Contract
THIS
NOTE
HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
Original
Issue Date: May 7, 2008
$2,000,000
10%
PROMISSORY NOTE
DUE
JUNE 21, 2008
FOR
VALUE
RECEIVED, RESPONZETV PLC, a company incorporated under the laws of England
and
Wales (the “Company”),
promises to pay to OmniReliant Holdings, Inc. or its registered assigns (the
“Holder”),
the
principal sum of $2,000,000 on June 21, 2008 (the “Maturity
Date”)
or
such earlier date as this Note is required or permitted to be repaid as provided
hereunder, and to pay interest to the Holder on the aggregate unconverted and
then outstanding principal amount of this Note in accordance with the provisions
hereof. This Note is subject to the following additional
provisions:
Section
1. Definitions.
For the
purposes hereof, in addition to the terms defined elsewhere in this Note, (a)
capitalized terms not otherwise defined herein shall have the meanings set
forth
in the Purchase Agreement and (b) the following terms shall have the following
meanings:
“Business
Day”
means
any day except any Saturday, any Sunday, any day which shall be a federal legal
holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.
“Change
of Control Transaction”
means
the occurrence after the date hereof of any of (a) an acquisition after the
date
hereof by an individual or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company, by
contract or otherwise) of in excess of 50% of the voting securities of the
Company (other than by means of conversion or exercise of the Notes), (b) the
Company merges into or consolidates with any other Person, or any Person merges
into or consolidates with the Company and, after giving effect to such
transaction, the stockholders of the Company immediately prior to such
transaction own less than 50% of the aggregate voting power of the Company
or
the successor entity of such transaction, or (c) the Company sells or transfers
all or substantially all of its assets to another Person and the stockholders
of
the Company immediately prior to such transaction own less than 50% of the
aggregate voting power of the acquiring entity immediately after the
transaction, (d) a replacement at one time or within a three year period of
more
than one-half of the members of the Board of Directors which is not approved
by
a majority of those individuals who are members of the Board of Directors on
the
date hereof (or by those individuals who are serving as members of the Board
of
Directors on any date whose nomination to the Board of Directors was approved
by
a majority of the members of the Board of Directors who are members on the
date
hereof), or (e) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events
set
forth in clauses (a) through (d) above.
“Event
of Default”
shall
have the meaning set forth in Section 6(a).
“Fundamental
Transaction”
shall
mean if, at any time while this Note is outstanding, (i) the Company effects
any
merger or consolidation of the Company with or into another Person, (ii) the
Company effects any sale of all or substantially all of its assets in one
transaction or a series of related transactions, (iii) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (iv) the Company effects
any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property.
“Late
Fees”
shall
have the meaning set forth in Section 2(c).
“Loan
Agreement”
means
the Loan Agreement, dated as of May 7, 2008 among the Company and the original
Holders, as amended, modified or supplemented from time to time in accordance
with its terms.
“Mandatory
Default Amount”
means
the outstanding principal amount of this Note, plus all accrued and unpaid
interest hereon, plus all other amounts, costs, expenses and liquidated damages
due in respect of this Note.
“New
York Courts”
shall
have the meaning set forth in Section 7(d).
“Note
Register”
shall
have the meaning set forth in Section 2(b).
“Original
Issue Date”
means
the date of the first issuance of the Notes, regardless of any transfers of
any
Note and regardless of the number of instruments which may be issued to evidence
such Notes.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Subsidiary”
shall
have the meaning set forth in the Purchase Agreement.
“Trading
Day”
means
a
day on which the New York Stock Exchange is open for business.
“Trading
Market”
means
the London Stock Exchange’s AIM Market.
“Transaction
Documents”
shall
have the meaning set forth in the Purchase Agreement.
Section
2. Interest.
a) Payment
of Interest in Cash.
Subject
to Section 4 of this Note, the Company shall pay interest to the Holder on
the
aggregate unconverted and then outstanding principal amount of this Note at
the
rate of 10% per annum, payable on the Maturity Date (an “Interest
Payment Date”)
(if
any Interest Payment Date is not a Business Day, then the applicable payment
shall be due on the next succeeding Business Day), in lawful money of the United
States of America.
b) Interest
Calculations.
Interest shall be calculated on the basis of a 360-day year, consisting of
twelve 30 calendar day periods, and shall accrue daily commencing on the
Original Issue Date until payment in full of the outstanding principal, together
with all accrued and unpaid interest, liquidated damages and other amounts
which
may become due hereunder, has been made. Interest hereunder will be paid to
the
Person in whose name this Note is registered on the records of the Company
regarding registration and transfers of this Note (the “Note
Register”).
c) Late
Fee.
