THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
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 LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO PIPELINE DATA INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, PIPELINE DATA INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o Ironshore
Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church
Street, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the "Holder") or its
registered assigns or successors in interest, on order, the sum of TWO MILLION
DOLLARS ($2,000,000.00), together with any accrued and unpaid interest hereon,
on February 27, 2007 (the "Maturity Date") if not sooner paid.
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Securities Purchase Agreement dated as of
the date hereof between the Borrower and the Holder (the "Purchase Agreement").
The following terms shall apply to this Note:
ARTICLE I
INTEREST & AMORTIZATION
1.1 Interest Rate and Payment. (a) Subject to Sections 4.10 and 5.6 hereof,
interest payable on this Note shall accrue at a rate per annum (the "Interest
Rate") equal to the "prime rate" published in The Wall Street Journal from time
to time, plus two (2%). The prime rate shall be increased or decreased as the
case may be for each increase or decrease in the prime rate in an amount equal
to such increase or decrease in the prime rate; each change to be effective as
of the day of the change in such rate. The Interest Rate shall not be less than
six percent (6%) unless the Company shall be in compliance with Section 2.2
hereof. If the Company has satisfied the requirements of Section 2.2 hereof, the
Interest Rate will be subject to adjustment as set forth in Section 1.1(b). In
no event, however, shall the Interest Rate be less than zero percent 0.0%).
Interest shall be payable monthly in arrears commencing on April 1, 2004, on the
first day of each consecutive calendar month thereafter (each, a "Repayment
Date"), and on the Maturity Date, whether by acceleration or otherwise.
(b) On the last business day of each month hereafter until the Maturity
Date (each a "Determination Date"), the Interest Rate shall be adjusted: if (i)
the Company shall have registered the shares of the Company's common stock
underlying the conversion of the Note and that certain warrant issued to Holder
on a registration statement declared effective by the SEC, and (ii) the volume
weighted average price of the Common Stock as reported by Bloomberg, L.P. on the
principal market for the five (5) trading days immediately preceding a
Determination Date exceeds the then applicable Fixed Conversion Price, the
Interest Rate for the succeeding calendar month shall automatically be (i)
reduced by 25 basis points (0.25%) for each incremental twenty five percent
(25%) increase in the market price of the Common Stock above the then applicable
Fixed Conversion Price and (ii) reset by 25 basis points (0.25%) for each
incremental twenty five percent (25%) decrease in the market price of the Common
Stock above the then applicable Fixed Conversion Price, provided, however that
in no event shall the Interest Rate exceed the Interest Rate on the date hereof.
1.2 Minimum Monthly Principal Payments. Amortizing payments of the
aggregate principal amount outstanding under this Note at any time (the
"Principal Amount") shall begin on September 1, 2004 and shall recur on the
first calendar day of each succeeding month thereafter until the Maturity Date
(each, an "Amortization Date"). Subject to Section 3 below, beginning on the
first Amortization Date, the Borrower shall make monthly payments to the Holder
on each Repayment Date, each in the amount of $33,333.00 (the "Monthly
Amortization"), together with any accrued and unpaid interest to date on such
portion of the Principal Amount plus any and all other amounts which are then
owing under this Note but have not been paid (collectively, the "Monthly
Amount"). From April 1, 2005 through March 1, 2007, the Monthly Amortization
shall be increased to $41,667.00.
ARTICLE II
CONVERSION REPAYMENT OPTION
2.1 (a) Payment of Monthly Amount in Cash or Common Stock. Subject to the
terms hereof, the Holder shall have the sole option to determine whether to
elect to accept payment of the Monthly Amount on each Repayment Date either in
cash or in shares of Common Stock (as defined in the Purchase Agreement), or a
combination of both. Each month by the fifth (5th) business day prior to each
Amortization Date (the "Notice Date"), the Holder shall deliver to Borrower a
written notice in the form of Exhibit B attached hereto electing to convert the
Monthly Amount payable on the next Repayment Date in either cash or Common
Stock, or a combination of both (each, a "Repayment Election Notice"). If a
Repayment Election Notice is not delivered by the Holder on or before the
applicable Notice Date for such Repayment Date, then the Borrower shall pay the
Monthly Amount due on such Repayment Date in cash. Any portion of the Monthly
Amount paid in cash on a Repayment Date, shall be paid to the Holder an amount
equal to 100% of the principal portion of the Monthly Amount due and owing to
Holder on the Repayment Date. If the Holder converts all or a portion of the
Monthly Amount in shares of Common Stock, the number of such shares to be issued
by the Borrower to the Holder on such Repayment Date shall be the number
determined by dividing (x) the portion of the Monthly Amount to be paid in
shares of Common Stock, by (y) the then applicable Fixed Conversion Price. For
purposes hereof, the initial "Fixed Conversion Price" means $1.00.
