Convertible Promissory Note - Ramp Corp. and Platinum Partners Value Arbitrage Fund LP
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR RAMP CORPORATION SHALL HAVE
RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS
NOT REQUIRED.
RAMP CORPORATION
CONVERTIBLE PROMISSORY NOTE
U.S. $250,000 New York, New York
No.: PN-11-01 November 22, 2004
FOR VALUE RECEIVED, the undersigned, RAMP CORPORATION, a
Delaware corporation (the "Company"), hereby promises to pay to the order of
PLATINUM PARTNERS VALUE ARBITRAGE FUND L.P., or any future permitted holder of
this promissory note (the "Payee"), at the principal office of the Payee set
forth herein, or at such other place as the Payee may designate in writing to
the Company, the principal sum of up to Two Hundred and Fifty Thousand Dollars
(U.S. $250,000), or such other amount as may be outstanding hereunder, together
with all accrued but unpaid interest, in such coin or currency of the United
States of America as at the time shall be legal tender for the payment of public
and private debts and in immediately available funds, as provided in this
promissory note (the "Note"). This Note is the Note referred to in the Note
Purchase Agreement dated as of November 22, 2004 between the Company and the
purchasers named therein (the "Purchase Agreement"). Concurrently with the
issuance of this Note, the Company is issuing separate notes to separate
purchasers pursuant to the Purchase Agreement (the "Other Notes"). Capitalized
terms used and not otherwise defined herein shall the meanings set forth for
such terms in the Purchase Agreement.
1. Principal and Interest Payments; Transaction.
(a) The Company shall repay in full (or the Note may be
automatically converted pursuant to Section 2 hereof) the entire principal
balance then outstanding under this Note on the earliest to occur of (the
"Maturity Date"): (i) ninety (90) days following the date hereof, (ii) the
consummation of a Transaction (as defined in Section 1(c) hereof), or (iii) the
acceleration of the obligations as contemplated by this Note.
(b) Interest on the outstanding principal balance of this Note
shall accrue at a rate of: (i) six percent (6%) per annum for the period
commencing on the date hereof through the Maturity Date. Interest shall be
computed on the basis of the actual number of days elapsed and a year of three
hundred and sixty (360) days and shall be payable on the Maturity Date in cash
or, if converted by the Company in accordance with Section 2 hereof, in
-2-
<PAGE>
securities of the Company. Upon the occurrence of an Event of Default (as
defined in Section 5 hereof), then to the extent permitted by law, the Company
will pay interest to the Payee, payable on demand, on the outstanding principal
balance of this Note from the date of the Event of Default until payment in full
at the rate of ten percent (10%) per annum.
(c) For purposes of this Note, a "Transaction" shall mean the
consummation of a transaction with any third party for the sale of Common Stock
or any securities of the Company convertible, exercisable or exchangeable into
Common Stock, including debt securities or convertible securities, in a private
or public offering, with gross proceeds to the Company of a minimum of
$1,000,000.
2. Mandatory Conversion; Issuance of Certificates.
(a) At the Maturity Date, the outstanding principal amount of
this Note plus all accrued but unpaid interest shall be due and payable in cash;
provided, however, at any time while this Note is outstanding the outstanding
principal amount of this Note plus any accrued but unpaid interest shall
automatically, and without further action, convert into such number of
securities of the Company issued to investor(s) in a Transaction ("Securities")
equal to on hundred and twenty percent (120%) of the principal amount of this
Note, plus any accrued but unpaid interest being converted.
(b) Upon the conversion of this Note plus all accrued but
unpaid interest into Securities, the outstanding principal amount of this Note,
together with all accrued but unpaid interest, shall be deemed to be the
consideration paid for the Payee's ownership of the Securities.
(c) The Company shall, not later than five (5) trading days
after the conversion of this Note, issue and deliver to the Payee a certificate
or certificates representing the Securities being acquired upon the conversion
of this Note.
