Attached files
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EX-99.8 - SUPPORT AGREEMENT - Inuvo, Inc. | inuv_ex998.htm |
EX-99.9 - PRESS RELEASE - Inuvo, Inc. | inuv_ex999.htm |
EX-99.7 - SUPPORT AGREEMENT - Inuvo, Inc. | inuv_ex997.htm |
EX-99.6 - SUPPORT AGREEMENT - Inuvo, Inc. | inuv_ex996.htm |
EX-99.5 - SUPPORT AGREEMENT - Inuvo, Inc. | inuv_ex995.htm |
EX-99.4 - SUPPORT AGREEMENT - Inuvo, Inc. | inuv_ex994.htm |
EX-99.3 - SUPPORT AGREEMENT - Inuvo, Inc. | inuv_ex993.htm |
EX-99.2 - SUPPORT AGREEMENT - Inuvo, Inc. | inuv_ex992.htm |
EX-99.1 - SUPPORT AGREEMENT - Inuvo, Inc. | inuv_ex991.htm |
EX-2.5 - FORM OF 10% PROMISSORY NOTE - Inuvo, Inc. | inuv_ex25.htm |
EX-2.4 - REGISTRATION RIGHTS AGREEMENT - Inuvo, Inc. | inuv_ex24.htm |
EX-2.2 - SECURITIES PURCHASE AGREEMENT - Inuvo, Inc. | inuv_ex22.htm |
EX-2.1 - AGREEMENT AND PLAN OF MERGER - Inuvo, Inc. | inuv_ex21.htm |
8-K - CURRENT REPORT - Inuvo, Inc. | inuv_8k.htm |
Exhibit 2.3
EXECUTION VERSION
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON THE CONVERSION OF
THESE SECURITIES HAVE BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR SECURITIES
LAWS OF ANY STATE OR JURISDICTION IN THE UNITED STATES. THE
SECURITIES REPRESENTED HEREBY MAY NOT BE CONVERTED, OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED (EACH A
“TRANSFER”)
EXCEPT (X) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSFER NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (Y) TO THE EXTENT THE TRANSFER DOES NOT
CONSTITUTE AND WILL NOT RESULT IN A VIOLATION OF APPLICABLE FEDERAL
OR STATE SECURITIES LAWS IN THE UNITED STATES, AS EVIDENCED BY A
LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT (TO THE
EXTENT REQUESTED BY COUNSEL OF THE COMPANY), THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THE HOLDER HEREOF
AGREES THAT IT WILL DELIVER, OR CAUSE TO BE DELIVERED, TO EACH
PERSON TO WHOM THE SECURITIES HEREBY REPRESENTED ARE TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS
NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF THAT CERTAIN
SUBORDINATION AGREEMENT DATED AS OF NOVEMBER 1, 2018 BY AND AMONG
WESTERN ALLIANCE BANK AND THE PARTIES HERETO (THE
“SUBORDINATION
AGREEMENT”). THE SUBORDINATION AGREEMENT CONTAINS
PROVISIONS RESTRICTING, AMONG OTHER THINGS, CERTAIN PAYMENTS AND
THE EXERCISE OF CERTAIN RIGHTS AND REMEDIES BY THE PARTIES
HERETO.
10% SENIOR UNSECURED SUBORDINATED CONVERTIBLE PROMISSORY
NOTE
Note
No.: A-1 November 1,
2018
$1,000,000 Little
Rock, Arkansas
FOR
VALUE RECEIVED, Inuvo, Inc., a Nevada corporation
(“Company”),
promises to pay to CPT INVESTMENTS, LLC, a California limited
liability company (“Holder”), or its registered
assigns, the principal sum of ONE MILLION DOLLARS ($1,000,000.00),
or such lesser amount as shall equal the outstanding principal
amount hereof, together with interest from the date of this 10%
Senior Unsecured Subordinated Convertible Promissory Note (this
“Note”) on the
unpaid principal balance at a rate equal to the rate set forth in
Section 2. Subject
to Section 6, all
principal, together with any then accrued and unpaid interest and
any other amounts payable hereunder, shall be due and payable on
the earlier of the Note Maturity Date and the Accelerated Maturity
Date (each as defined below). Upon payment in full of all principal
and interest payable hereunder, this Note shall be surrendered to
the Company for cancellation.
This
Note is being issued pursuant to the terms and conditions contained
in that certain Securities Purchase Agreement (the
“Securities Purchase
Agreement”) executed by the Company and the Holder
(the “Note
Offering”) and in connection with that certain
Agreement and Plan of Merger of even date herewith by and among the
Company, ConversionPoint Technologies, Inc. (“CPT”) and other parties thereto
(the “Merger
Agreement”). This Note, together with the similar 10%
Senior Unsecured Subordinated Convertible Promissory Notes issued
pursuant to the Note Offering, including Notes that may be issued
after the date of this Note, are collectively referred to herein as
the “Notes.” The
Company shall establish a note register containing the records of
the Company regarding the issuance, registration and permitted
transfers of the Notes (the “Note Register”).
1. Certain
Definitions. For purposes of this Note, the following terms
shall have the following respective meanings:
“Affiliate” has the meaning set
forth in Rule 405 under the Securities Act of 1933, as
amended.
“Accelerated Maturity Date”
means the date as of which the outstanding principal and accrued
interest on this Note and all other payments payable hereunder are
due and payable to the Holder pursuant to Section 5.1.
“Alternate Consideration” has the
meaning set forth in Section 7.4.
“Business Day” means any day except
Saturday, Sunday or any other day on which commercial banks located
in California are required by law to be closed for
business.
“Buy-In Price” has the meaning set
forth in Section
6.2(c).