(b) Monthly Amount Conversion Guidelines. Subject to Sections 2.2, and 3.2
hereof, the Holder shall elect to convert all or a portion of the Monthly Amount
due on each Repayment Date in shares of Common Stock if the average closing
price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market
(as defined in Section 4.7 hereof) for the five (5) trading days immediately
preceding such Repayment Date was greater than 115% of the Fixed Conversion
Price. Any part of the Monthly Amount due on a Repayment Date that the Holder
has not elected to convert into shares of Common Stock shall be paid by the
Borrower in cash on such Repayment Date. Any part of the Monthly Amount due on
such Repayment Date which the Holder has elected to convert into shares of
Common Stock but which must be paid in cash (as a result of the closing price of
the Common Stock on one or more of the five (5) trading days immediately
preceding the applicable Repayment Date was less than 115% of the Fixed
Conversion Price) shall be paid in cash at the rate of 100% of the Monthly
Amount otherwise due on the Repayment Date within three (3) business days of the
applicable Repayment Date.
2.2 No Effective Registration. Notwithstanding anything to the contrary
herein, none of the Borrower's obligations to the Holder may be converted into
Common Stock unless (a) either (i) an effective current Registration Statement
(as defined in the Registration Rights Agreement) covering the shares of Common
Stock to be issued in connection with satisfaction of such obligations exists,
or (ii) an exemption from registration of the Common Stock is available to
pursuant to Rule 144 of the Securities Act and (b) no Event of Default hereunder
exists and is continuing, unless such Event of Default is cured within any
applicable cure period or is otherwise waived in writing by the Holder in whole
or in part at the Holder's option.
Any amounts converted by the Holder pursuant to this Section 2.2 shall be
deemed to constitute payments of outstanding principal applying to Monthly
Amounts for the remaining Repayment Dates in chronological order.
2.3 Optional Redemption in Cash. The Borrower will have the option of
prepaying this Note ("Optional Redemption") by paying to the Holder a sum of
money equal to one hundred twenty-five percent (125%) of the outstanding
principal amount of this Note together with accrued but unpaid interest thereon
and any and all other sums due, accrued or payable to the Holder arising under
this Note, the Security Agreement, or any Ancillary Agreement (as defined in the
Security Agreement) (the "Redemption Amount") outstanding on the day written
notice of redemption (the "Notice of Redemption") is given to the Holder. The
Notice of Redemption shall specify the date for such Optional Redemption (the
"Redemption Payment Date") which date shall be ten (10) days after the date of
the Notice of Redemption (the "Redemption Period"). A Notice of Redemption shall
not be effective with respect to any portion of this Note for which the Holder
has a pending election to convert pursuant to Section 3.1, or for conversions
elected to be made by the Holder pursuant to Section 3.1 during the Redemption
Period. The Redemption Amount shall be determined as if such Xxxxxx's conversion
elections had been completed immediately prior to the date of the Notice of
Redemption. On the Redemption Payment Date, the Redemption Amount must be paid
in good funds to the Holder. In the event the Borrower fails to pay the
Redemption Amount on the Redemption Payment Date, then such Redemption Notice
will be null and void.
ARTICLE III
CONVERSION RIGHTS
3.1. Holder's Conversion Rights. Subject to the requirement of Section 2.1
(b) hereof, the Holder shall have the right, but not the obligation, to convert
all or any portion of the then aggregate outstanding principal amount of this
Note, together with interest and fees due hereon, into shares of Common Stock
subject to the terms and conditions set forth in this Article III. The Holder
may exercise such right by delivery to the Borrower of a written notice of
conversion not less than one (1) day prior to the date upon which such
conversion shall occur. The date upon which such conversion shall occur is (the
"Conversion Date").
