BERMAN CENTER, INC. AMENDMENT NO. 3 TO SECURED CONVERTIBLE PROMISSORY NOTE
Exhibit
10.1
THIS
NOTE
HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES
ACT”),
OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES
AND
MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS
XXXXXX
CENTER, INC.
AMENDMENT
NO. 3 TO SECURED CONVERTIBLE PROMISSORY NOTE
This
Amendment No. 3 (this “Amendment”),
dated
August 16, 2007, amends that certain Secured Convertible Promissory Note
pursuant to which Xxxxxx Center, Inc. (the “Company”)
borrowed from Hunter Fund LTD (the “Holder”)
the
aggregate principal amount of $225,000 dated as of March 7, 2007 (the
“Note”).
All
capitalized terms used herein and not defined shall have the meanings given
to
them in the Note.
RECITALS:
WHEREAS,
the
Company entered into the Note issued to the Holder pursuant to which the Company
borrowed from the Holder and promised to pay the Holder the principal sum of
Two
Hundred Twenty-Five Thousand Dollars ($225,000.00), with interest at the rate
of
fifteen percent (15%) per annum;
WHEREAS, the
Company entered into Amendment No. 1 to the Note dated May 24, 2007 issued
to
the Holder pursuant to which the Company borrowed from the Holder and promised
to pay the Holder the principal sum of Sixty Thousand Dollars ($60,000.00),
with
interest at the rate of fifteen percent (15%) per annum;
WHEREAS, the
Company entered into Amendment No. 2 to the Note dated July 9, 2007 issued
to
the Holder pursuant to which the Company borrowed from the Holder and promised
to pay the Holder the principal sum of Twenty-Five Thousand Dollars
($25,000.00), with interest at the rate of fifteen percent (15%) per annum;
and
WHEREAS,
Section
16 of the Note states that the Note may be modified or amended by an agreement
in writing signed by the parties;
WHEREAS,
the
Holder wishes to loan to the Company, and the Company wishes to borrow, an
additional Three Hundred Thousand Dollars ($300,000.00) (“Additional
Loan Amount”)
under
the same terms and conditions of the Note for payment of the Company’s
payroll.
1
NOW
THEREFORE,
for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The
Company promises to pay to the Holder the principal sum of the Additional Loan
Amount with interest from the date hereof at the rate of fifteen percent (15%)
per annum on the unpaid balance hereof until paid.
2. The
Company promises to pay, within five business days after the end of each
calendar month, the Additional Loan Amount and the amounts due under the Note
and each of the Amendments to the Note from one hundred percent (100%) of the
funds available from the Company’s monthly net profits for such calendar month.
The term net profits shall mean the net profits of the Company and its
affiliated entities after taxes, as shown on the Company’s internal monthly
financial statements (the “Net Profits”). Net Profits of the Company shall be
calculated by the Company’s Chief Financial Officer in accordance with US GAAP
accounting as used by the Company to prepare its financial statements for its
periodic reports filed with the Securities and Exchange Commission. The first
payment that may be due under this provision shall be for the calendar month
of
September 2007. The Company agrees to keep accurate books and records in
connection with the calculation of Net Profits, including sales figures, the
computation of net sales, the accumulation of all related costs and expenses,
and payments made to Holder hereunder. During any time that the Company owes
money to the Holder and for one (1) year thereafter, the Company shall permit
Holder and/or its authorized representatives to inspect (and make copies) and
conduct an examination during the Company’s business hours of all or any such
books and records pertaining to the calculation of Net Profits relating to
this
Amendment. The Company shall also provide copies of relevant documents and
calculations to the Holder upon request. In the event that Xxxxxx believes
that
such examination shows an understatement of the net profits, the parties shall
work in good faith to resolve any such dispute.
3. The
Company promises to not effect any significant increases in operating costs
without the consent of the Holder. In the event that operating costs decrease,
the Company promises to alert the Holder of the change in operating costs.
A
copy of the Company’s average monthly operating costs is attached hereto as
Exhibit
A,
which
is the average operating costs for the Company for the six months of
2007.
4. The
Company and Holder agree that the Additional Loan Amount shall be subject to
the
same terms and conditions of the Note and all Amendments to the Note, copies
of
which are attached hereto as Exhibit
B,
including, but not limited to, the Due Date, Default Rate, Conversion,
registration rights, the first priority security interest in all assets of
the
Subsidiary, indemnification rights, and all other terms and conditions of the
Note; provided
that, however,
the
Company, pursuant to the last sentence of Section 11 to the Note, shall only
be
obligated to (i) make a one-time payment of an aggregate fee amount equal to
$30,000.00 to the placement agent, Hunter World Markets, Inc., (ii) issue an
aggregate of 1,066,667 shares of the Company’s common stock to Hunter World
Markets, Inc. and/or its designees in connection with the execution of this
Amendment, and (iii) pay reasonable legal fees incurred by the Holder in
connection with the processing of this Amendment.