“Change of Control” means (i) that
the Company shall, directly or indirectly, including through
Subsidiaries, Affiliates or otherwise, in one or more related
transactions, (a) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity,
or (b) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company or
any of its “significant subsidiaries” (as defined in
Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(c) make, or allow one or more Subject Entities to make, or allow
the Company to be subject to or have its Common Stock be subject to
or party to one or more Subject Entities making, a purchase, tender
or exchange offer that is accepted by the holders of at least
either (1) 50% of the outstanding shares of Common Stock, (2) 50%
of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all Subject Entities making or party
to, or Affiliated with any Subject Entities making or party to,
such purchase, tender or exchange offer were not outstanding; or
(3) such number of shares of Common Stock such that all Subject
Entities making or party to, or Affiliated with any Subject Entity
making or party to, such purchase, tender or exchange offer, become
collectively the beneficial owners (as defined in Rule 13d-3 under
the Exchange Act) of at least 50% of the outstanding shares of
Common Stock, or (d) consummate a stock purchase agreement or other
business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more Subject Entities whereby such Subject
Entities, individually or in the aggregate, acquire, either (1) at
least 50% of the outstanding shares of Common Stock, (2) at least
50% of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all the Subject Entities making or
party to, or Affiliated with any Subject Entity making or party to,
such stock purchase agreement or other business combination were
not outstanding; or (3) such number of shares of Common Stock such
that the Subject Entities become collectively the beneficial owners
(as defined in Rule 13d-3 under the Exchange Act) of at least 50%
of the outstanding shares of Common Stock, or (e) reorganize,
recapitalize or reclassify its Common Stock, (ii) that the Company
shall, directly or indirectly, including through Subsidiaries,
Affiliates or otherwise, in one or more related transactions, allow
any Subject Entity individually or the Subject Entities in the
aggregate to be or become the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, whether through acquisition, purchase, assignment,
conveyance, tender, tender offer, exchange, reduction in
outstanding shares of Common Stock, merger, consolidation, business
combination, reorganization, recapitalization, spin-off, scheme of
arrangement, reorganization, recapitalization or reclassification
or otherwise in any manner whatsoever, of either (a) at least 50%
of the aggregate ordinary voting power represented by issued and
outstanding Common Stock, (b) at least 50% of the aggregate
ordinary voting power represented by issued and outstanding Common
Stock not held by all such Subject Entities as of the date of Note
calculated as if any shares of Common Stock held by all such
Subject Entities were not outstanding, or (c) a percentage of the
aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock or other equity securities of
the Company sufficient to allow such Subject Entities to effect a
statutory short form merger or other transaction requiring other
stockholders of the Company to surrender their shares of Common
Stock without approval of the stockholders of the Company or (iii)
directly or indirectly, including through Subsidiaries, Affiliates
or otherwise, in one or more related transactions, the issuance of
or the entering into any other instrument or transaction structured
in a manner to circumvent, or that circumvents, the intent of this
definition in which case this definition shall be construed and
implemented in a manner otherwise than in strict conformity with
the terms of this definition to the extent necessary to correct
this definition or any portion of this definition which may be
defective or inconsistent with the intended treatment of such
instrument or transaction, provided, however, that in each
forgoing instance the stockholders of the Company or CPT, do not
own a majority by voting power of the outstanding shares of the
Subject Entities or Successor Entities. The Closing of the Merger
Agreement shall not constitute a Change of Control.
“Common Stock” means the common
stock, par value $0.001, per share of the Company.
“Common Stock Equivalents” shall
mean Options and Convertible Securities.
“Conversion Failure” has the
meaning set forth in Section 6.2(c).
“Conversion Price” has the meaning
set forth in Section
6.4.
“Conversion Shares” means the
shares of Common Stock issuable upon conversion of this Note in
accordance with Section
6.
“Convertible Securities” shall mean
any stock or securities (other than Options) convertible into or
exchangeable for Common Stock.
“Default Interest Rate” means
fifteen percent (15%) per annum.
2
“DTC” has the meaning set forth in
Section
6.2(c).
“Eligible Market” means The New
York Stock Exchange, Inc., the NYSE American, The NASDAQ Global
Select Market, The NASDAQ Global Market, The NASDAQ Capital Market,
the OTCQX marketplace or the OTCQB marketplace.
“Event of Default” means any of the
events specified as such in Section 5.1.
“Exchange Act” means the Securities
Exchange Act of 1934, as amended.
“Group” means a “group”
as that term is used in Section 13(d) of the Exchange Act and as
defined in Rule 13d-5 thereunder.
“Holder” means the person or entity
specified in the introductory paragraph of this Note or any
transferee that is at the time the registered holder of this Note.
The Holder or any transferee is an “accredited
investor” as defined under the Securities Act.
“Insolvency or Liquidation
Proceeding” means (i) any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding, relative to the
Company or to its creditors, as such, or to its assets, or (ii) any
liquidation, dissolution, reorganization or winding up of the
Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (iii) any assignment for the
benefit of creditors or any other marshaling of assets and
liabilities of the Company.
“Liabilities” means any
indebtedness, liabilities and obligations, whether accrued or
fixed, absolute or contingent, known or unknown, matured or
unmatured or determined or determinable.
“Maximum Issuable Conversion
Shares” has the meaning set forth in Section 7.7.
“Note Maturity Date” means November
1, 2021;
provided,
however, that in
the event the Closings (as that term is defined in the Merger
Agreement) occur pursuant to the Merger Agreement, the Note
Maturity date shall mean the fifth (5th) day after the
Closing Date (as that term is defined in the Merger
Agreement).
“Options” shall mean any
outstanding rights, warrants or options to subscribe (including
restricted stock units) for or purchase Common Stock or Convertible
Securities.
“Person” means an individual, a
limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency
thereof.
“Principal Market” means the
Eligible Market that is the principal securities exchange market
for the Common Stock.
“Representative” means the trustee,
agent or other representative for holders of all or any Senior
Indebtedness, if any, designated in the indenture, agreement or
other document creating, evidencing or governing such Senior
Indebtedness or pursuant to which it was issued, or otherwise duly
designated by the holders of such Senior Indebtedness.
“Required Holders” has the meaning
set forth in Section
10.
“Senior Indebtedness” means the
principal of and unpaid interest on all secured indebtedness of the
Company validly incurred before or after the date of this Note in
accordance with its terms (including, but not limited to
obligations under the Company’s Amended and Restated Business
Financing Agreement dated October 11, 2018 by and between the
Company, certain of its wholly-owned subsidiaries and Western
Alliance Bank) (i) for money borrowed from any bank, savings and
loan or other financial institution, and is evidenced by notes,
bonds, debentures or other written obligations and (ii) in
connection with any renewals, replacement loans or extensions of
any indebtedness described in (i) above after the date of this
Note; provided,
however, that the
term shall not include (a) any lease financing arrangement
involving the Company and (b) indebtedness which by the terms of
the instrument creating or evidencing it is subordinated to or on
parity with this Note.