3.2 Conversion Limitation. Notwithstanding anything contained herein to the
contrary, the Holder shall not be entitled to convert pursuant to the terms of
this Note an amount that would be convertible into that number of Conversion
Shares which would exceed the difference between the number of shares of Common
Stock beneficially owned by such Holder or issuable upon exercise of warrants
held by such Holder and 4.99% of the outstanding shares of Common Stock of the
Borrower. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and Regulation 13d-3 thereunder. The Holder may void the Conversion Share
limitation described in this Section 3.2 upon 75 days prior notice to the
Borrower or without any notice requirement upon an Event of Default.
3.3 Mechanics of Xxxxxx's Conversion. (a) In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion
("Notice of Conversion") to the Borrower and such Notice of Conversion shall
provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees being converted. On each Conversion Date (as hereinafter
defined) and in accordance with its Notice of Conversion, the Holder shall make
the appropriate reduction to the Principal Amount, accrued interest and fees as
entered in its records and shall use its best efforts to provide written notice
thereof to the Borrower within two (2) business days after the Conversion Date.
Each date on which a Notice of Conversion is delivered or telecopied to the
Borrower in accordance with the provisions hereof shall be deemed a Conversion
Date (the "Conversion Date"). A form of Notice of Conversion to be employed by
the Holder is annexed hereto as Exhibit A.
(b) Pursuant to the terms of the Notice of Conversion, the Borrower will
use its best efforts to issue instructions to the transfer agent accompanied by
an opinion of counsel within one (1) business day of the date of the delivery to
Borrower of the Notice of Conversion and shall cause the transfer agent to
transmit the certificates representing the Conversion Shares to the Holder by
crediting the account of the Holder's designated broker with the Depository
Trust Corporation ("DTC") through its Deposit Withdrawal Agent Commission
("DWAC") system within three (3) business days after receipt by the Borrower of
the Notice of Conversion (the "Delivery Date"). In the case of the exercise of
the conversion rights set forth herein the conversion privilege shall be deemed
to have been exercised and the Conversion Shares issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the Borrower of
the Notice of Conversion. The Holder shall be treated for all purposes as the
record holder of such Common Stock, unless the Holder provides the Borrower
written instructions to the contrary.
3.4 Conversion Mechanics.
--------------------
(a) The number of shares of Common Stock to be issued upon each conversion
of this Note shall be determined by dividing that portion of the principal and
interest and fees to be converted, if any, by the then applicable Fixed
Conversion Price. In the event of any conversions of outstanding principal
amount under this Note in part pursuant to this Article III, such conversions
shall be deemed to constitute conversions of outstanding principal amount
applying to Monthly Amounts for the remaining Repayment Dates in chronological
order. By way of example, if the original principal amount of this Note is
$2,000,000, the Holder converted $50,000 of such original principal amount prior
to the first Repayment Date and the Monthly Amortization is $33,333.00, then (1)
the principal amount of the Monthly Amount due on the first Repayment Date would
equal $0.00, (2) the principal amount of the Monthly Amount due on the second
Repayment Date would equal $16,667.00 and (3) the principal amount of the
Monthly Amount due on the third Repayment Date would be $33,333.00.
(b) The Fixed Conversion Price and number and kind of shares or other
securities to be issued upon conversion is subject to adjustment from time to
time upon the occurrence of certain events, as follows:
A. Stock Splits, Combinations and Dividends. If the shares of Common
Stock are subdivided or combined into a greater or smaller number of shares
of Common Stock, or if a dividend is paid on the Common Stock in shares of
Common Stock, the Fixed Conversion Price or the Conversion Price, as the
case may be, shall be proportionately reduced in case of subdivision of
shares or stock dividend or proportionately increased in the case of
combination of shares, in each such case by the ratio which the total
number of shares of Common Stock outstanding immediately after such event
bears to the total number of shares of Common Stock outstanding immediately
prior to such event.
B. During the period the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of Common Stock upon the full
conversion of this Note. The Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and non-assessable. The
Borrower agrees that its issuance of this Note shall constitute full
authority to its officers, agents, and transfer agents who are charged with
the duty of executing and issuing stock certificates to execute and issue
the necessary certificates for shares of Common Stock upon the conversion
of this Note.
