Contract
THIS
NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT").
NO
INTEREST IN THIS NOTE MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT
APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE
ACT), OR (iii) AN EXEMPTION FROM REGISTRATION UNDER THE ACT WHERE PAYEE HAS
FURNISHED TO THE COMPANY AN OPINION OF ITS COUNSEL THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT IS AVAILABLE.
ASKMENOW,
INC.
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$____________
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______
__, 2007
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FOR
VALUE
RECEIVED, the undersigned, AskMeNow, Inc., a Delaware corporation (the “Company”
or “Payor”),
having its executive office and principal place of business at 00 Xxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxx, XX 00000, hereby promises to pay to ______________
(the “Payee”) at Xxxxx's address set forth above (or at such other place as
Payee may from time to time hereafter direct by notice in writing to Payor),
the
principal sum of _______ ($____),
in such coin or currency of the United States of America as at the time shall
be
legal tender for the payment of public and private debts, on the first to occur
of the following dates: (i): May 29, 2007 (90 days after the date of
issuance) (the “Maturity
Date”)
unless
extended by the Payor for up to an additional 90 days (the “Extended
Maturity Date”);
(ii)
the date on which the outstanding principal amount of this Note is prepaid
in
full as hereinafter permitted (the “Prepayment
Date”);
(iii)
the date on which the Company raises at least Three Million Dollars ($3,000,000)
in equity financing or a proportionate repayment on such amount less than
$3,000,000 (the “Funding Date”), and (iv) any other date on which any
principal amount of, or accrued unpaid interest on, this Note is declared to
be,
or becomes, due and payable pursuant to its terms prior to the Maturity Date
(the "Acceleration
Date").
This
Note
is being issued in connection with a bridge financing (the “Bridge Offering”) by
the Company on a “best efforts” no minimum basis, up to a maximum of $3,000,000
of Bridge Offering units (each a “Bridge
Unit”).
Each
Bridge Unit consists of $1.00 principal amount of 12% Promissory Notes and
Warrants to purchase four (4) shares of Common Stock, to be offered on a “best
efforts” basis. The Bridge Offering is being made only to Investors who qualify
as “accredited investors” as such term is defined in Rule 501 of Regulation D
under the Securities Act of 1933, as amended (the “Securities
Act”).
Partial Bridge Units may be sold.
All
of
the proceeds of the Bridge Offering will be used by the Company for general
corporate purposes, including working capital.
1. Interest
And Payment.
1.1. The
principal amount of this Note outstanding from time to time shall bear simple
interest at the annual rate (the "Note
Rate")
of
twelve (12%) percent from the date hereof through the earliest to occur of
(i) the Maturity Date; (ii) the Prepayment Date; (iii) the Funding
Date or (iv) the Acceleration Date. In the event the Company extends the
Maturity Date, the Note Rate shall increase to fourteen (14%) percent from
the
original Maturity Date until the Note is paid.
1.2. Interest
accrued on this Note shall be payable not later than, on the earliest to occur
of (i) the Maturity Date (if not extended); (ii) the Prepayment Date; (iii)
the
Funding Date; (iv) the Acceleration Date; or (v) the Extended Maturity
Date.
1.3. All
payments made by the Payor on this Note shall be applied first to the payment
of
accrued unpaid interest on this Note and then to the reduction of the unpaid
principal balance of this Note.
1.4. In
the
event that the date for the payment of any amount payable under this Note falls
due on a Saturday, Sunday or public holiday under the laws of the State of
New
York, the time for payment of such amount shall be extended to the next
succeeding business day and interest at the Note Rate shall continue to accrue
on any principal amount so effected until the payment thereof on such extended
due date.
2. Replacement
Of Note.
2.1. In
the
event that this Note is mutilated, destroyed, lost or stolen, Payor shall,
at
its sole expense, execute, register and deliver a new Note, in exchange and
substitution for this Note, if mutilated, or in lieu of and substitution for
this Note, if destroyed, lost or stolen. In the case of destruction, loss or
theft, Payee shall furnish to Payor indemnity reasonably satisfactory to Payor,
and in any such case, and in the case of mutilation, Payee shall also furnish
to
Payor evidence to its reasonable satisfaction of the mutilation, destruction,
loss or theft of this Note and of the ownership thereof. Any replacement Note
so
issued shall be in the same outstanding principal amount as this Note and dated
the date to which interest shall have been paid on this Note or, if no interest
shall have yet been paid, dated the date of this Note.
2.2. Every
Note issued pursuant to the provisions of Section 2.1 above in substitution
for
this Note shall constitute an additional contractual obligation of the Payor,
whether or not this Note shall be found at any time or be enforceable by
anyone.
3. Prepayment.
The
principal amount of this Note may be prepaid in whole at any time, or in part
from time to time, without penalty or premium, together with unpaid interest
thereon accrued through the Maturity Date or the Extended Maturity Date. Each
partial prepayment of this Note shall first be applied to interest accrued
through the Maturity Date and the Extended Maturity Date and then to
principal.