3
“Shareholder Approval” means such
approval as may be required by the applicable rules and regulations
of the NYSE American (or any successor entity) from the
stockholders of the Company with respect to the transactions
contemplated by the Securities Purchase Agreement and this Note,
including the issuance of Conversion Shares in excess of 19.99% of
the issued and outstanding shares of Common Stock on November 1,
2018.
“Subject Entity” means any Person,
Persons or Group or any Affiliate or associate of any such Person,
Persons or Group.
“Subsidiary” means, with respect to
the Company, any entity in which the Company, directly or
indirectly, owns any of the capital stock or holds an equity or
similar interest.
“Successor Entity” means one or
more Person or Persons (or, if so elected by the Required Holders)
formed by, resulting from or surviving any Change of Control or one
or more Person or Persons (or, if so elected by the Required
Holders) with which such Change of Control shall have been entered
into.
“Trading Day” means any day on
which the Common Stock is traded on the Principal Market, or, if
the Principal Market is not the principal trading market for the
Common Stock, then on the principal securities exchange or
securities market on which the shares of Common Stock are then
traded.
2. Interest.
This Note will bear interest at a rate of ten percent (10%) per
annum, computed on the basis of the actual number of days elapsed
and a year of three hundred sixty-five (365) days. Accrued interest
on this Note shall be due and payable on the Note Maturity Date or
Accelerated Maturity Date (if applicable), whether by acceleration
(if applicable), scheduled maturity or otherwise, unless such
amounts are automatically converted into Conversion Shares pursuant
to the terms set forth in Section 6. Subject to
Section 6, any
accrued interest on this Note that is due on or prior to the Note
Maturity Date or the Accelerated Maturity Date (if applicable)
shall be payable as set forth in Section 16.
3. Prepayment.
At any time after the issuance of this Note, upon fifteen (15) days
prior written notice to the Holder, the Company may prepay the
entire amount due and owing under this Note, in which case the
Company shall pay to the Holder of this Note an amount equal to the
principal balance of this Note, together with any then accrued and
unpaid interest on such principal balance, at a rate equal to the
rate set forth in Section
2; provided,
however, that: (i)
any prepayment of this Note must be approved in writing by the
Holders of Notes representing more than fifty percent (50%) of the
aggregate principal amount of Notes then outstanding, (ii) any
prepayment of this Note may only be made in connection with the
prepayment of all Notes, and (iii) any such prepayment will be
applied first to the payment of expenses due under this Note,
second to interest accrued on this Note and third, if the amount of
prepayment exceeds the amount of all such expenses and accrued
interest, to the payment of principal of this Note.
4. Subordination.
Notwithstanding anything to the contrary, the terms of this Note
(including, without limitation, this Section 4) are subject in all
respects to the Subordination Agreement and in the event of any
conflict between the terms of this Note and the terms of the
Subordination Agreement, the Subordination Agreement shall govern
and control in all respects.
4.1 Note Subordinate to
Senior Indebtedness.
(a) The provisions of
this Section 4
apply notwithstanding anything to the contrary contained in this
Note (other than as set out in clause (b) immediately below). The
Company covenants and agrees, and the Holder, by such
Holder’s acceptance hereof, likewise covenants and agrees,
that, to the extent and in the manner hereinafter set forth in this
Section 4, the
indebtedness represented by this Note and the payment of the
principal of and interest on this Note are hereby expressly made
subordinate and subject in right of the prior payment in full of
all Senior Indebtedness. This Section 4 constitutes a
continuing offer to all persons who become holders of Senior
Indebtedness, each of whom is an obligee hereunder and is entitled
to enforce such holder’s rights hereunder, subject to the
provisions hereof, without any act or notice of acceptance hereof
or reliance hereon.
4
(b) As required by
Section 8.1, the
Company shall not incur certain indebtedness (including Senior
Indebtedness) without the prior written consent of the holders of
Notes representing more than fifty percent (50%) of the aggregate
principal amount of Notes then outstanding, and the provisions of
this Section 4
shall be of no force or effect in the absence of any such prior
written consent; provided, however, that this Note shall remain
subject to the Subordination Agreement in all
respects.
4.2 Payment
Over of Proceeds Upon Dissolution, Etc.
(a) In the event of any
Insolvency or Liquidation Proceeding, all Senior Indebtedness shall
first be paid in full before the Holder is entitled to receive any
direct or indirect payment or distribution of any cash, property or
securities on account of the principal of or interest on this
Note.
(b) The holders of
Senior Indebtedness (or their respective Representatives) shall be
entitled to receive directly, for application to the payment
thereof (to the extent necessary to pay all such Senior
Indebtedness in full after giving effect to any substantially
concurrent payment or distribution to the holders of such Senior
Indebtedness), any payment or distribution of any kind or
character, whether in cash, property or securities which may be
payable or deliverable in respect of this Note in any such
Insolvency or Liquidation Proceeding.
(c) In the event that,
notwithstanding the foregoing provisions of this Section 4.2, the Holder shall
have received any payment from or distribution of assets of the
Company in an Insolvency or Liquidation Proceeding or the estate
created by the commencement of any such Insolvency or Liquidation
Proceeding, of any kind or character in respect of this Note
whether in cash, property or securities before all Senior
Indebtedness is paid in full, then and in such event such payment
or distribution shall be received and held in trust for and shall
be paid over to the holders of Senior Indebtedness remaining unpaid
(or their respective Representatives), to the extent necessary to
pay all such Senior Indebtedness in full after giving effect to any
substantially concurrent payment or distribution to the holders of
such Senior Indebtedness, for application to the payment in full of
such Senior Indebtedness.
4.3 Default on Senior
Indebtedness.