3. Payment on Non-Business Days. Whenever any payment to be made shall
be due on a Saturday, Sunday or a public holiday under the laws of the State of
New York, such payment may be due on the next succeeding business day.
4. Representations and Warranties of the Company. The Company
represents and warrants to the Payee as follows:
(a) The Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted.
(b) This Note has been duly authorized, validly executed and
delivered on behalf of the Company and is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy or
other laws affecting the enforcement of creditors' rights generally, and the
Company has full power and authority to execute and deliver this Note and to
perform its obligations hereunder.
-3-
<PAGE>
(c) The execution, delivery and performance of this Note will
not (i) conflict with or result in a breach of or a default under any of the
terms or provisions of, (A) the Company's certificate of incorporation or
by-laws, or (B) any material provision of any indenture, mortgage, deed of trust
or other material agreement or instrument to which the Company is a party or by
which it or any of its material properties or assets is bound, (ii) result in a
violation of any material provision of any law, statute, rule, regulation, or
any existing applicable decree, judgment or order by any court, federal or state
regulatory body, administrative agency, or other governmental body having
jurisdiction over the Company, or any of its material properties or assets or
(iii) result in the creation or imposition of any material lien, charge or
encumbrance upon any material property or assets of the Company or any of its
subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of their
property or any of them is subject except in the case of clauses (i)(B) or (iii)
for any such conflicts, breaches, or defaults or any liens, charges, or
encumbrances which would not have a Material Adverse Effect (as defined in the
Purchase Agreement).
(d) Except as disclosed in the Purchase Agreement, no consent,
approval or authorization of or designation, declaration or filing with any
governmental authority on the part of the Company is required in connection with
the valid execution and delivery of this Note.
5. Events of Default. The occurrence of any of the following events
shall be an "Event of Default" under this Note:
(a) the Company shall fail to make the payment of any amount
of any principal outstanding on the date such payment shall become due and
payable hereunder; or
(b) the Company shall fail to make the interest payments on
the date such payment shall become due and payable hereunder; or
(c) any representation, warranty or certification made by the
Company herein, in the Transaction Documents or in any certificate or financial
statement shall prove to have been false or incorrect or breached in a material
respect on the date as of which made; or
(d) the holder of any indebtedness of the Company or any of
its subsidiaries shall accelerate any payment of any amount or amounts of
principal or interest on any indebtedness (the "Indebtedness") (other than the
Indebtedness hereunder and the Other Notes) prior to its stated maturity or
payment date the aggregate principal amount of which Indebtedness of all such
persons is in excess of $500,000, whether such Indebtedness now exists or shall
hereinafter be created, and such accelerated payment entitles the holder thereof
to immediate payment of such Indebtedness which is due and owing and such
indebtedness has not been discharged in full or such acceleration has not been
stayed, rescinded or annulled within ten (10) business days of such
acceleration; or
(e) A judgment or order for the payment of money shall be
rendered against the Company or any of its subsidiaries in excess of $500,000 in
the aggregate (net of any applicable insurance coverage) for all such judgments
or orders against all such persons (treating any deductibles, self insurance or
-4-
<PAGE>
retention as not so covered) that shall not be discharged, and all such
judgments and orders remain outstanding, and there shall be any period of sixty
(60) consecutive days following entry of the judgment or order in excess of
$500,000 or the judgment or order which causes the aggregate amount described
above to exceed $500,000 during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
(f) the Company shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property or
assets, (ii) make a general assignment for the benefit of its creditors, (iii)
commence a voluntary case under the Bankruptcy Code or under the comparable laws
of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take
advantage of any bankruptcy, insolvency, moratorium, reorganization or other
similar law affecting the enforcement of creditors' rights generally, (v)
acquiesce in writing to any petition filed against it in an involuntary case
under the Bankruptcy Code or under the comparable laws of any jurisdiction
(foreign or domestic), or (vi) take any action under the laws of any
jurisdiction (foreign or domestic) analogous to any of the foregoing; provided,
however, that any "going concern" limitation or qualification contained in any
report of the Company's independent public accountants contained in the
Company's financial statements or SEC Documents shall not be an Event of Default
under this Note; or
(g) a proceeding or case shall be commenced in respect of the
Company or any of its subsidiaries without its application or consent, in any
court of competent jurisdiction, seeking (i) the liquidation, reorganization,
moratorium, dissolution, winding up, or composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of it or of all or any substantial part of its assets or (iii) similar
relief in respect of it under any law providing for the relief of debtors, and
such proceeding or case described in clause (i), (ii) or (iii) shall continue
undismissed, or unstayed and in effect, for a period of sixty (60) consecutive
days or any order for relief shall be entered in an involuntary case under the
Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or
domestic) against the Company or any of its subsidiaries or action under the
laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing
shall be taken with respect to the Company or any of its subsidiaries and shall
continue undismissed, or unstayed and in effect for a period of sixty (60)
consecutive days.
