THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS
NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE SOLD, PLEDGED,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER PROVISIONS OF THE SECURITIES ACT
AND ALL APPLICABLE STATE SECURITIES LAWS, AND IN THE CASE OF ANY EXEMPTION, ONLY
IF THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION OF THE NOTE OR SUCH
OTHER SECURITIES
AUGMENT SYSTEMS, INC.
SECURED CONVERTIBLE PROMISSORY NOTE
$_________
For value received, Augment Systems, Inc., 0 Xxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxxxx ("Debtor") promises to pay to the order of ________________ with
an address at _______________ ("Payee") the sum of ____________ with interest on
the unpaid balance at 8% per annum on or before the earlier of 4th day of
September, 1999 or (i) any sale, pledge, assignment, transfer or disposition of
any assets of Debtor outside of the ordinary course of business, (ii) any merger
or consolidation of Debtor with any other entity, other that if Debtor is the
surviving entity of such merger or a "change of control" of Debtor (which shall
mean the acquisition by any person, entity or group of control of Debtor), or
(iii) proceeds of at least $4,000,000 are received by Debtor from the sale or
issuance of any debt or equity securities by Debtor (such applicable date
hereinafter the "Maturity Date").
This Note is being issued pursuant to a Loan Agreement dated as of the
date hereof by and among Debtor, Payee and other lenders (collectively, the
"Lenders") specified therein (as amended, the "Loan Agreement"), and Xxxxx's
rights and Debtor's obligations hereunder are subject to the provisions of the
Loan Agreement, the terms of which are incorporated herein by this reference.
This Note is also referred to and entitled to the benefits of, and payment of
this Note is secured by certain collateral set forth in a Security Agreement,
dated the date hereof, between Debtor and the Lenders.
Debtor shall have the right to pre-pay this Note in whole or in part,
provided any pre-payment shall be in multiples of $10,000. Such pre-payment
shall be first credited to any accrued unpaid interest with the balance to be in
reduction of the principal sum.
At the option of the Payee, the principal and interest due and payable
under this Note may be converted into the form of equity securities issued by
Debtor in the first equity financing subsequent to the date hereof of at least
$4,000,000 that is completed within twelve (12) months of the date of this Note,
upon the terms and conditions of any such financing, at the time of closing for
that equity financing. Debtor shall give the Payee at least twenty (20) days
advance notice of the closing of such financing.
The occurrence of an Event of Default under the Loan Agreement shall
constitute an "Event of Default" under this Note. Upon the occurrence of an
Event of Default, the Debtor agrees it shall be liable for interest at the rate
of 14 1/2% from the date of default until paid. In the event this rate is above
the legal authorized default rate, Debtor shall pay the highest rate permitted
under the laws of the State of New York from the date of default until paid.
Upon an Event of Default, the holder of this Note shall be entitled to the costs
and expenses of collection hereof, including, but not limited to, reasonable
attorneys' fees.
If any principal or interest payment is not made within five (5) days
of when due ("Payment Default"), or if any other Event of Default other than a
Payment Default shall occur for any reason, and is not cured within ten (10)
days of notice thereof, then in any such event, in addition to all rights and
remedies of Payee under applicable law or otherwise, all such rights being
cumulative, not exclusive and enforceable alternatively, successively and
concurrently, Payee may, at its option, declare any or all of Debtor's
obligations, liabilities and indebtedness owing to Payee, including, without
limitation, all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof together with all interest accrued thereon, shall
forthwith become due and payable, together with interest accruing thereafter at
the then applicable rate stated above until the indebtedness evidenced by this
Note is paid in full, plus the costs and expenses of collection hereof,
including but not limited to, reasonable attorney's fees.
Debtor (i) waives diligence, demand, presentment, protest, and notice
of any kind, (ii) agrees that it will not be necessary for any holder hereof to
first file suit in order to enforce payment of this Note and (iii) consents to
any one or more extensions or postponements of time of payment, release,
surrender or substitution of collateral security, or forbearance or other
indulgence, without notice or consent. The pleading of any statute of
limitations as a defense to any demand against Debtor is expressly hereby
waived. Upon any Event of Default, Xxxxx shall have the right but not the
obligation to set off against this Note all money owed by Xxxxx to Debtor.
Payee shall not be required to resort to any collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
The execution and delivery of this Note has been authorized by all
necessary corporate actions of the Debtor. The Debtor hereby authorizes the
Payee to complete this Note in any particulars according to the terms of the
Loan evidenced hereby.
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Any notices that are required or permitted under this Note may be sent
to the address of the party as it appears in this Note by either Certified Mail,
Return Receipt Requested, or by overnight courier. In the event that it is sent
by Certified Mail, Return Receipt Requested, the notice shall be deemed to have
been given three (3) days after same has been sent and in the event that the
Note has been sent by overnight courier, the notice shall be deemed to be given
one (1) day after it has been sent.
This Note and the collateral shall be governed by and construed in
accordance with the laws of the State of New York and shall be binding upon the
successors and assigns of Debtor and inure to the benefit of Payee and
successors, holders, and assigns. If any term or provisions of this Note is held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall not be affected thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Debtor hereby waives the right to trial by jury and any and all rights
of set off arising in connection with this Note. Debtor hereby irrevocably
consents to a non-exclusive jurisdiction of the Supreme Court of the State of
New York, County of New York and of the United States District Court in the
State of New York, Southern District of New York for all purposes in connection
with any action or proceeding arising out of or relating to this Note, and
further consents that any process in connection with any proceeding hereunder
may be served (i) inside or outside the State of New York by Registered or
Certified Mail, Return Receipt Requested, and service or notice so served shall
be deemed complete three (3) days after same shall have been posted, or (ii)
such other manner as permissible under the rules of said Courts. Within twenty
(20) days after such mailing, Debtors shall appear in answer to such process or
Notice of Motion or other application to said Courts, failing which Debtor shall
be deemed in default and judgment may be entered by the holder of this Note
against Debtor for the amount of the claim and other relief requested therein.
Failure by the Payee to insist upon the strict performance by Debtor of
any terms and provisions herein shall not be deemed to be a waiver of any terms
and provisions herein, and Xxxxx shall retain the right thereafter to insist
upon strict performance by Debtor of any and all terms and provisions of this
note or any documents securing the repayment of this Note.
IN WITNESS WHEREOF, the parties have set their hand and seal as of this
____ day of September, 1998.
AUGMENT SYSTEMS, INC.
By:______________________________
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