(a) If there exists a
default in the payment when due (whether at maturity or upon
acceleration or mandatory repayment, or on any principal
installment payment date or interest payment date, or otherwise) of
any Senior Indebtedness (a “Payment Default”) and such default
shall not have been cured or waived in writing by or on behalf of
the requisite percentage of the holders of such Senior Indebtedness
(or their Representative, if any), then any payment on account of
principal of or interest on this Note which the Holder would then
be entitled to receive, but for the provisions of this Section 4.3(a), shall instead
be paid over to the holders of such Senior Indebtedness (or their
Representative, if any) until all amounts of Senior Indebtedness
then due and payable have been paid in full, prior to any direct or
indirect payment by or on behalf of the Company to the Holder of
any principal of or interest on this Note.
(b) The Company may
not, directly or indirectly, make, and the Holder may not ask,
demand, take or receive from or on behalf of the Company, any
payment on account of the principal of or interest on this Note
during the period (a “Deferral Period”) from the date
the Company and/or the Holder receive from a holder of Senior
Indebtedness a notice (a “Deferral Notice”) of:
(i) the existence of a
Payment Default; or
(ii) the
existence of any event of default (other than a Payment Default)
under any agreement or instrument pursuant to which any Senior
Indebtedness is issued, in each instance as now in effect or as
hereafter from time to time modified or amended, without the
necessity of any consent by or notice to the Holders (a
“Specified Covenant
Default”);
5
until
the earlier of (i) the date such Payment Default or Specified
Covenant Default is cured, waived in writing or otherwise ceases to
exist and (ii) the one hundred eightieth (180th) day after receipt
by the Company and/or by the Holder of this Note of such Deferral
Notice; provided,
however, that (x)
only one Deferral Notice relating to the same Payment Default or
Specified Covenant Default may be given, (y) no subsequent Deferral
Notice may be given with respect to any Payment Default or
Specified Covenant Default existing at the time an effective
Deferral Notice is given and (z) if any such Deferral Notice has
been given, no subsequent Deferral Notice with respect to any
number of different Payment Defaults or Specified Covenant Defaults
shall be effective until the later of (1) the date such subsequent
Deferral Notice is received by the Company and the holders of Notes
and (2) the three hundred sixty-fifth (365th) day after receipt
of the then most recent prior effective Deferral Notice. So long as
any Senior Indebtedness is outstanding, the Holder shall give the
holders of Senior Indebtedness five (5) Business Days’ prior
written notice of any proposed demand for payment or institution of
proceedings with respect to this Note (which notice may be given
during a Deferral Period provided that the proposed demand for
payment is not to be made or the proposed proceedings are not to be
instituted until the expiration of such Deferral
Period).
(c) Upon termination of
any Deferral Period the Company shall resume payments on account of
the principal of and interest on this Note subject to the
obligation of the Company and the Holder to pay over to the holders
of Senior Indebtedness amounts otherwise payable on account of the
principal of and interest on this Note pursuant to the provisions
of, and in the circumstances specified in, this Section 4.
(d) During the first
one hundred twenty (120) days of any Deferral Period, payment on
account of this Note may not be accelerated unless a voluntary
Insolvency or Liquidation Proceeding shall be instituted by the
Company or an involuntary Insolvency or Liquidation Proceeding
shall be instituted against the Company and such proceeding remains
undismissed for a period of sixty (60) days. So long as any Senior
Indebtedness is outstanding, the Holder shall give the holders of
Senior Indebtedness five (5) Business Days’ prior written
notice of any proposed acceleration with respect to this Note
(which notice may be given during a Deferral Period provided that
the proposed acceleration is not to be effective until the
expiration of such Deferral Period).
(e) In the event that,
notwithstanding the foregoing provisions of this Section 4.3, any payment
shall be made by or on behalf of the Company and received by the
Holder at a time after the giving of a Deferral Notice and during a
Deferral Period, then such payment shall be held in trust for the
benefit of and shall be immediately paid over to the holders of
Senior Indebtedness remaining unpaid or their respective
Representatives, for application to the payment in full of all
Senior Indebtedness in accordance with its terms (after giving
effect to any prior or substantially concurrent payment to the
holders of such Senior Indebtedness).
4.4 Subrogation to
Rights of Holders of Senior Indebtedness. After all amounts
payable under or in respect of Senior Indebtedness are paid in
full, the Holder shall be subrogated to the extent of the payments
or distributions made to the holders of, or otherwise applied to
payment of, such Senior Indebtedness pursuant to the provisions of
this Section 4
(equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinate and subject in
right of payment to Senior Indebtedness to substantially the same
extent as this Note is so subordinate and subject in right of
payment and which is entitled to like rights of subrogation), to
the rights of the holders of such Senior Indebtedness (or their
respective Representatives) to receive payments and distributions
of cash, property and securities applicable to the Senior
Indebtedness until the principal of and interest on this Note shall
be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness (or their
respective Representatives) of any cash, property or securities to
which the Holder would be entitled except for the provisions of
this Section 4, and
no payments over pursuant to the provisions of this Section 4 to the holders of
Senior Indebtedness (or their respective Representatives) by the
Company or the Holder shall, as among the Company and its creditors
(other than holders of Senior Indebtedness and the Holder), be
deemed to be a payment or distribution by the Company to or on
account of Senior Indebtedness it being understood that the
provisions of this Section
4 are solely for the purpose of defining the relative rights
of the holders of Senior Indebtedness on the one hand and the
Holder on the other hand.
6
If any
payment or distribution to which the Holder would otherwise have
been entitled but for the provisions of this Section 4 shall have been
applied, pursuant to the provisions of this Section 4, to the payment of
all amounts payable under the Senior Indebtedness, then and in such
case, the Holder shall be entitled to receive (equally and ratably
with the holders of all indebtedness of the Company which by its
express terms is subordinate and subject in right of payment to
Senior Indebtedness to substantially the same extent as this Note
is subordinate and subject in right of payment and which is
entitled to like rights) from the holders of such Senior
Indebtedness (or their respective Representatives) any
substantially contemporaneous payments or distributions received by
such holders of Senior Indebtedness (or their respective
Representatives) in excess of the amount sufficient to pay in full
all obligations payable under or in respect of such Senior
Indebtedness.
