Unassociated Document


    TERM
PROMISSORY NOTE

    


    


    $250,000.00
USD 

    Dated:  December
12, 2008

    


    


    For Value Received, Webdigs, Inc., a
Delaware corporation whose principal executive office is at 3433 West Broadway
St., NE, Suite 501, Minneapolis, Minnesota 55413 (“Maker”), hereby
promises to pay to the order of Lantern Advisors, LLC, whose business address is
at 80 South Eighth Street, Suite 900, Minneapolis, Minnesota 55402 (c/o Joseph
A. Geraci, II), or its registered assigns (“Payee”), upon the
terms set forth below, the principal sum of TWO HUNDRED FIFTY THOUSAND AND
NO/100 DOLLARS ($250,000.00), with interest thereon at the rate set forth
below.

    


    
      	
              1.

            	
              Interest and
      Payments.  Maker shall make monthly interest payments to
      Payee in the amount equal to one percent (1%) of the outstanding principal
      (i.e., initially $2,500) (plus any accrued but unpaid interest) as of the
      end of each calendar month, the equivalent of twelve percent (12%)
      interest per annum.  Each monthly interest payment shall be made
      by the 15th calendar day of the month following the month in which the
      interest accrued.  The first interest payment shall be made by
      January 15, 2009 in the amount of $2,747 (such amount being equal to a 12%
      interest rate applied against the initial 34 days from the date hereof
      through January 15, 2009).  The entire outstanding principal
      balance and accrued by unpaid interest shall be due and payable on
      September 30, 2009 (the “Maturity
      Date”), unless accelerated earlier in accordance with Section 4 of
      this Note or unless converted by Payee in accordance with Section
      14.  Maker may prepay amounts due under this Note, in whole or
      in part, prior to the Maturity Date and without penalty, but may not
      prepay amounts due under this Note at any time after Payee shall have
      given Maker a Conversion Notice under Section 14.  All payments
      under this Note shall be made by either cash, check or wire transfer of
      immediately available funds to Payee (pursuant to written instructions
      from Payee) and in United States Dollars (USD).  In the event of
      non-payment or a late payment of interest occurring after the 20th
      calendar day of any particular month (i.e., more than five days past due),
      interest shall accrue on the outstanding principal amount at the per annum
      rate of 18%.

            


    

    


    
      	
              2.

            	
              Security.  The
      amounts owed under this Note are secured pursuant to the terms of a Pledge
      Agreement of even date herewith (the “Pledge
      Agreement”).  In addition, the amounts owed under this
      Note shall also be guaranteed by Robert A. Buntz, Jr., pursuant to the
      terms of a Guaranty Agreement of even date herewith (the “Guaranty”).

            


    

    


    
      	
              3.

            	
              Issuance of
      Shares.  As of the date first set forth above, Maker
      shall issue to Payee a total of 200,000 shares of its common stock, which
      shall be duly authorized, validly issued, fully paid and
      non-assessable.  Additionally, Maker shall within three days
      hereof cause to be issued to Payee a certificate representing the shares
      issued hereunder.

            


    

    


    
      	
              4.

            	
              Events of
      Default.  The term “Event of
      Default,” wherever used herein, means any one of the following
      events (whatever the reason therefor and regardless of whether any such
      event shall have occurred voluntarily, involuntarily, by operation of law
      or pursuant to any judgment, decree or order of any court, or any order,
      rule or regulation of any administrative or governmental
      body):

            


    


    
      
        
        

         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
               
      

            	
              (a)

            	
              any
      default in the payment of amounts due under this Note, as and when the
      same shall become due and payable;

            


    

    


    
      	
               
      

            	
              (b)

            	
              Maker’s
      failure to observe or perform an obligation under, or Maker’s breach of
      any material representation, warranty, term or provision of, this Note or
      the Pledge Agreement (or any breach of the Guaranty), with such failure or
      breach not having been remedied within ten days after the date on which
      written notice of such failure or breach shall have been sent to Maker in
      accordance with Section 9 below (it being understood that there shall be
      no cure period available to Maker hereunder in the event that any failure
      or breach is unable to be cured, as determined in the discretion of
      Payee);

            


    

    


    
      	
               
      

            	
              (c)