C. Share Issuances. Subject to the provisions of this Section 3.4, if
the Borrower shall at any time prior to the conversion or repayment in full
of the Principal Amount issue any shares of Common Stock to a person other
than the Holder (except (i) pursuant to Subsections A or B above; (ii)
pursuant to options, warrants, or other obligations to issue shares
outstanding on the date hereof as disclosed to Holder in writing; (iii)
pursuant to options that may be issued under any employee incentive stock
option and/or any qualified and non qualified stock option plan adopted by
the Borrower; or (iv) the issuance of 500,000 shares of Common Stock, all
of which are unregistered, as compensation for professional services
rendered by consultants and other service providers of the Borrower) for a
consideration per share (the "Offer Price") less than the Fixed Conversion
Price in effect at the time of such issuance, then the Fixed Conversion
Price shall be immediately reset pursuant to the formula below
If the Borrower issues any additional shares pursuant to Section 3.4
above then, and thereafter successively upon each such issue, the Fixed
Conversion Price shall be adjusted by multiplying the then applicable Fixed
Conversion Price by the following fraction:
(A + B)
------------------------
(A + B) + [((C - D) x B) / C]
where:
A = Actual shares outstanding prior to such offering
B = Actual shares sold in the offering
C = Fixed Conversion Price
D = Offering Price
D. Reclassification, etc. If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to
the unpaid Principal Amount and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase an adjusted number of such
securities and kind of securities as would have been issuable as the result
of such change with respect to the Common Stock immediately prior to such
reclassification or other change.
3.5 Issuance of New Note. Upon any partial conversion of this Note, a new
Note containing the same date and provisions of this Note shall, at the request
of the Holder, be issued by the Borrower to the Holder for the principal balance
of this Note and interest which shall not have been converted or paid. The
Borrower will pay no costs, fees or any other consideration to the Holder for
the production and issuance of a new Note.
ARTICLE IV
EVENTS OF DEFAULT
Upon the occurrence and continuance of an Event of Default beyond any
applicable grace period, the Holder may make all sums of principal, interest and
other fees then remaining unpaid hereon and all other amounts payable hereunder
due and payable within five (5) days after written notice from Holder to
Borrower (each occurrence being a "Default Notice Period"). In the event of such
an acceleration, the amount due and owing to the Holder shall be 125% of the
outstanding principal amount of the Note (plus accrued and unpaid interest and
fees, if any). If, with respect to any Event of Default other than a payment
default described in Section 4.1 below, within the Default Notice Period the
Borrower cures the Event of Default, the Event of Default will be deemed to no
longer exist and any rights and remedies of Holder pertaining to such Event of
Default will be of no further force or effect.
The occurrence of any of the following events is an "Event of Default":
4.1 Failure to Pay Principal, Interest or other Fees. The Borrower fails to
pay when due any installment of principal, interest or other fees hereon in
accordance herewith, or the Borrower fails to pay when due any amount due under
any other promissory note issued by Borrower and such failure continues for a
period of three (3) days after such payment is the due.
4.2 Breach of Covenant. The Borrower breaches any material covenant or
other term or condition of this Note or the Purchase Agreement in any material
respect and such breach, if subject to cure, continues for a period of thirty
(30) days after the occurrence thereof, except where a longer cure period has
been provided.
4.3 Breach of Representations and Warranties. Any material representation
or warranty of the Borrower made herein, in the Purchase Agreement, or in any
Related Document (as defined in the Purchase Agreement) shall be materially
false or misleading and shall not be cured for a period of fifteen (15) days
after the occurrence thereof.
4.4 Receiver or Trustee. The Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its 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 the Borrower or any of its property or other assets for
more than $250,000, and shall remain unvacated, unbonded or unstayed for a
period of ninety (90) days.
4.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower which
is not vacated within ninety (90) days.
4.7 Stop Trade. An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for 5 consecutive days or 5
days during a period of 10 consecutive days, excluding in all cases a suspension
of all trading on a Principal Market, provided that the Borrower shall not have
been able to cure such trading suspension within 30 days of the notice thereof
or list the Common Stock on another Principal Market within 60 days of such
notice. The "Principal Market" for the Common Stock shall include the NASD OTC
Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market System, American
Stock Exchange, or New York Stock Exchange (whichever of the foregoing is at the
time the principal trading exchange or market for the Common Stock, or any
securities exchange or other securities market on which the Common Stock is then
being listed or traded.
4.8 Failure to Deliver Common Stock or Replacement Note. The Borrower's
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note, and Section 9 of the Purchase Agreement, if such failure
to timely deliver Common Stock shall not be cured within two (2) days after
written notice. If Borrower is required to issue a replacement Note to Holder
and Borrower shall fail to deliver such replacement Note within seven (7)
Business Days after receipt of a written request from the Purchaser to replace
the Note.