4.5 Rights of Holders
Not to Be Impaired. Nothing contained in this Section 4 or elsewhere in this
Note is intended to or shall:
(a) impair, as among
the Company, its creditors other than holders of Senior
Indebtedness and the Holder, the obligation of the Company, which
is absolute and unconditional, to pay to the Holder the principal
of and premium, if any, and interest on this Note as and when the
same shall become due and payable in accordance with their terms;
or
(b) affect the relative
rights against the Company of the Holder of this Note and creditors
of the Company other than the holders of Senior Indebtedness;
or
(c) prevent the Holder
from exercising all remedies otherwise permitted by applicable law
upon default subject to the rights, if any, under this Section 4 of the holders
of Senior Indebtedness to receive payments or distributions
otherwise payable or deliverable to, or received by, such holder
upon the exercise of any such remedy and subject to the restriction
on acceleration set forth in Section 4.3(d).
4.6 Effectuation of
Subordination. If the Holder does not file a proper claim or
proof of debt in the form required in any Insolvency or Liquidation
Proceeding prior to thirty (30) days before the expiration of the
time to file such claims or proofs, then the holders of Senior
Indebtedness, or their Representatives, are hereby authorized, and
shall have the right (without any duty), to file an appropriate
claim for and on behalf of such holder.
4.7 No Waiver of
Subordination Provisions. No right of any present or future
holder of any Senior Indebtedness, or Representative thereof, to
enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act by any such
holder or Representative thereof, or by any noncompliance by the
Company with the terms, provisions and covenants of this Note
regardless of any knowledge thereof which any such holder or
Representative thereof may have or be otherwise charged
with.
Without
in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness (or their Representatives, if
applicable) may, at any time and from time to time, without the
consent of or notice to the Holder, without incurring
responsibility to the Holder and without impairing or releasing the
subordination and other benefits provided in this Section 4 or the obligations
hereunder of the Holder to the holders of Senior Indebtedness, do
any one or more of the following all without notice to the Holder
and even if any right of reimbursement or subrogation or other
right or remedy of the Holder is affected, impaired or extinguished
thereby:
(a) change the manner,
place or terms of payment or change or extend the time of payment
of, or renew, exchange, amend or alter, the terms of any Senior
Indebtedness, any security therefor or guaranty thereof or any
liability of the Company or any guarantor to such holder, or any
liability incurred directly or indirectly in respect thereof, or
otherwise amend, renew, exchange, modify or supplement in any
manner Senior Indebtedness or any instrument evidencing or
guaranteeing or securing the same or any agreement under which
Senior Indebtedness is outstanding;
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(b) sell, exchange,
release, surrender, realize upon, enforce or otherwise deal with in
any manner and any order any property pledged, mortgaged or
otherwise securing Senior Indebtedness or any liability of the
Company or any guarantor to such holder, or any liability incurred
directly or indirectly in respect thereof;
(c) settle or
compromise any Senior Indebtedness or any other liability of the
Company or any guarantor of the Senior Indebtedness to such holder
or any security therefor or any liability incurred directly or
indirectly in respect thereof and apply any sums by whomsoever paid
and however realized to any liability (including, without
limitation, Senior Indebtedness) in any manner or order;
and
(d) fail to take or to
record or otherwise perfect, for any reason or for no reason, any
lien or security interest securing Senior Indebtedness by
whomsoever granted, exercise or delay in or refrain from exercising
any right or remedy against the Company or any security or any
guarantor or any other person, elect any remedy and otherwise deal
freely with the Company and any security and any guarantor of the
Senior Indebtedness or any liability of the Company or any
guarantor to such holder or any liability incurred directly or
indirectly in respect thereof.
4.8 Reliance on Court
Orders; Evidence of Status. Upon any payment or distribution
of assets of the Company referred to in Section 4.2, the Holder shall
be entitled to rely upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such
payment or distribution delivered to the Holder for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Section 4.
In the
absence of any such receiver, trustee in bankruptcy, liquidating
trustee, agent or other person, the Holder of this Note shall be
entitled to rely upon a written notice by a person representing
himself or herself to be a holder of Senior Indebtedness (or a
Representative on behalf of such holder) as evidence that such
person is a holder of Senior Indebtedness (or is such a
Representative) for any relevant purpose. In the event that any
holder determines in good faith that further evidence is required
with respect to the right of any person as a holder of Senior
Indebtedness (or such a Representative), as to the extent to which
such person is entitled to participate in such payment or
distribution, and as to other facts pertinent to the rights of such
person under this Section 4, such holder may
request such person to furnish evidence to the reasonable
satisfaction of such holder as to the amount of Senior Indebtedness
held by such person, the extent to which such person is entitled to
participate in such payment or distribution and any other facts
pertinent to the rights of such person under this Section 4, and if such evidence
is not furnished such holder may defer (without liability to any
holder of Senior Indebtedness or any Representative of such holder)
any payment to such person pending judicial determination as to the
right of such person to receive such payment or until such time as
such holder shall be otherwise satisfied as to the right of such
person to receive such payment.
4.9 Not to Prevent
Events of Default. The failure to make a payment on account
of the principal of or interest on this Note by reason of any
provision of this Section 4 shall not be
construed as preventing the occurrence of a default or an Event of
Default under this Note. Except as expressly provided in
Section 4.3(d), nothing in
this Section 4
shall affect the rights of the Holder to accelerate the maturity of
this Note in accordance with its terms.
4.10 Amendments.
Without the prior written consent of the holders of Senior
Indebtedness, the Company and the Holder shall not (i) amend,
supplement or otherwise modify any provision of this Section 4, (ii) accelerate
the payment of the principal of or interest on this Note or (iii)
if such amendment would have a material adverse effect on the
holders of Senior Indebtedness, amend, supplement or otherwise
modify any other provision of this Note.