6. Remedies Upon An Event of Default. If an Event of Default shall have
occurred and shall be continuing, the Payee of this Note may at any time at its
option, (a) declare the entire unpaid principal balance of this Note, together
with all accrued but unpaid interest, due and payable, and thereupon, the same
shall be accelerated and so due and payable; provided, however, that upon the
occurrence of an Event of Default described in Sections 5(f) and (g), without
presentment, demand, protest, or notice, all of which are hereby expressly
unconditionally and irrevocably waived by the Company, the outstanding principal
balance of this Note plus all accrued but unpaid interest shall be automatically
due and payable; or (b) exercise or otherwise enforce any one or more of the
Payee's rights, powers, privileges, remedies and interests under this Note or
applicable law. No course of delay on the part of the Payee shall operate as a
waiver thereof or otherwise prejudice the right of the Payee. No remedy
conferred hereby shall be exclusive of any other remedy referred to herein or
-5-
<PAGE>
now or hereafter available at law, in equity, by statute or otherwise.
Notwithstanding the foregoing, Payee agrees that its rights and remedies
hereunder are limited to receipt of cash or shares of Common Stock in the
amounts described herein.
7. Replacement. Upon receipt of a duly executed, notarized and
unsecured written statement from the Payee with respect to the loss, theft or
destruction of this Note (or any replacement hereof), and without requiring an
indemnity bond or other security, or, in the case of a mutilation of this Note,
upon surrender and cancellation of such Note, the Company shall issue a new
Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or
mutilated Note.
8. Parties in Interest, Transferability. This Note shall be binding
upon the Company and its successors and assigns and the terms hereof shall inure
to the benefit of the Payee and its successors and permitted assigns. This Note
may not be transferred, sold, pledged, hypothecated or otherwise granted as
security by the Payee.
9. Amendments. This Note may not be modified or amended in any manner
except in writing executed by the Company and the Payee.
10. Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective upon delivery by telecopy, facsimile or prepaid courier service at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received). The Company will give
written notice to the Payee at least twenty (20) days prior to the date on which
dissolution, liquidation or winding-up will take place and in no event shall
such notice be provided to the Payee prior to such information being made known
to the public.
Address of the Payee: Platinum Partners Value Arbitrage Fund L.P.
152 West 57th Street
New York, New York
Attention: Mr. Mark Nordlicht
Tel. No.: ( )
Fax No.: ( )
With a copy to: Attention:
Tel. No.: ( )
Fax No.: ( )
Address of the Company: Ramp Corporation
33 Maiden Lane, 5th Floor
New York, New York 10038
Attention: Andrew Brown, Chief Executive Officer
Tel. No.: (212) 440-1548
Fax No.: (509) 757-4801
-6-
<PAGE>
with a copy to: Jenkens & Gilchrist Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attention: Martin Eric Weisberg, Esq.