4.9 Default Under Related Agreements. The occurrence and continuance of any
Event Default as defined in the Related Agreements.
DEFAULT RELATED PROVISIONS
4.10 Payment Grace Period. The Borrower shall have a three (3) business day
grace period to pay any monetary amounts due under this Note or the Purchase
Agreement or any Related Document, after which grace period a default interest
rate of two percent (2%) per month shall apply to the monetary amounts due
hereunder.
4.11 Conversion Privileges. The conversion privileges set forth in Article
III shall remain in full force and effect immediately from the date hereof and
until this Note is paid in full.
4.12 Cumulative Remedies. The remedies under this Note shall be cumulative.
ARTICLE V
MISCELLANEOUS
5.1 Failure or Indulgence Not Waiver. No failure or delay on the part of
the 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. Any notice herein required or permitted to be given shall be
in writing and shall be deemed effectively given: (a) upon receipt of successful
transmission by facsimile, with original deposited with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt, (b) upon personal delivery to the party notified, (c) one day after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the Borrower shall be sent to
Pipeline Data Inc., 00 Xxxx Xxxx Xxxxxx, Xxxxxxx Xxxxx, Xxx Xxxx, 00000,
Attention: Xxxxxx Xxxxxxxxx, Chief Financial Officer, Facsimile: (000) 000-0000,
with a copy to Xxxxxx Xxxxxxx, Esq., 000 Xxxxxx Xxxx Xxxx, Xxxxxx, Xxxxxxx
00000, Facsimile: (000) 000-0000, and to the Holder at the address provided in
the Purchase Agreement for such Holder, with a copy to Xxxx X. Xxxxxx, Esq., 000
Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, xxxxxxxxx number (212)
541-4434, or at such other address as the Borrower or the Holder may designate
by ten days advance written notice to the other parties hereto. A Notice of
Conversion shall be deemed given when made to the Borrower pursuant to the
Purchase Agreement.
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, and any
successor instrument issued pursuant to Section 3.5 hereof, as it may be 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, and may be assigned by the Holder in accordance with the
requirements of the Purchase Agreement.
5.5 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. 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 or in the federal courts located in the state of
New York. 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.
5.6 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.
5.7 Security Interest. The holder of this Note has been granted a security
interest in certain assets of the Borrower more fully described in a Security
Agreement dated as of February 27, 2004.
5.8 Construction. 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 Cost of Collection. If default is made in the payment of this Note, the
borrower shall pay to Holder reasonable costs of collection, including
reasonable attorney's fees.
[Balance of page intentionally left blank;
signature page follows.]
IN WITNESS WHEREOF, Xxxxxxxx has caused this Convertible Term Note to be
signed in its name effective as of this 27th day of February, 2004.
PIPELINE DATA INC.
By:________________________________
Name:______________________________
Title:_______________________________
WITNESS:
-------------------------------
EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert
all or part of the Note into Common Stock)
[Name and Address of Holder]
The Undersigned hereby elects to convert $_________ of the principal due on
[specify applicable Repayment Date] under the Convertible Term Note issued by
PIPELINE DATA INC. dated February 27, 2004 by delivery of Shares of Common Stock
of PIPELINE DATA INC. on and subject to the conditions set forth in Article III
of such Note.
1. Date of Conversion _______________________
2. Shares To Be Delivered: _______________________
By:_______________________________
Name:_____________________________
Title:______________________________
EXHIBIT B
CONVERSION ELECTION NOTICE
(To be executed by the Holder in order to convert
all or part of a Monthly Amount into Common Stock)
[Name and Address of Holder]
Holder hereby elects to convert $_________ of the Monthly Amount due on
[specify applicable Repayment Date] under the Convertible Term Note issued by
PIPELINE DATA INC. dated February 27, 2004 by delivery of Shares of Common Stock
of PIPELINE DATA INC. on and subject to the conditions set forth in Article III
of such Note.
1. Fixed Conversion Price: $_______________________
2. Amount to be paid: $_______________________
3. Shares To Be Delivered (2 divided by 1): __________________
4. Cash payment to be made by Borrower : $_____________________
Date: ____________ LAURUS MASTER FUND, LTD.
By:_______________________________
Name:_____________________________
Title:______________________________