            	
              Maker
      shall commence, or there shall be commenced against any Maker, a case
      under any applicable bankruptcy or insolvency laws as now or hereafter in
      effect or any successor thereto, or Maker commences any other proceeding
      under any reorganization, arrangement, adjustment of debt, relief of
      debtors, dissolution, insolvency or liquidation or similar law of any
      jurisdiction whether now or hereafter in effect relating to Maker, or
      there is commenced against Maker any such bankruptcy, insolvency or other
      proceeding which remains undismissed for a period of 60 days;
      or

            


    

    


    
      	
               
      

            	
              (d)

            	
              Maker
      is adjudicated insolvent or bankrupt, or any order of relief or other
      order approving any such case or proceeding is entered; or a custodian for
      Maker is appointed for any substantial part of Maker’s property which
      continues undischarged or unstayed for a period of 60 days; or Maker makes
      a general assignment for the benefit of
  creditors.

            


    

    


    If any
Event of Default occurs, then all principal and accrued but unpaid interest
thereon under this Note shall, at Payee’s election, become immediately due and
payable in the manner described in Section 1 above.  Payee need not
provide Maker with, and Maker hereby waives any right to, notice of any kind,
including any right to demand or protest.

    


    
      	
              5.

            	
              Representations and
      Warranties.  Maker hereby represents and warrants to
      Payee as follows:

            


    

    


    
      	
               
      

            	
              (a)  No Material
      Changes.  Since the date of the latest financial
      statements included in Maker’s public filings with the Securities and
      Exchange Commission (the “SEC”), (i)
      there has been no event, occurrence or development that has had or that
      could reasonably be expected to result in a material adverse effect on
      Maker or its business, taken as a whole, (ii) Maker has not incurred any
      liabilities (contingent or otherwise) other than (A) trade payables and
      accrued expenses incurred in the ordinary course of business and (B)
      liabilities not required to be reflected in Maker’s financial statements
      pursuant to generally accepted principles of accounting or disclosed in
      filings made with the SEC, (iii) Maker has not altered its method of
      accounting, and (iv) Maker has not declared or made any dividend or
      distribution of cash or other property to its shareholders or purchased,
      redeemed or entered into any agreements to purchase or redeem any shares
      of its capital stock.  Maker does not have pending with the SEC
      any request for confidential treatment of
  information.

            


    

    


    
      	
               
      

            	
              (b)  Disclosure in SEC
      Reports.  The information contained in the reports filed
      by Maker with the SEC, as  of the date of their respective
      filings, did not contain an untrue statement of material fact or omit to
      state a material fact required to be stated therein or necessary to make
      the statements therein, in light of the circumstances under which they
      were made, not misleading.

            


    

     


    
      
        
           

        

         


      

      
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                  (c) 
      Financial
      Statements.  On or prior to the date hereof, Maker has
      provided Payee (or its representative) with its unaudited financial
      statements (or substantially similar financial information) for the
      quarterly period ending October 31, 2008 (the “Financial
      Information”).  The Financial Information provided to
      Payee, and the financial statements of Maker included in reports filed
      with the SEC, fairly present in all material respects the financial
      position of Maker as of the dates thereof and the results of operations
      and cash flows for the periods then ended (subject, in the case of
      unaudited Financial Information and other quarterly financial statements,
      to normal year-end audit
  adjustments).

                

              


      

       

    

     

    
      	
              6.

            	
              No Waiver of Payee’s
      Rights.  All payments of principal shall be made without
      setoff, deduction or counterclaim.  No delay or failure on the
      part of Payee in exercising any of its options, powers or rights, nor any
      partial or single exercise of its options, powers or rights shall
      constitute a waiver thereof or of any other option, power or right, and no
      waiver on the part of Payee of any of its options, powers or rights shall
      constitute a waiver of any other option, power or
      right.  Acceptance by Payee of less than the full amount due and
      payable hereunder shall in no way limit the right of Payee to require full
      payment of all sums due and payable hereunder in accordance with the terms
      hereof.

            


    

    


    
      	
              7.

            	
              Legal
      Fees.  Maker acknowledges and agrees that $20,000,
      representing a portion of the outstanding amounts owed by Maker to Maslon
      Edelman Borman and Brand, LLP (“Maslon”), shall
      be transferred by Payee directly to Maslon in satisfaction of a portion of
      Maker’s indebtedness to Maslon.  In addition, $4,000,
      representing the legal fees incurred by Payee in connection with the loan
      evidenced by this Note, shall be transferred by Payee directly to
      Maslon.  The foregoing amounts, aggregating $24,000, shall be
      withheld from the loan proceeds delivered to Maker in connection with this
      Note.  Maslon shall be a third-party beneficiary to the covenant
      under this Section 7.