2
5. The
Company shall use reasonable best efforts to cause the registration statement
filed with the Securities and Exchange Commission (“SEC”) on Form SB-2 on June
19, 2007 (the “Initial Registration Statement”) to be declared effective by the
SEC within 45 days of the effective date of this Amendment (the “Effective
Date”). Subject to the conditions and limitations hereof, the Company’s failure
to satisfy the obligations specified in the immediately preceding sentence
shall
require the Company to issue, as liquidated damages, shares (the “Additional
Shares”) to the Holder equal to a total of 0.0333% of the shares listed in the
Initial Registration Statement (the “Shares”) for each business day that the
Initial Registration Statement has not been declared effective by the SEC (and
until the Initial Registration Statement is declared effective by the SEC);
provided
however
that no
penalty shall be payable if the primary and direct cause of such failure to
satisfy said obligations is as result of comments from the SEC regarding the
ability of the Company to utilize and rely upon Rule 415 of the Securities
Act
of 1933, as amended, or the SEC’s refusal to permit the registration of
securities issued after the filing of the Initial Registration Statement. For
the avoidance of doubt, any right to receive such Additional Shares shall be
Holder’s sole and exclusive remedy for the failure of the Company to satisfy the
obligations under this Section 5. In the event the SEC does not permit the
Company to register all of the Shares, the Company shall use its best efforts
to
register the securities, subject to the foregoing sentence, that were not
registered in the Initial Registration Statement as promptly as possible and
in
a manner permitted by the SEC.
6. The
Company shall use reasonable best efforts to prepare and file a registration
statement (the “Subsequent Registration Statement”) on Form SB-2 or other
appropriate registration document under the Securities Act of 1933, as amended
(the “Act”) for resale of the securities issued or issuable to the Holder in
connection with the Amendment No. 2 to the Note dated July 9, 2007 and this
Amendment No. 3 to the Note (the “Amendment Shares”) and shall use its
reasonable best efforts to maintain the Subsequent Registration Statement
effective for a period of twenty-four (24) months at the Company’s expense (the
“Effectiveness Period”). The Company shall file such Subsequent Registration
Statement no later than 10 days after the Effective Date, as defined in Section
4. The Company shall use reasonable best efforts to cause such Registration
Statement to become effective within 45 days after the Required Filing Date
or
the actual filing date, whichever is earlier, or 60 days after the Required
Filing Date or the actual filing date, whichever is earlier, if the Registration
Statement is subject to a full review by the SEC (the “Required Effectiveness
Date”). Subject to the conditions and limitations hereof, the Company’s failure
to satisfy the obligations specified in the immediately preceding sentence
shall
require the Company to issue, as liquidated damages, shares (the “Amendment
Additional Shares”) to the Holder equal to a total of 0.0333% of the shares
listed in the Subsequent Registration Statement for each business day that
the
Subsequent Registration Statement has not been declared effective by the SEC
(and until the Subsequent Registration Statement is declared effective by the
SEC); provided
however
that no
penalty shall be payable if the primary and direct cause of such failure to
satisfy said obligations is as result of comments from the SEC regarding the
ability of the Company to utilize and rely upon Rule 415 of the Securities
Act
of 1933, as amended, or the SEC’s refusal to permit the registration of
securities issued after the filing of the Subsequent Registration Statement.
For
the avoidance of doubt, any right to receive such Amendment Additional Shares
shall be Holder’s sole and exclusive remedy for the failure of the Company to
satisfy the obligations under this Section 6. In the event the SEC does not
permit the Company to register all of the Amendment Shares, the Company shall
use its best efforts to register the securities, subject to the foregoing
sentence, that were not registered in the Subsequent Registration Statement
as
promptly as possible and in a manner permitted by the SEC.
3
7. Holder
shall have the rights of a secured party under the Uniform Commercial Code
for
the Additional Loan Amount, and to effect the foregoing, each of the Company
and
the Subsidiary agrees to execute promptly such additional security documentation
as Holder may request and hereby authorizes Holder to file financing and other
statements as Holder deems advisable to perfect the first priority security
interest granted herein.
8. The
Company and Holder make the same representations and warranties as contained
in
the Note as of the date of this Amendment No. 3.
9. Except
as
amended herein, the Note shall remain in full force and effect.
10. This
Amendment may be executed in any number of facsimile counterparts, each of
which
shall be an original, but which together constitute one and the same instrument.
This Amendment may be executed and delivered by facsimile.
[SIGNATURE
PAGE TO FOLLOW]
4
IN
WITNESS WHEREOF, the Company and Xxxxxx have executed this Amendment No. 3
to
the Secured Convertible Promissory Note as of the date first written
above.
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XXXXXX
CENTER, INC.,
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/s/
Xxxxx X.X. Xxxxxx
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By:
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Xxxxx
X.X. Xxxxxx, LCSW, Ph.D.
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Its:
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Chief
Executive Officer and President
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Address:
000
Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxx 00000
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XXXXXX
HEALTH & MEDIA, INC.,
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/s/
Xxxxx X.X. Xxxxxx
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By:
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Xxxxx
X.X. Xxxxxx, LCSW, Ph.D.
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Its:
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Chief
Executive Officer and President
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Address:
000
Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxx 00000
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HUNTER
FUND LTD.,
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/s/
Xxxx Xxxxxx
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By:
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Xxxx
Xxxxxx
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Its:
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President
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Address:
Hunter
Fund Ltd.
0000
Xxxxxxxx Xxxx.
Penthouse
Suite
Beverly
Hills, CA 90212
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5
EXHIBIT
A
XXXXXX
CENTER, INC.’S OPERATING COSTS
EXHIBIT
B
XXXXXX
CENTER, INC. SECURED CONVERTIBLE PROMISSORY NOTE DATED MARCH 7, 2007 FOR
$225,000.00 AND ALL AMENDMENTS