5. Default.
5.1 Events of
Default. If any of the following events (each, an
“Event of
Default” and collectively, “Events of Default”) shall
occur:
8
(a) the Company shall
default in the payment of any part of the principal of, or accrued
and unpaid interest on, this Note;
(b) the Company shall
breach or default in the performance of any covenant or warranty of
the Company in this Note, and continuance of such breach for a
period of thirty (30) days after there has been given, by
registered or certified mail, to the Company by the Holder of this
Note, a written notice specifying such breach or default and
requiring it to be remedied;
(c) any Insolvency or
Liquidation Proceeding occurs in respect of the Company or any of
its subsidiaries;
(d) a court having
jurisdiction in the premises shall enter a decree or order for
relief in respect of the Company in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of
the Company or for any substantial part of its property, or
ordering the winding-up or liquidation of its affairs, and such
decree or order shall remain unstayed and in effect for a period of
thirty (30) consecutive days; or
(e) the Company shall
commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of the Company
or for any substantial part of its property, or shall make any
general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action in furtherance of any of the
foregoing;
then
and in any such event the Holder of this Note may at any time
(unless all defaults theretofore or thereupon shall have been
remedied) at its option, by written notice to the Company, declare
this Note to be due and payable, whereupon the same shall forthwith
mature and become due and payable as at the date the Company
receives such written notice from the Holder (with such date being
referred to in this Note as the “Accelerated Maturity Date”)
without presentment, demand, protest or other notice, all of which
are hereby waived.
5.2 Remedies on and
Notices of Default. Subject to the provisions of
Section 6, in
case any one or more Events of Default shall occur, the Holder may
proceed to protect and enforce the rights of such Holder by a suit
in equity, action at law or other appropriate proceeding, whether
for the specific performance of any agreement contained in this
Note, or for an injunction against a violation of any of the terms
or provisions hereof or thereof, or in aid of the exercise of any
power granted hereby or thereby or by law. In case of default under
this Note, the Company will pay to the Holder such further amount
as shall be sufficient to cover the reasonable cost and expense of
enforcement, including, without limitation, reasonable
attorneys’ fees. If the Holder shall give any notice or take
any other action in respect of a claimed default, the Company shall
forthwith give written notice thereof to all other holders of Notes
at the time outstanding, describing the notice or action and the
nature of the claimed default. No course of dealing and no delay on
the part of any Holder of this Note in exercising any right shall
operate as a waiver thereof or otherwise prejudice such
Holder’s rights or the rights of the holder of any other
Notes. No remedy conferred by this Note upon the Holder shall be
exclusive of any other remedy referred to herein or now or
hereafter available at law, in equity, by statute or
otherwise.
5.3 Default
Interest. If the
Company defaults in the payment of any amounts due under this Note,
then without prejudice to any other remedy available to each
Holder: (i) that unpaid amount becomes a debt due to the Holder as
and from the relevant date on which that amount was due; (ii)
interest shall accrue on the unpaid amount (now a debt due) at the
Default Interest Rate from the date on which that amount was due
until the date on which it is paid to the Holder in full; and (iii)
any interest charged at the Default Interest Rate must be paid by
the Company to the Holder immediately on demand.
9
6. Conversion.
6.1 Voluntary
Conversion. In the event the Merger Agreement is terminated,
the Holder may, at any time before this Note has been repaid in
full, upon fifteen (15) days written notice to the Company, elect
to convert all or any portion of the principal amount of, and
accrued and unpaid interest on, this Note outstanding into the
number of Conversion Shares determined in accordance with the
formula below, at the applicable Conversion Price as set forth in
Section
6.4.
S = (V)
÷ (P)
where:
S
is the number of
fully paid Conversion Shares to be issued;
V
is the principal
amount of, and accrued and unpaid interest on, this Note;
and
P
is the applicable
Conversion Price calculated in accordance with Section 6.4.
6.2 Conversion
Procedure in the Event of Voluntary Conversion.
(a) Each voluntary
conversion of this Note shall be effected by the surrender of this
Note at the principal office of the Company at any time during
normal business hours, together with a written notice by the Holder
stating that the Holder desires to convert the entire, or a
specified increment of, principal of this Note into Common Stock.
Each conversion of a Note will be deemed to have been effected as
of the close of business on the date on which this Note has been
surrendered and the notice has been received, and at that time, the
rights of the Holder of this Note will cease and the person or
persons in whose name or names any certificate or certificates for
Common Stock are to be issued upon conversion will be deemed to
have become the Holder or Holders of record of the shares of Common
Stock represented thereby.
(b) Within two (2)
Trading Days after a conversion has been effected, the Company will
deliver to the converting Holder:
(i) a certificate or
certificates representing the number of shares of Common Stock
issuable by reason of conversion in such name or names and such
denomination or denominations as the converting Holder has
specified; and
(ii) a
replacement Note representing the principal amount of this Note
delivered to the Company in connection with the conversion but
which was not converted.
(c) If the Company
shall fail, for any reason or for no reason, to issue to the Holder
within two (2) Trading Days after the Company’s receipt of a
notice of conversion (whether via facsimile or otherwise), a
certificate for the number of shares of Common Stock to which the
Holder is entitled and register such shares of Common Stock on the
Company’s share register or to credit the Holder’s or
its designee’s balance account with The Depository Trust
Company’s (“DTC”) for such number of shares of
Common Stock to which the Holder is entitled upon the
Holder’s conversion of any Conversion Amount (as the case may
be) (a “Conversion
Failure”) and if on or after such third (3rd) Trading Day the
Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the
Holder of shares of Common Stock issuable upon such conversion that
the Holder anticipated receiving from the Company, then, in
addition to all other remedies available to the Holder, the Company
shall, within two (2) Trading Days after the Holder’s request
and in the Holder’s discretion, either (i) pay cash to the
Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased (the
“Buy-In Price”),
at which point the Company’s obligation to deliver such
certificate (and to issue such shares of Common Stock) shall
terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such shares of
Common Stock or credit the Holder’s balance account with DTC
for the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s conversion hereunder (as the case
may be) and pay cash to the Holder in an amount equal to the excess
(if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock multiplied by (B) the applicable Conversion
Price.
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(d) The issuance of
certificates for Common Stock upon conversion of this Note will be
made without charge to the Holder for any tax in respect thereof or
other cost incurred by the Company in connection with conversion
and the related issuance of Common Stock. Upon conversion of any
portion of this Note, the Company will take all actions as are
necessary in order to ensure that the Common Stock issuable with
respect to conversion will be validly issued, fully paid and
nonassessable.