4. Covenants
of Payor.
Payor
covenants and agrees that, so long as this Note remains outstanding and unpaid,
in whole or in part:
4.1. Payor
will not sell, transfer or dispose of a material part of its assets;
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4.2. Payor
will not make any loan to any person who is or becomes a shareholder or
executive employee of Payor, other than for reasonable advances for expenses
in
the ordinary course of business;
4.3. Payor
will promptly pay and discharge all lawful taxes, assessments and governmental
charges or levies imposed upon it, its income and profits, or any of its
property, before the same shall become in default, as well as all lawful claims
for labor, materials and supplies which, if unpaid, might become a lien or
charge upon such properties or any part thereof; provided, however, that Payor
or such subsidiary shall not be required to pay and discharge any such tax,
assessment, charge, levy or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings and Payor or such subsidiary,
as the case may be, shall set aside on its books adequate reserves with respect
to any such tax, assessment, charge, levy or claim so contested;
4.4. Payor
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights and franchises and
substantially comply with all laws applicable to Payor as its counsel may
advise;
4.5. Payor
will at all times maintain, preserve, protect and keep its property used or
useful in the conduct of its business in good repair, working order and
condition (except for the effects of reasonable wear and tear in the ordinary
course of business) and will, from time to time, make all necessary and proper
repairs, renewals, replacements, betterments and improvements
thereto;
4.6. Payor
will keep adequately insured, by financially sound reputable insurers, all
property of a character usually insured by similar corporations and carry such
other insurance as is usually carried by similar corporations;
4.7. Payor
will, promptly following the occurrence of an Event of Default or of any
condition or event which, with the giving of notice or the lapse of time or
both, would constitute an Event of Default, furnish a statement of Xxxxx's
Chief
Executive Officer or Chief Financial Officer to Payee setting forth the details
of such Event of Default or condition or event and the action which Payor
intends to take with respect thereto;
4.8. Payor
will, and will cause each of its subsidiaries to, at all times maintain books
of
account in which all of its financial transactions are duly recorded in
conformance with generally accepted accounting principles;
4.9. Payor
shall not create, incur, assume or suffer to exist any pledge, hypothecation,
assignment, deposit arrangement, lien (except Permitted Liens and Permitted
Debt
as defined in Section 13 of the Note Purchase and Warrant Agreement entered
into
between the Payor and Payee), charge, claim, or security interest, mortgage,
deed of trust, easement or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Uniform Commercial Code or comparable law of any jurisdiction) with
respect to the assets of Payor or such subsidiary; and
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4.10. Payor
shall not issue any debt, equity or other instrument which would give the holder
thereof, directly or indirectly, a right in any assets of Payor or such
subsidiary that are pari passu, senior or superior to any right of the Payee
in
or to such assets.
5. Events
of Default.
If
any of
the following events (each an "Event
of Default")
occurs:
5.1. The
dissolution of Payor or any vote in favor thereof by the board of directors
and
shareholders of Payor;
5.2. Payor
makes an assignment for the benefit of creditors, or files with a court of
competent jurisdiction an application for appointment of a receiver or similar
official with respect to it or any substantial part of its assets, or Payor
files a petition seeking relief under any provision of the Federal Bankruptcy
Code or any other federal or state statute now or hereafter in effect affording
relief to debtors, or any such application or petition is filed against Payor,
which application or petition is not dismissed or withdrawn within sixty (60)
days from the date of its filing;
5.3. Payor
fails to pay the principal amount, or interest on, or any other amount payable
under, this Note as and when the same becomes due and payable;
5.4. Xxxxx
admits in writing its inability to pay its debts as they mature;
5.5. Payor
sells all or substantially all of its assets or merges or is consolidated with
or into another corporation; other than a merger with or into a publicly traded
corporation;
5.6. A
proceeding is commenced to foreclose a security interest or lien in any property
or assets of Payor as a result of a default in the payment or performance of
any
debt (in excess of $50,000 and secured by such property or assets) of Payor
or
of any subsidiary of Payor;
5.7. A
final
judgment for the payment of money in excess of $50,000 is entered against Payor
by a court of competent jurisdiction, and such judgment is not discharged (nor
the discharge thereof duly provided for) in accordance with its terms, nor
a
stay of execution thereof procured, within sixty (60) days after the date such
judgment is entered, and, within such period (or such longer period during
which
execution of such judgment is effectively stayed), an appeal therefrom has
not
been prosecuted and the execution thereof caused to be stayed during such
appeal;
5.8. An
attachment or garnishment is levied against the assets or properties of Payor
or
any subsidiary of Payor involving an amount in excess of $50,000 and such levy
is not vacated, bonded or otherwise terminated within sixty (60) days after
the
date of its effectiveness;
5.9. Payor
defaults in the due observance or performance of any covenant, condition or
agreement on the part of Payor to be observed or performed pursuant to the
terms
of this Note (other than the default specified in Section 5.3 above) and such
default continues uncured for a period of sixty (60) days then, upon the
occurrence of any such Event of Default and at any time thereafter, Payee shall
have the right (at Payee's option) to declare the principal of, accrued unpaid
interest on, and all other amounts payable under this Note to be forthwith
due
and payable, whereupon all such amounts shall be immediately due and payable
to
Payee, without presentment, demand, protest or other notice of any kind, all
of
which are hereby expressly waived; provided, however, that in case of the
occurrence of an Event of Default under any of the sections above, such amounts
shall become immediately due and payable without any such declaration by Payee;
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5.10. Payor
fails to pay the principal amount, or interest on, or any other amount payable
under, this Note as and when the same becomes due and payable (as specified
in
Section 5.3 above), the Company will pay the Payee a default interest rate
of
two (2%) per month on all amounts due and owing under the Note for each month
or
part thereof beyond the Maturity Date or the Extended Maturity Date, which
default interest shall be payable in cash on demand in cash;
5.11. Payor
creates, incurs, assumes or suffers to exist any pledge, hypothecation,
assignment, deposit arrangement, lien (except Permitted Liens and Permitted
Debt), charge, claim, or security interest, mortgage, deed of trust, easement
or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Uniform Commercial
Code or comparable law of any jurisdiction) with respect to the assets of Payor
or such subsidiary; or
5.12. If
Payor
issues any debt, equity or other instrument which would give the holder thereof,
directly or indirectly, a right in any assets of Payor or such subsidiary that
are senior or superior to any right of the Payee in or to such
assets.