All
overdue accrued and unpaid interest to be paid hereunder shall entail a late
fee
at an interest rate equal to the lesser of 18% per annum or the maximum rate
permitted by applicable law (the “Late
Fees”)
which
shall accrue daily from the date such interest is due hereunder through and
including the date of actual payment in full.
d) No
Usurious Interest.
In the
event that any interest rate(s) provided for in this Note (or any other payment
hereunder) shall be determined to be unlawful, such interest rate(s) (or other
payment) shall be computed at the highest rate (or amount) permitted by
applicable law. Any payment by the Borrower of any amount in excess of that
permitted by law shall be considered a mistake, with the excess being applied
to
the principal amount of this Note without prepayment premium or penalty; if
no
such principal amount is outstanding, such excess shall be returned to
Borrower.
e) Prepayment.
The
Company may prepay any portion of the principal amount of this Note without
the
prior written consent of the Holder.
Section
3. Registration
of Transfers and Exchanges.
a) Different
Denominations.
This
Note is exchangeable for an equal aggregate principal amount of the Note of
different authorized denominations, as requested by the Holder surrendering
the
same. No service charge will be payable for such registration of transfer or
exchange.
b) Investment
Representations.
This
Note has been issued subject to certain investment representations of the
original Holder set forth in the Purchase Agreement and may be transferred
or
exchanged only in compliance with the Purchase Agreement and applicable federal
and state securities laws and regulations.
c) Reliance
on Note Register.
Prior
to due presentment for transfer to the Company of this Note, the Company and
any
agent of the Company may treat the Person in whose name this Note is duly
registered on the Note Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this
Note
is overdue, and neither the Company nor any such agent shall be affected by
notice to the contrary.
Section
4. Conversion
upon Maturity.
On the
Maturity Date, the Holder, at its sole discretion, may either (i) apply the
principal amount of this Note, and any interest accrued thereon, towards the
purchase price of a strategic transaction entered into with the Company for
the
acquisition of the capital stock and/or assets of any of the Company’s
subsidiaries and/or divisions (the “Strategic Transaction”) or (ii) convert the
principal amount of this Note, and any interest accrued thereon, into (x) the
Specified Number of New RETV Shares at a price of 25.75p per share plus (y)
New
RETV Warrants (the “New RETV Securities”). If it does not make any such express
election, the Holder will be deemed to have elected to convert the principal
amount of this Note, and any accrued interest thereon on the Maturity Date,
in
accordance with (ii) above. If the Holder converts this Note on the Maturity
Date in accordance with the provisions of this Section 4, the Holder will hereby
forgive the Company of its obligation to repay the principal amount of this
Note
and any interest accrued but unpaid hereunder and this Note shall become null
and void as of the Maturity Date. For purposes of this Section, “New RETV
Shares” means new ordinary shares of 16p par value in the capital of RETV,
credited as fully paid up.For purposes of this Section, “New RETV Warrants”
means new unlisted warrants to subscribe for New RETV Shares which will be
issued and granted to the Holder pursuant to a warrant instrument in
substantially the same form as the warrant instrument granted to the Holder
on
dated 11 September 2007, in the following manner: (x) warrants equal to the
Specified Number, which shall be exercisable at 37p; (y) warrants equal to
50%
of the Specified Number, which shall be exercisable at 50p; and (z) warrants
equal to 50% of the Specified Number, which shall be exercisable at 100p. For
purposes of this Section, “Specified Number” means the principal amount of this
Note, and any interest accrued thereon, in Pounds Sterling (calculated at an
agreed exchange rate of £1:US$1.98) divided by 25.75p (being the agreed price
for each New RETV Share).
Section
5. Negative
Covenants.
As long
as any portion of this Note remains outstanding, the Company shall not, and
shall not permit any of its subsidiaries (whether or not a Subsidiary on the
Original Issue Date) to, directly or indirectly:
a) enter
into, create, incur, assume, guarantee or suffer to exist any indebtedness
for
borrowed money of any kind, including, but not limited to, a guarantee, on
or
with respect to any of its property or assets now owned or hereafter acquired
or
any interest therein or any income or profits therefrom;
b) enter
into, create, incur, assume or suffer to exist any Liens of any kind, on or
with
respect to any of its property or assets now owned or hereafter acquired or
any
interest therein or any income or profits therefrom;
c) amend
its
charter documents, including, without limitation, its articles of association,
in any manner that materially and adversely affects any rights of the
Holder;
d) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a
de minimis
number
of shares of its Common Stock or Common Stock Equivalents other than as to
repurchases of Common Stock or Common Stock Equivalents of departing officers
and directors of the Company, provided that such repurchases shall not exceed
an
aggregate of $100,000 for all officers and directors during the term of this
Note;
e) repay,
repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness,
other than this Note if on a pro-rata basis, other than regularly scheduled
principal and interest payments as such terms are in effect as of the Original
Issue Date, provided that such payments shall not be permitted if, at such
time,
or after giving effect to such payment, any Event of Default exist or
occur;
f) pay
cash
dividends or distributions on any equity securities of the Company;
g) enter
into any agreement with respect to any of the foregoing.
