PROMISSORY NOTE
| $200,000.00 |
New
York, New York
|
|
January
31,
2008
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WHEREAS,
effective as of May 10, 2005, ForgeHouse LLC, a Georgia limited liability
company (“ForgeHouse”),
executed its Promissory Note in favor of Arngrove Group Holdings Ltd., a company
organized under the laws of England (the “Arngrove”),
and
effective as of June 19, 2006, ForgeHouse executed its letter agreement in
favor
of After All Limited, a company organized under the laws of England
(“Holder”)
(said
Promissory Note and letter agreement, collectively the “Original
Promissory Note”);
WHEREAS,
Xxxxxxxx has agreed to accept a promissory note from ForgeHouse and Publico
(defined below), as co-makers, concurrently with and identical to this
Promissory Note but for the principal payment amount (“Tandem
Note”);
WHEREAS,
Holder and Arngrove are affiliated parties;
WHEREAS,
as of the date hereof, ForgeHouse has entered into a transaction (the
“Transaction”)
with
ForgeHouse, Inc., a Nevada corporation (“Publico”),
as a
result of which ForgeHouse has become a wholly-owned subsidiary of
Publico;
WHEREAS,
in connection with the Transaction, ForgeHouse and Publico requested that the
Holder and Arngrove provide certain financial accommodations;
WHEREAS,
in connection with such financial accommodations, the Holder and Arngrove have
agreed that Arngrove shall receive the sum of $240,000.00 and Holder shall
receive nothing, in full satisfaction of all of ForgeHouse’s non-principal
obligations to each of Arngrove and Holder through and including the date hereof
under the Original Promissory Note;
WHEREAS,
in connection with such financial accommodations and to facilitate the
Transaction, Xxxxxxxx has agreed to release all of its rights in the Collateral,
as that term is defined in that certain Security Agreement of ForgeHouse in
favor of the Arngrove, dated as of May 10, 2005, and in that certain Trademark
Security Agreement of ForgeHouse in favor of Arngrove, dated as of May 10,
2005;
WHEREAS,
in connection with such financial accommodations, the release of such security
interests and to facilitate the Transaction, Xxxxxx has agreed to subordinate
its interests in this Promissory Note, and Arngrove has agreed to subordinate
its interests in the Tandem Note, to the rights, privileges, and preferences
of
the Preferred Stock Holders, as that term is defined in that certain
Subordination and Intercreditor Agreement of even date herewith, by and among
Holder, Arngrove, Publico, and ForgeHouse (“Subordination
Agreement”);
WHEREAS,
in connection with such financial accommodations and the release of such
security interests and to facilitate the Transaction, the Holder has agreed
to
cancel its interests in the Original Promissory Note and to accept this
Promissory Note in exchange therefor as the sole memorialization of the
amended-in-full,
restated-in-full, and superseded-in-full
obligations of ForgeHouse to the Holder relating to ForgeHouse’s obligations
under the Original Promissory Note;
WHEREAS,
in connection with such financial accommodations and the release of such
security interests and to facilitate the Transaction, Xxxxxxxx has agreed to
cancel its interest in the Original Promissory Note and to accept the Tandem
Note in exchange therefor as the sole memorialization of the amended-in-full,
restated-in-full, and superseded-in-full obligations of ForgeHouse to Arngrove
relating to ForgeHouse’s obligations under the Original Promissory
Note;
1
WHEREAS,
in connection with such financial accommodations, the release of such security
interests and the cancellation of the Original Promissory Note and the
substitution of this Promissory Note and the Tandem Note, and to facilitate
the
Transaction, Publico has agreed to become a joint maker hereunder;
NOW,
THEREFORE, in consideration of these presents and for such other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, ForgeHouse and Publico (collectively, the “Makers”)
hereby
promise to pay to the order of the Holder, in lawful money of the United States
of America, the sum of $200,000.00, together with accrued and unpaid interest
thereon, at the rate of six percent (6%) simple interest per annum from the
date
of this Promissory Note until maturity, and at the rate of eight percent (8%)
simple interest per annum after maturity, said principal and interest to be
due
and payable as stated below.