(e) The Company will
not close its books against the transfer of this Note or of the
shares of Common Stock issued or issuable upon conversion of this
Note in any manner which interferes with the timely conversion of
this Note, and will at all times reserve for issuance the maximum
number of shares of Common Stock into which this Note is
convertible.
6.3 Fractional Shares;
Interest. No fractional Conversion Shares shall be issued
upon conversion of this Note. In lieu of the Company issuing any
fractional Conversion Shares to Holder upon the conversion of this
Note, the Company shall pay to Holder an amount equal to the
product obtained by multiplying the Conversion Price applied to
effect such conversion by the fraction of a share not issued
pursuant to the previous sentence. Upon conversion of this Note in
full or the payment of outstanding amounts specified in this Note,
the Company shall be released from all its obligations and
liabilities under this Note.
6.4 Conversion
Price. The conversion price (the “Conversion Price”) shall be equal
to $0.44; provided,
however, that in
the event the Merger Agreement is terminated for any reason other
than in connection with a Superior Proposal (as defined in the
Merger Agreement), the Conversion Price shall be equal to
$0.352.
7. Conversion Price
Adjustments.
7.1 Adjustments for
Stock Splits and Subdivisions. In the event the Company
should at any time or from time to time after the date of issuance
hereof fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of
Common Stock without payment of any consideration by such holders
for the additional shares of Common Stock, then, as of such record
date (or the date of such dividend distribution, split or
subdivision if no record date is fixed), the Conversion Price shall
be appropriately decreased so that the number of Conversion Shares
issuable upon conversion of this Note shall be increased in
proportion to such increase of outstanding shares.
7.2 Adjustments
for Reverse Stock Splits. If the number of shares of Common
Stock outstanding at any time after the date hereof is decreased by
a combination of the outstanding shares of Common Stock, then,
following the record date of such combination, the Conversion Price
shall be appropriately increased so that the number of Conversion
Shares issuable on conversion hereof shall be decreased in
proportion to such decrease in outstanding shares.
7.3 [Intentionally
Omitted].
11
7.4 Change of
Control. If, at any time while this Note is outstanding a
Change of Control occurs, then, upon any subsequent conversion of
this Note, the Holder shall have the right to receive, for each
Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Change of Control, the
same kind and amount of securities, cash or property as it would
have been entitled to receive upon the occurrence of such Change of
Control if it had been, immediately prior to such Change of
Control, the holder of one (1) share of Common Stock (the
“Alternate
Consideration”). For purposes of any such conversion,
the determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one (1)
share of Common Stock in such Change of Control, and the Company
shall apportion the Conversion Price among the Alternate
Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Change of Control, then the
Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Note
following such Change of Control. To the extent necessary to
effectuate the foregoing provisions, any successor to the Company
or surviving entity in such Change of Control shall issue to the
Holder a new note consistent with the foregoing provisions and
evidencing the Holder’s right to convert such note into
Alternate Consideration. The terms of any agreement pursuant to
which a Change of Control is effected shall include terms requiring
any such successor or surviving entity to comply with the
provisions of this Section 7.4 and insuring
that this Note (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Change of
Control.
7.5 Notices of Record
Date, Etc. In the event of:
(a) Any taking by the
Company of a record of the holders of any class of securities of
the Company for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend
payable out of earned surplus at the same rate as that of the last
such cash dividend theretofore paid) or other distribution or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to
receive any other right; or
(b) Any Change of
Control; or
(c) Any voluntary or
involuntary dissolution, liquidation or winding-up of the
Company,
the
Company will mail to the Holder at least ten (10) days prior to the
earliest date specified therein, a notice specifying (i) the date
on which any such record is to be taken for the purpose of such
dividend, distribution or right and the amount and character of
such dividend, distribution or right; and (ii) the date on which
any such Change of Control, dissolution, liquidation or winding-up
is expected to become effective and the record date for determining
stockholders entitled to vote thereon.
7.6 Reservation of
Conversion Shares Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized
but unissued Conversion Shares for the purpose of effecting the
conversion of this Note such number of its Conversion Shares as
shall from time to time be sufficient to effect the conversion of
this Note; and if at any time the number of authorized but unissued
Conversion Shares shall not be sufficient to effect the conversion
of the entire outstanding principal amount of, and accrued and
unpaid interest on, this Note, or if such conversion would result
in the issuance of greater than 19.99% of the voting power or total
outstanding shares of the Company prior to the Company obtaining
stockholder approval, without limitation of such other remedies as
shall be available to the Holder of this Note, the Company shall
immediately take all actions necessary to (i) increase its
authorized but unissued Conversion Shares to such number of shares
as shall be sufficient for such purposes, and/or (ii) seek approval
from the Company’s stockholders to issue all Conversion
Shares issuable under the Notes.
7.7 Issuance
Limitations. Notwithstanding anything herein to the
contrary, the Company may not issue upon conversion of this Note a
number of shares of Common Stock which, when aggregated with all
shares of Common Stock issued pursuant to the Notes, would exceed
19.99% of the issued and outstanding shares of Common Stock on
November 1, 2018 (subject to adjustment for forward and reverse
stock splits, recapitalizations and the like) (such number of
shares, the “Maximum Issuable
Conversion Shares”), without first obtaining
Shareholder Approval. Until such time as Shareholder Approval is
obtained, each Holder shall be entitled to a portion of the Maximum
Issuable Conversion Shares equal to the quotient obtained by
dividing (x) the original principal amount of the Holder’s
Note by (y) the aggregate original principal amount of all Notes
issued to all Holders. In addition, the Holder acknowledges the
Company may not issue, upon conversion of this Note, any number of
shares of Common Stock, prior to filing an additional shares
listing application with the Principal Market covering the
Conversion Shares and obtaining approval of such additional shares
listing application.