Section
6. Events
of Default.
a) “Event
of Default”
means,
wherever used herein, any of the following events (whatever the reason for
such
event and whether such event shall be voluntary or involuntary or effected
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):
i. any
default in the payment of (A) the principal amount of this Note or (B) interest,
liquidated damages and other amounts owing the Holder on this Note, as and
when
the same shall become due and payable (which default, solely in the case of
an
interest payment or other default under clause (B) above, is not cured within
5
Trading Days;
ii. the
Company shall fail to observe or perform any other covenant or agreement
contained in this Note which failure is not cured, if possible to cure, within
the earlier to occur
of
(A)
5
Trading
Days after notice of such failure sent by the Holder or by any other
Holder
to the
Company and (B) 10 Trading Days after the Company has become or should have
become aware of such failure;
iii. a
default
or event of default (subject to any grace or cure period provided in the
applicable agreement, document or instrument) shall occur under (A) any of
the
Transaction Documents or (B) any other material agreement, lease, document
or
instrument to which the Company or any Subsidiary is obligated (and not covered
by clause (vi) below);
iv. any
representation
or warranty made in this Note, any other Transaction Documents, any written
statement pursuant hereto or thereto or any other report, financial statement
or
certificate made or delivered to the Holder or any other Holder shall
be
untrue or incorrect in any material respect as of the date when made or deemed
made;
v. the
Company or any Subsidiary shall default on any of its obligations under any
mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which
there
may be secured or evidenced, any indebtedness for borrowed money or money due
under any long term leasing or factoring arrangement that (a) involves an
obligation greater than $150,000, whether such indebtedness now exists or shall
hereafter be created, and (b) results in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable;
vi. the
Company shall be a party to any Change of Control Transaction or Fundamental
Transaction or shall agree to sell or dispose of all or in excess of 40% of
its
assets in one transaction or a series of related transactions (whether or not
such sale would constitute a Change of Control Transaction);
vii. the
Company or
any of
its Subsidiaries shall (a) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (b) consent to the institution of,
or
fail to contest in a timely and appropriate manner, any proceeding or the filing
of any petition described in this section, (c) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Company or
any of
its Subsidiaries, or for a substantial part of any of its or their property
or
assets, (d) file an answer admitting the material allegations of a petition
filed against it or them in any such proceeding, (e) make a general assignment
for the benefit of creditors, (f) become unable, admit in writing its inability
or fail generally to pay its or their debts as they become due or (g) take
any
action for the purpose of effecting any of the foregoing;
viii. an
involuntary proceeding shall be commenced or an involuntary petition shall
be
filed in a court of competent jurisdiction seeking (a) relief in respect of
the
Borrower or its affiliates, or of a substantial part of its or their property
or
assets, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (b) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the
Borrower or
any of
its affiliates,
or for a substantial part of any of its or their property or assets, or (c)
the
winding up or liquidation of the Borrower or
any of
its affiliates; and such proceeding or petition shall continue undismissed
for
60 days, or an order or decree approving or ordering any of the foregoing shall
be entered; or
ix. any
Person shall breach any agreement delivered to the initial Holders pursuant
to
Section 2.2 of the Purchase Agreement; or
x. any
monetary judgment, writ or similar final process shall be entered or filed
against the Company, any subsidiary or any of their respective property or
other
assets for more than $50,000, and such judgment, writ or similar final process
shall remain unvacated, unbonded or unstayed for a period of 45 calendar
days.
b) Remedies
Upon Event of Default.
If any
Event of Default occurs, the outstanding principal amount of this Note, plus
accrued but unpaid interest, liquidated damages and other amounts owing in
respect thereof through the date of acceleration, shall become, at the Holder’s
election, immediately due and payable in cash at the Mandatory Default Amount.
