apply to the amounts owed hereunder.
1.2 Interest Rate. Simple interest payable on this Note shall accrue
at the annual rate of fourteen percent (14%). Interest will be payable on the
ninetieth (90th) day after the Issue Date and on the last business day of each
calendar quarter thereafter 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. Interest will be payable in cash or if
an Event of Default, or an event which with the passage of time or the giving
of notice could become an Event of Default has not occurred, at the election of
the Holder, by the Borrower's delivery of registered Common Stock ("Interest
Shares") valued at 75% of the average of the three lower closing bid prices of
the Common Stock as reported by Bloomberg L.P. for the Principal Market for the
twenty trading days ending on the trading day preceding the relevant interest
payment date. The Borrower must notify the Holder, in writing, not less than
fifteen trading days of its intention to pay interest with shares of Common
Stock otherwise such payment must be made in cash. The Interest Shares must be
delivered not later than two trading days after the date a cash interest
payment would otherwise be payable.
ARTICLE II
EXCHANGE, REDEMPTION AND APPLICATION OF NOTE PROCEEDS
0.0.Xxxxxxxx. At the election of the Holder, this Note may be
exchanged by the Holder and submitted as payment for other securities and debt
of the Company as described in Section 12(a) of the Subscription Agreement or
as payment for the exercise of Warrants issued by the Borrower.
2.2.Optional Redemption of Principal Amount. Provided an Event of
Default or an event which with the passage of time or the giving of notice
could become an Event of Default has not occurred, whether or not such Event of
Default has been cured, the Borrower will have the option of prepaying the
outstanding Principal amount of this Note ("Optional Redemption") and accrued
interest, in whole or in part, by paying to the Holder a sum of money equal to
105% of the Principal amount to be redeemed, together with accrued but unpaid
interest thereon and any and all other sums due, accrued or payable to the
Holder arising under this Note or any Transaction Document through the
Redemption Payment Date as defined below (the "Redemption Amount"). Xxxxxxxx's
election to exercise its right to prepay must be by notice in writing ("Notice
of Redemption"). The Notice of Redemption shall specify the date for such
Optional Redemption (the "Redemption Payment Date"), which date must be not
later than ten (10) business days after the date of the Notice of Redemption
(the "Redemption Period"). On the Redemption Payment Date, the Redemption
Amount shall be paid in good funds to the Holder. In the event the Borrower
fails to pay the Redemption Amount on the Redemption Payment Date as set forth
herein, then at the election of the Holder (i) such Notice of Redemption will
be null and void, (ii) Borrower will not have the right to deliver another
Notice of Redemption, and/or (iii) Borrower's failure may be deemed by Holder
to be a non-curable Event of Default.
2.3. Mandatory Redemption at Holder's Election. Upon the occurrence
of (i) an Event of Default that continues for more than twenty (20) business
days beyond any required cure or notice period, (ii) a Change in Control (as
defined below), or (iii) of the liquidation, dissolution or winding up of the
Company, then at the Holder's election, the Borrower must pay to the Holder ten
(10) business days after request by the Holder, a sum of money equal to 115% of
the outstanding principal amount of the Note designated by the Holder, together
with accrued but unpaid interest thereon, less the amount described in Section
11.7(c) of the Subscription Agreement calculated in connection with the default
described therein ("MANDATORY REDEMPTION PAYMENT"). Upon receipt of the
Mandatory Redemption Payment, the corresponding Note principal and interest
will be deemed paid and no longer outstanding. "CHANGE IN CONTROL" shall mean
(i) the Borrower no longer having a class of shares publicly traded or listed
on a Principal Market, (ii) the Borrower becoming a Subsidiary of another
entity (other than a corporation formed by the Borrower for purposes of
reincorporation in another U.S. jurisdiction), (iii) the sale, lease or
transfer of substantially all the assets of the Company or Subsidiaries, and
(iv) Xxxxx Xxxxxx no longer being President and Chief Executive Officer of the
Company or not an employee of the Company pursuant to the Employment Agreement
entered into with the Borrower at or about June 12, 2006.
2.4. Application of Note Proceeds. All sums payable, owed or
accruing under this Note may be applied by the Holder at any time, at the
Holder's election, as a credit and offset of any sum payable by the Holder to
Borrower for any reason including but not limited to subscriptions for
Xxxxxxxx's securities and exercise of warrants or options issued by Borrower.
ARTICLE III
SECURITY INTEREST
3. Security Interest/Waiver of Automatic Stay. This Note is secured
by a security interest granted to the Collateral Agent for the benefit of the
Holder pursuant to a Security Agreement, as delivered by Borrower to Holder.
The Borrower acknowledges and agrees that should a proceeding under any
bankruptcy or insolvency law be commenced by or against the Borrower, or if any
of the Collateral (as defined in the Security Agreement) should become the
subject of any bankruptcy or insolvency proceeding, then the Holder should be
entitled to, among other relief to which the Holder may be entitled under the
Transaction Documents and any other agreement to which the Borrower and Holder
are parties (collectively, "Loan Documents") and/or applicable law, an order
from the court granting immediate relief from the automatic stay pursuant to 11
U.S.C. Section 362 to permit the Holder to exercise all of its rights and
remedies pursuant to the Loan Documents and/or applicable law. TO THE EXTENT
PERMITTED BY LAW, THE BORROWER EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC
STAY IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, THE BORROWER EXPRESSLY
ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER
SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT
LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR
INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY OF ITS RIGHTS AND
REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. The Borrower hereby
consents to any motion for relief from stay that may be filed by the Holder in
any bankruptcy or insolvency proceeding initiated by or against the Borrower
and, further, agrees not to file any opposition to any motion for relief from
stay filed by the Holder. The Borrower represents, acknowledges and agrees
that this provision is a specific and material aspect of the Loan Documents,
and that the Holder would not agree to the terms of the Loan Documents if this
waiver were not a part of this Note. The Borrower further represents,
acknowledges and agrees that this waiver is knowingly, intelligently and
voluntarily made, that neither the Holder nor any person acting on behalf of
the Holder has made any representations to induce this waiver, that the
Borrower has been represented (or has had the opportunity to he represented) in
the signing of this Note and the Loan Documents and in the making of this
waiver by independent legal counsel selected by the Borrower and that the
Borrower has discussed this waiver with counsel.