8. Covenants of the
Company. From and after the date of the Securities Purchase
Agreement and continuing so long as any of the Notes are
outstanding:
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8.1 Negative
Covenants. The Company shall not (without the prior written
approval of Holders of Notes representing more than fifty percent
(50%) of the aggregate principal amount of Notes then outstanding
or as otherwise permitted by this Note): (i) repurchase shares of
the Company’s capital stock, or otherwise return capital to
the Company’s shareholders, or otherwise undertake any
reorganization or reconstruction of capital (however described) of
the Company; (ii) incur any financial indebtedness against assets
of the Company outside the ordinary course of the Company’s
business in excess of $500,000; (iii) use assets of the Company
other than in the ordinary course of the Company’s business
and on ordinary commercial terms or undertake any similar
arrangements other than in the ordinary course of the
Company’s business and on ordinary commercial terms; (iv)
take any action which constitutes or results in any material
alteration to the nature of the business of the Company; or (v)
incur any additional Senior Indebtedness in excess of
$10,000,000.
8.2 Notices. The
Company shall promptly notify the Holder of (i) the occurrence of
any Event of Default of which the Company becomes aware, and (ii)
entry into a definitive agreement with a third-party that may
result in a Change of Control.
9. Successors and
Assigns. Subject to the restrictions on transfer described
in Sections 11 and
12, the rights and obligations of Company and the Holder
shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
10. Waiver and
Amendment. Any provision of this Note may be amended, waived
or modified upon the written consent of Company and the holders of
a majority in principal amount of the Notes (the
“Required
Holders”).
11. Transfer of this
Note or Conversion Shares. With respect to any offer, sale
or other disposition of this Note or the Conversion Shares, the
Holder will give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written
opinion of the Holder’s counsel, or other evidence if
reasonably satisfactory to the Company, to the effect that such
offer, sale or other distribution may be effected without
registration or qualification under the Securities Act or state
law. Upon receiving such written notice and reasonably satisfactory
opinion, if so requested, or other evidence, the Company, as
promptly as practicable, shall notify the Holder that the Holder
may sell or otherwise dispose of this Note or the Conversion
Shares, all in accordance with the terms of the notice delivered to
Company; provided,
however, that the
ability of the Holder or any transferee of the Holder to transfer
any of the Conversion Shares shall be subject to the limitations
contained in the Securities Purchase Agreement. If a determination
has been made pursuant to this Section 11 that the
opinion of counsel for the Holder, or other evidence, is not
reasonably satisfactory to the Company, the Company shall so notify
the Holder promptly after such determination has been made. Each
Note thus transferred and each certificate representing the
Conversion Shares thus transferred shall bear a legend as to the
applicable restrictions on transferability in order to ensure
compliance with the Securities Purchase Agreement and the
Securities Act, as applicable, unless in the opinion of counsel for
the Company such legend is not required in order to ensure
compliance with the Securities Purchase Agreement and the
Securities Act. The Company may issue stop transfer instructions to
its transfer agent in connection with such restrictions, if
permitted in accordance with this Note. Subject to the foregoing,
transfers of this Note shall be registered upon the Note Register.
Prior to presentation of this Note for registration of transfer,
the Company shall treat the registered Holder hereof as the owner
and the Holder of this Note for the purpose of receiving all
payments of principal and interest hereon and for all other
purposes whatsoever, whether or not this Note shall be overdue and
the Company shall not be affected by notice to the
contrary.
12. Assignment by the
Company. Neither this Note nor any of the rights, interests
or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by Company without the prior
written consent of the Holder.
13. Notices. All
notices, requests, demands, consents, instructions or other
communications required or permitted hereunder shall be in writing
and faxed, mailed or delivered to each party at the respective
addresses of the parties as set forth in the Securities Purchase
Agreement or at such other address or facsimile number as the
Company shall have furnished to Holder in writing. All such notices
and communications shall be effective (i) when sent by Federal
Express or other overnight service of recognized standing, on the
business day following the deposit with such service; (ii) when
mailed, by registered or certified mail, first class postage
prepaid and addressed as aforesaid through the United States Postal
Service, upon receipt; (iii) when delivered by hand, upon
delivery; and (iv) when faxed or emailed, upon confirmation of
receipt.
13
14. Rank. All
payments under this Note (i) shall rank pari passu with all other
Notes as set forth in Section 15, (ii) shall be
senior to all other indebtedness of the Company, other than Senior
Indebtedness, and (iii) junior to all Senior
Indebtedness.
15. Pari Passu
Notes. The Holder acknowledges and agrees that the payment
of all or any portion of the outstanding principal amount of this
Note and all interest hereon shall be pari passu in right of
payment and in all other respects to the other Notes issued
pursuant to the Securities Purchase Agreement or pursuant to the
terms of such Notes. In the event the Holder receives payments in
excess of its pro rata share of the Company’s payments to the
holders of all of the Notes, then the Holder shall hold in trust
all such excess payments for the benefit of the holders of the
other Notes and shall pay such amounts held in trust to such other
holders upon demand by such holders.
16. Payment.
Unless requested otherwise by the Holder, any payment made under
this Note shall be made in lawful tender of the United
States.
17. Usury. In
the event any interest is paid on this Note which is deemed to be
in excess of the then legal maximum rate, then that portion of the
interest payment representing an amount in excess of the then legal
maximum rate shall be deemed a payment of principal and applied
against the principal of this Note.
18. Waivers. The
Company hereby waives notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor and all other
notices or demands relative to this instrument.
19. No Rights as
Stockholder. This Note does not entitle the Holder to any
voting rights or other rights as a stockholder of the Company prior
to the conversion thereof. Specifically, until this Note is
converted upon the terms contained herein, the Holder shall not be
entitled to notice of, or the right to attend, any meeting of the
stockholders of the Company, or to receive copies of any documents
distributed to the Company’s stockholders (unless otherwise
provided for in this Note).
20. Governing
Law. The validity, interpretation, construction and
performance of this Note, and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall
be governed, construed and interpreted in accordance with the laws
of the state of Nevada, without giving effect to principles of
conflicts of law. For purposes of litigating any dispute that may
arise directly or indirectly from this Note, the parties hereby
submit and consent to the exclusive jurisdiction of the state of
California and agree that any such litigation shall be conducted
only in the courts of California or the federal courts of the
United States located in California and no other
courts.
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IN
WITNESS WHEREOF, the Company has caused this Note to be issued as
of the date first written above.
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INUVO, INC.,
a
Nevada corporation
By: /s/ Richard K.
Howe
Richard K. Howe,
President and CEO
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