Equal
payments of principal in the amount of $40,000.00 shall be due and payable
commencing on the thirty-first (31st)
day of
December, 2008, and continuing on the last day of each and every June and
December thereafter through and including December 2010. On December 31, 2010,
all unpaid principal, plus accrued and unpaid interest, shall be due and payable
in full. If any interest is determined to be in excess of the then legal maximum
rate, then that portion of each interest payment representing an amount in
excess of the then legal maximum rate shall be deemed a payment of principal
and
applied against the principal of the obligations evidenced by this Promissory
Note.
This
Promissory Note may be prepaid in whole or in part at any time, or from time
to
time, without premium or penalty and without prior notice to or consent by
the
Holder. This Promissory Note must be prepaid in whole or in part upon the
closing of any equity or debt1
financing
of Publico (subsequent to the date hereof), excluding trade debt or the
refinancing of any debt outstanding on or about the date hereof taken out in
the
name of Publico and/or ForgeHouse, which prepayment(s) shall be an amount
equivalent to twenty percent (20%) of the net funding received by Publico or
ForgeHouse from said equity or debt financing. Any amount prepaid by Makers
shall be first applied to the then outstanding principal balance of the Loan
and
second to any interest accrued thereon. Amounts prepaid may not be
re-borrowed.
Upon
the
occurrence of an Event of Default, the Holder may make all sums of principal,
interest, and other fees then remaining unpaid hereunder immediately due and
payable. The occurrence with respect to the Makers of any of the following
events is an “Event of Default”:
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1.
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The
Makers fail to pay when due any principal, interest, or other fees
hereunder in accordance herewith.
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2.
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The
Makers breach any covenant or any other term or condition of this
Promissory Note in any material
respect.
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3.
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The
Makers 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.
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4.
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The
Makers or any of their members shall materially default under any
bond,
debenture, note or other evidence of indebtedness for money borrowed,
under any guarantee or under any mortgage, or indenture pursuant
to which
there shall be issued or by which there shall be secured or evidenced
any
indebtedness for money borrowed by the Makers or any of their respective
subsidiaries, whether such indebtedness now exists or shall hereafter
be
created, which default shall have resulted in indebtedness of at
least
$100,000 becoming due and payable prior to the date on which it would
otherwise become due and payable and shall not have been cured by
the
Makers or waived by the lender;
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1
The term “debt financing” shall not include any
debt
financing in an amount equal to or less than the principal and all accrued
and
unpaid interest paid by either of the obligors hereunder to North Atlanta
Bank
as of the date hereof, in respect of the obligation of GS Security Group,
LLC,
dated August 19, 2002, as informally assumed by ForgeHouse
thereafter.
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5.
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Any
money judgment, writ, or similar final process shall be entered or
filed
against the Makers or any of its property or other assets for more
than
$100,000, and shall remain unvacated, unbonded, or unstayed for a
period
of forty-five (45) days.
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6.
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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 the
Makers.
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7.
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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 against the Makers, and shall remain
undismissed for a period of forty-five (45)
days.
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Notwithstanding
the foregoing to the contrary, for 1, 2, and 4 above, Holder shall give Maker
five (5) days prior written notice and opportunity to cure such Default;
provided,
however,
if such
Default is not cured within said five (5) day period, there shall exist an
Event
of Default hereunder.
The
Makers hereby waive presentment, demand, notice of dishonor, protest, notice
of
protest, and all other demands, protests, and notices in connection with the
execution, delivery, performance, collection, and enforcement of this Promissory
Note. If default is made in the payment of this Promissory Note, the Makers
shall pay to the Holder reasonable costs of collection, including reasonable
attorney’s fees. The remedies under this Promissory Note shall be
cumulative.