ARTICLE IV
EVENTS OF DEFAULT
The occurrence of any of the following events of default ("Event of
Default") shall, at the option of the Holder hereof, make all sums of principal
and interest then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable, upon demand, without presentment, or
grace period, all of which hereby are expressly waived, except as set forth
below:
4.1 Failure to Pay Principal or Interest. The Borrower fails to pay
any installment of Principal Amount, interest or other sum due under this Note
or any Transaction Document when due and such failure continues for a period of
five (5) business days after the due date.
4.2 Breach of Covenant. The Borrower breaches any material covenant or
other term or condition of the Subscription Agreement, this Note or other
Transaction Document in any material respect and such breach, if subject to
cure, continues for a period of ten (10) business days after written notice to
the Borrower from the Holder.
4.3 Breach of Representations and Warranties. Any material
representation or warranty of the Borrower made herein, in the Subscription
Agreement, Transaction Document or in any agreement, statement or certificate
given in writing pursuant hereto or in connection herewith or therewith shall
be false or misleading in any material respect as of the date made and the
Closing Date.
4.4 Receiver or Trustee. The Borrower or any Subsidiary of Borrower
shall make an assignment for the benefit of creditors, or apply for or consent
to the appointment of a receiver or trustee for them or for a substantial part
of their property or business; or such a receiver or trustee shall otherwise be
appointed.
4.5 Judgments. Any money judgment, writ or similar final process shall
be entered or filed against Borrower or any subsidiary of Borrower or any of
their property or other assets for more than $100,000, and shall remain unpaid,
unvacated, unbonded or unstayed for a period of forty-five (45) calendar days,
unless subject to a bona fide settlement agreement, which provides for vacation
of such judgment upon completion of the settlement, for so long as Borrower is
not in default of such settlement agreement.
4.6 Non-Payment. The Borrower shall have received a notice of
default, which remains uncured for a period of more than twenty (20) business
days, on the payment of any one or more debts or obligations aggregating in
excess of One Hundred Thousand Dollars ($100,000.00) beyond any applicable
grace period, unless such obligation is being contested in good faith;
4.7 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law,
or the issuance of any notice in relation to such event, for the relief of
debtors shall be instituted by or against the Borrower or any Subsidiary of
Borrower and if instituted against them is not dismissed within forty-five (45)
calendar days of initiation.
4.8 Delisting. Delisting of the Common Stock from the OTC Bulletin
Board ("Bulletin Board") or any Principal Market; failure to comply with the
requirements for continued listing on the Bulletin Board or other Principal
Market for a period of seven consecutive trading days; or notification from the
Bulletin Board or any Principal Market that the Borrower is not in compliance
with the conditions for such continued listing on the Bulletin Board or other
Principal Market.
4.9 Stop Trade. An SEC or judicial stop trade order or Principal
Market trading suspension that lasts for five or more consecutive trading days.
4.10Cross Default. A default by the Borrower of a material term,
covenant, warranty or undertaking of any Transaction Document or other
agreement to which the Borrower and Holder are parties, or the occurrence of a
material event of default under any such other agreement which is not cured
after any required notice and/or cure period.
ARTICLE V
MISCELLANEOUS
5.1 Failure or Indulgence Not Waiver. No failure or delay on the part
of 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.
5.2 Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile, with accurate confirmation generated by
the transmitting facsimile machine, at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be: (i) if to the Borrower to:
Datascension, Inc., 000 X. Xxxxx Xxxxxxx Xxxx., Xxxxx 000, Xxxx, XX 00000,
Attn: Xxxxx Xxxxxx, President and CEO, telecopier: (000) 000-0000, with a copy
by telecopier only to: Xxxxx X. Xxxx, Esq., 00 Xxxxxxx Xxxxx, Xxxxx 000, Xxx
Xxxx, XX 00000, telecopier: (000) 000-0000, and (ii) if to the Holder, to the
name, address and telecopy number set forth on the front page of this Note,
with a copy by telecopier only to Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, telecopier number: (000) 000-0000.
5.3 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.
5.4 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.
5.5 Cost of Collection. If default is made in the payment of this
Note, Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.
5.6 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles that would result in the application of the substantive laws
of another jurisdiction. 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 County, New York, or in the federal courts
located in New York County. 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.
THIS NOTE SHALL BE DEEMED AN UNCONDITIONAL OBLIGATION OF BORROWER FOR THE
PAYMENT OF MONEY AND, WITHOUT LIMITATION TO ANY OTHER REMEDIES OF HOLDER, MAY
BE ENFORCED AGAINST BORROWER BY SUMMARY PROCEEDING PURSUANT TO NEW YORK CIVIL
PROCEDURE LAW AND RULES SECTION 3213 OR ANY SIMILAR RULE OR STATUTE IN THE
JURISDICTION WHERE ENFORCEMENT IS SOUGHT.
5.7 Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate
of interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.
0.0.Xxxxxxxxxxxx. 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.
5.9 Redemption. This Note may not be redeemed or called without the
consent of the Holder except as described in this Note.
IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be signed in its
name by an authorized officer as of the ____ day of December, 2006.
DATASCENSION, INC.
By:________________________________
Name:
Title:
WITNESS:
______________________________________