6. Suits
for Enforcement and Remedies.
If any
one or more Events of Default shall occur and be continuing, the Payee may
proceed to (i) protect and enforce Payee's rights either by suit in equity
or by action at law, or both, whether for the specific performance of any
covenant, condition or agreement contained in this Note or in any agreement
or
document referred to herein or in aid of the exercise of any power granted
in
this Note or in any agreement or document referred to herein, (ii) enforce
the payment of this Note, or (iii) enforce any other legal or equitable
right of Payee. No right or remedy herein or in any other agreement or
instrument conferred upon Payee is intended to be exclusive of any other right
or remedy, and each and every such right or remedy shall be cumulative and
shall
be in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise.
7. Unconditional
Obligation; Fees, Waivers, Other.
7.1. The
obligations to make the payments provided for in this Note are absolute and
unconditional and not subject to any defense, set-off, counterclaim, rescission,
recoupment or adjustment whatsoever.
7.2. If,
following the occurrence of an Event of Default, Payee shall seek to enforce
the
collection of any amount of principal of and/or interest on this Note, there
shall be immediately due and payable from Payor, in addition to the then unpaid
principal of, and accrued unpaid interest on, this Note, all costs and expenses
incurred by Payee in connection therewith, including, without limitation,
reasonable attorneys' fees and disbursements.
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7.3. No
forbearance, indulgence, delay or failure to exercise any right or remedy with
respect to this Note shall operate as a waiver or as an acquiescence in any
default, nor shall any single or partial exercise of any right or remedy
preclude any other or further exercise thereof or the exercise of any other
right or remedy.
7.4. This
Note
may not be modified or discharged (other than by payment or exchange) except
by
a writing duly executed by Xxxxx and Xxxxx.
7.5. Payor
hereby expressly waives demand and presentment for payment, notice of
nonpayment, notice of dishonor, protest, notice of protest, bringing of suit,
and diligence in taking any action to collect amounts called for hereunder,
and
shall be directly and primarily liable for the payment of all sums owing and
to
be owing hereon, regardless of and without any notice, diligence, act or
omission with respect to the collection of any amount called for hereunder
or in
connection with any right, lien, interest or property at any and all times
which
Payee had or is existing as security for any amount called for hereunder.
8. Restriction
on Transfer.
This
Note has been acquired for investment, and this Note has not been registered
under the securities laws of the United States of America or any state thereof.
Accordingly, no interest in this Note may be offered for sale, sold or
transferred in the absence of registration and qualification of this Note,
under
applicable federal and state securities laws or an opinion of counsel of Payee
reasonably satisfactory to Payor that such registration and qualification are
not required.
9. Miscellaneous.
9.1. The
headings of the various paragraphs of this Note are for convenience of reference
only and shall in no way modify any of the terms or provisions of this
Note.
9.2. All
notices required or permitted to be given hereunder shall be in writing and
shall be deemed to have been duly given when personally delivered or sent by
registered or certified mail (return receipt requested, postage prepaid),
facsimile transmission or overnight courier to the address of the intended
recipient as set forth in the preamble to this Note or at such other address
as
the intended recipient shall have hereafter given to the other party hereto
pursuant to the provisions of this Note.
9.3. This
Note
and the obligations of Payor and the rights of Payee shall be governed by and
construed in accordance with the substantive laws of the State of California
without giving effect to the choice of laws rules thereof.
9.4. This
Note
shall bind Payor and its successors and assigns.
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ASKMENOW,
INC.
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By:
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Name:
Xxxxxx
Xxxxx
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Title: CEO
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