            


    

    


    
      	
              8.

            	
              Cumulative Rights and
      Remedies. The rights and
      remedies of Payee expressed herein are cumulative and not exclusive of any
      rights and remedies otherwise available under this Note or applicable law
      (including at equity).  The election of Payee to avail itself of
      any one or more remedies shall not be a bar to any other available
      remedies, which Maker agrees that Payee may take from time to
      time.

            


    

    


    
      	
              9.

            	
              Collection
      Expenses. If Payee shall
      commence an action or proceeding to enforce its rights under this Note,
      then Maker shall be obligated to reimburse Payee for its costs of
      collection and attorneys’ fees incurred with the investigation,
      preparation and prosecution of such action or
  proceeding.

            


    

    


    
      	
              10.

            	
              Severability.  If
      any provision of this Note is declared by a court of competent
      jurisdiction to be in any way invalid, illegal or unenforceable, the
      balance of this Note shall remain in effect, and if any provision is
      inapplicable to any person or circumstance, it shall nevertheless remain
      applicable to all other persons and
  circumstances.

            


    

    


    
      	
              11.

            	
              Successors and
      Assigns. This Note shall be
      binding upon Maker and its successors and shall inure to the benefit of
      Payee and its successors and assigns.  The term “Payee,” as used
      herein, shall also include any endorsee, assignee or other holder of this
      Note.

            


    

    


    
      	
              12.

            	
              Governing Law; Dispute
      Resolution.  This Note shall be governed by the laws of
      the State of Minnesota without regard to its conflicts-of-law
      principles.  Any judicial action to enforce any right of any
      party under this Note may be brought and maintained in Minnesota state or
      federal courts.  Accordingly, the parties hereby submit to the
      process, jurisdiction and venue of any such
  court.

            


    

    


    
      	
              13.

            	
              Notices. Any and all
      notices or other communications or deliveries to be provided by Payee or
      Maker hereunder shall be in writing and delivered to the address of Payee
      or Maker set forth in the introductory paragraph of this Note, as
      applicable.  In the case of any notices or communications or
      deliveries to be provided to Payee, a copy thereof must also be provided
      to Maslon Edelman Borman & Brand, LLP (attention Paul D. Chestovich),
      90 South Seventh Street, Suite 3300, Minneapolis, Minnesota
      55402.

            


    


    
      
        
           

        

         


      

      
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              14.

            	
              Optional
      Conversion.  At Payee’s option, Payee may, at any time
      and from time to time, convert all or any portion of amounts owed under
      this Note by giving Maker written notice of intent to exercise such right
      (the “Conversion
      Notice”).  Upon delivery of a Conversion Notice, together
      with the surrender by Payee of this Note for cancellation (the date upon
      which both of such requirements shall have been fulfilled is referred to
      herein as the “Conversion
      Date”), Payee shall be entitled to receive that number of shares of
      common stock of Maker equal to the quotient obtained by dividing (i) the
      amount owed hereunder that is identified in the Conversion Notice as being
      converted, by (ii) 75% of the lowest bid price of the common stock of
      Maker as reported on the OTCBB or Pink Sheets (or other applicable
      quotation medium) during the five trading days prior to the Conversion
      Date.  Maker shall cause one or more stock certificates (as
      directed by Payee) to be delivered to Payee within five business days of
      the Conversion Date, together with a replacement promissory note
      (identical in all respects to this Note, other than reflecting an
      appropriate reduction in any principal amount earlier converted hereunder)
      in cases involving a conversion of less than all amounts then owing under
      this Note.

            


    

    


    In Witness Whereof, the undersigned has
executed this Note.

    


    
      
        
          	 	WEBDIGS,
      INC.	 
	 	 	 	 
	 	
                  By:
      

                	/s/ Robert
      A. Buntz, Jr.	 
	 	 	By:  Robert A. Buntz, Jr.	 
	 	 	Its:  Chief
      Executive Officer	 
	 	 	 	 


        

      



     

    


    


     

     

     


    
      
        
           

        

         


      

      
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