All
notices and other communications required or permitted hereunder shall be in
writing and shall be sent by express mail or other form of rapid communications,
if possible, and if not then such notice or communication shall be mailed by
first-class mail, postage prepaid, addressed in each case to the party entitled
thereto at the following addresses: (a) if to the Makers, to Publico and
ForgeHouse LLC, 000 Xxxxxx Xxx, Xxxxxxxxxx, Xxxxxxx 00000, Attention: Xxxx
X.
Xxxxxxxxxx-Steel, with a copy (which shall not constitute notice) c/o Xxxxx
Xxxx
LLP, 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000, Attention: Xxxxxxx X. Xxxx,
and (b) if to the Holder, to After All Limited, Palatine House, Senate Suite,
Belmont Business Park, Durham DH1 1YW, United Kingdom, Attention:
______________, or at such other address as one party may furnish to the other
in writing. Notice shall be deemed effective on the date dispatched if by
personal delivery, seven days after mailing if by express mail, or ten days
after mailing if by first-class mail. Notice shall conclusively be deemed to
have been given when received.
This
Promissory Note is being delivered in, is intended to be performed in, shall
be
construed and interpreted in accordance with, and be governed by the internal
laws of, the State of New York, without regard to principles of conflict of
laws. Any judicial proceeding brought by or against the Makers with respect
to
this Promissory Note shall be brought in any state court of New York or any
federal court sitting in the State of New York, and, by execution and delivery
of this Promissory Note, and by acceptance hereof, each of the Makers and the
Holder accepts for itself and in connection with its properties, generally
and
unconditionally, the exclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with this Promissory Note. Each of the Makers and the Holder hereby
waives any claim or defense that any such forum is not convenient or proper.
This
Promissory Note is one of a series of promissory notes, identical but for the
principal and payment amounts, entered into by Makers. This Promissory Note
may
only be amended, modified, superseded, or terminated by an agreement in writing
signed by the party to be charged. This Promissory Note shall not be transferred
or assigned by Holder without: (1) the express written consent of the Makers,
and (2) the transferee or assignee of Holder becoming a party to the
Subordination Agreement, thereby subordinating its interest in this Promissory
Note to the rights, privileges, and preferences of the Preferred Stock Holders.
If Makers consent to any such transfer or, if notwithstanding the foregoing,
such a transfer occurs, then the provisions of this Promissory Note shall be
binding upon any successor to the transferring Holder and shall inure to the
benefit of and be extended to any holder hereof. This Promissory Note shall
be
binding upon the successors and assigns of each of the Makers and inure to
the
benefit of the Holder and its successors, endorsees, and assigns.
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THIS
PROMISSORY NOTE IS SUBORDINATED TO THE RIGHTS, PRIVILEGES, AND PREFERENCES
OF
THE HOLDERS OF THE MAKERS’ SERIES A PREFERRED STOCK AND MAY BE ENFORCED ONLY IN
ACCORDANCE WITH THAT CERTAIN SUBORDINATION AND INTERCREDITOR
AGREEMENT
OF EVEN DATE HEREWITH AMONG THE HOLDER OF THIS PROMISSORY NOTE, AND OTHER
SIMILARLY SITUATED PERSONS OR ENTITIES AND THE MAKERS HEREOF.
[Signatures
on following page.]
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| MAKERS | |||
| FORGEHOUSE LLC, a Georgia limited liability company | |||
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By: ForgeHouse,
Inc. a Nevada corporation,
its
manager
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| By: /s/ Xxxxxxxxx Man-Kit Xxxx | |||
|
Xxxxxxxxx
Man-Kit Xxxx, its Assistant Secretary
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| ForgeHouse, Inc., a Nevada corporation | |||
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By: /s/ Xxxxxxxxx Man-Kit Xxxx
Xxxxxxxxx
Man-Kit Xxxx, its Assistant Secretary
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