Tel. No.: (212) 704-6000
Fax No.: (212) 704-6288
11. Governing Law. This Note shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to the choice of law provisions. This Note shall not be interpreted or
construed with any presumption against the party causing this Note to be
drafted.
12. Headings. Article and section headings in this Note are included
herein for purposes of convenience of reference only and shall not constitute a
part of this Note for any other purpose.
13. Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity
(including, without limitation, a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a Payee's right to pursue actual damages for any failure by the
Company to comply with the terms of this Note. Amounts set forth or provided for
herein with respect to payments and the like (and the computation thereof) shall
be the amounts to be received by the Payee and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable and material harm to the Payee and
that the remedy at law for any such breach may be inadequate. Therefore the
Company agrees that, in the event of any such breach or threatened breach, the
Payee shall be entitled, in addition to all other available rights and remedies,
at law or in equity, to seek and obtain such equitable relief, including but not
limited to an injunction restraining any such breach or threatened breach,
without the necessity of showing economic loss and without any bond or other
security being required.
14. Failure or Indulgence Not Waiver. No failure or delay on the part
of the Payee 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.
15. Enforcement Expenses. The Company agrees to pay all costs and
expenses of enforcement of this Note, including, without limitation, reasonable
attorneys' fees and expenses.
16. Binding Effect. The obligations of the Company and the Payee set
forth herein shall be binding upon the successors and assigns of each such
party, whether or not such successors or assigns are permitted by the terms
hereof.
-7-
<PAGE>
17. Compliance with Securities Laws. The Payee of this Note
acknowledges that this Note is being acquired solely for the Payee's own account
and not as a nominee for any other party, and for investment, and that the Payee
shall not offer, sell or otherwise dispose of this Note other than in compliance
with the laws of the United States of America and as guided by the rules of the
Securities and Exchange Commission. This Note, any Note issued in substitution
or replacement therefore and the Note Payment Shares or, if converted,
Securities, shall be stamped or imprinted with a legend in substantially the
following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND
UNDER APPLICABLE STATE SECURITIES LAWS OR KNIGHTSBRIDGE FINE
WINES, INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND
UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS
NOT REQUIRED."
18. Severability. The provisions of this Note are severable, and if any
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
19. Consent to Jurisdiction. Each of the Company and the Payee (i)
hereby irrevocably submits to the jurisdiction of the United States District
Court sitting in the Southern District of New York and the courts of the State
of New York located in New York county for the purposes of any suit, action or
proceeding arising out of or relating to this Note and (ii) hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the Payee
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address set forth in Section 13
hereof and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing in this Section 19 shall affect or limit
any right to serve process in any other manner permitted by law.
20. Company Waivers. Except as otherwise specifically provided herein,
the Company and all others that may become liable for all or any part of the
obligations evidenced by this Note, hereby waive presentment, demand, notice of
nonpayment, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, and do hereby
consent to any number of renewals of extensions of the time or payment hereof
and agree that any such renewals or extensions may be made without notice to any
such persons and without affecting their liability herein and do further consent
to the release of any person liable hereon, all without affecting the liability
of the other persons, firms or Company liable for the payment of this Note, and
do hereby waive trial by jury.
-8-
<PAGE>
(a) No delay or omission on the part of the Payee in
exercising its rights under this Note, or course of conduct relating hereto,
shall operate as a waiver of such rights or any other right of the Payee, nor
shall any waiver by the Payee of any such right or rights on any one occasion be
deemed a waiver of the same right or rights on any future occasion.
(b) THE COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH
THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY
APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO
ANY PREJUDGMENT REMEDY WHICH THE PAYEE OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE
TO USE.
[Signature Page Follows]
-9-
<PAGE>
IN WITNESS WHEREOF, the Company has executed and delivered this Note as
of the date first written above.
RAMP CORPORATION
By:
---------------------------
Name:
Title:
-10-