Commencing 5 days after the occurrence of any Event of Default that results
in
the eventual acceleration of this Note, the interest rate on this Note shall
accrue at an interest rate equal to the lesser of 18% per annum or the maximum
rate permitted under applicable law. Upon the payment in full of the Mandatory
Default Amount, the Holder shall promptly surrender this Note to or as directed
by the Company. In connection with such acceleration described herein, the
Holder need not provide, and the Company hereby waives, any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such
acceleration may be rescinded and annulled by Xxxxxx at any time prior to
payment hereunder and the Holder shall have all rights as a holder of the Note
until such time, if any, as the Holder receives full payment pursuant to this
Section 6(b). No such rescission or annulment shall affect any subsequent Event
of Default or impair any right consequent thereon.
Section
7. Miscellaneous.
a) Notices.
Any and
all notices or other communications or deliveries to be provided by the Holder
hereunder, including, without limitation, any Notice of Conversion, shall be
in
writing and delivered personally, by facsimile, or sent by a nationally
recognized overnight courier service, addressed to the Company, at the address
set forth above, or such other facsimile number or address as the Company may
specify for such purpose by notice to the Holder delivered in accordance with
this Section 6(a). Any and all notices or other communications or deliveries
to
be provided by the Company hereunder shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile number or address of the
Holder appearing on the books of the Company, or if no such facsimile number
or
address appears, at the principal place of business of the Holder. Any notice
or
other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified on the signature
page prior to 5:30 p.m. (New York City time), (ii) the date immediately
following the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number specified on the signature page between
5:30 p.m. (New York City time) and 11:59 p.m. (New York City time) on any date,
(iii) the second Business Day following the date of mailing, if sent by
nationally recognized overnight courier service or (iv) upon actual receipt
by
the party to whom such notice is required to be given.
b) Absolute
Obligation.
Except
as expressly provided herein, no provision of this Note shall alter or impair
the obligation of the Company, which is absolute and unconditional, to pay
the
principal of, liquidated damages and accrued interest, as applicable, on this
Note at the time, place, and rate, and in the coin or currency, herein
prescribed. This Note is a direct debt obligation of the Company.
c) Lost
or Mutilated Note.
If this
Note shall be mutilated, lost, stolen or destroyed, the Company shall execute
and deliver, in exchange and substitution for and upon cancellation of a
mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost,
stolen or destroyed, but only upon receipt of evidence of such loss, theft
or
destruction of such Note, and of the ownership hereof, reasonably satisfactory
to the Company.
d) Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Note shall be governed by and construed and enforced in accordance
with
the internal laws of the State of New York, without regard to the principles
of
conflict of laws thereof. Each party agrees that all legal proceedings
concerning the interpretation, enforcement and defense of the transactions
contemplated by any of the Transaction Documents (whether brought against a
party hereto or its respective Affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the “New
York Courts”).
Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
New
York Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction Documents),
and hereby irrevocably waives, and agrees not to assert in any suit, action
or
proceeding, any claim that it is not personally subject to the jurisdiction
of
such New York Courts, or such New York Courts are improper or inconvenient
venue
for such proceeding. Each party hereby irrevocably waives personal service
of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address
in
effect for notices to it under this Note and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by applicable law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
and
all right to trial by jury in any legal proceeding arising out of or relating
to
this Note or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Note, then
the prevailing party in such action or proceeding shall be reimbursed by the
other party for its attorneys fees and other costs and expenses incurred in
the
investigation, preparation and prosecution of such action or
proceeding.
e) Waiver.
Any
waiver by the Company or the Holder of a breach of any provision of this Note
shall not operate as or be construed to be a waiver of any other breach of
such
provision or of any breach of any other provision of this Note. The failure
of
the Company or the Holder to insist upon strict adherence to any term of this
Note on one or more occasions shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term
or
any other term of this Note. Any waiver by the Company or the Holder must be
in
writing.
f) Severability.
If any
provision of this Note is 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. If it shall be found that any interest or other amount deemed
interest due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum rate of interest permitted under applicable law. The Company
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive the Company from paying all or any portion of the principal
of or interest on this Note as contemplated herein, wherever enacted, now or
at
any time hereafter in force, or which may affect the covenants or the
performance of this indenture, and the Company (to the extent it may lawfully
do
so) hereby expressly waives all benefits or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Holder, but will suffer and
permit the execution of every such as though no such law has been
enacted.
g) Next
Business Day.
Whenever any payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day.
h) Headings.
The
headings contained herein are for convenience only, do not constitute a part
of
this Note and shall not be deemed to limit or affect any of the provisions
hereof.
i) Assumption.
Any successor to the Company or any surviving entity in a Fundamental
Transaction shall (i) assume, prior to such Fundamental Transaction, all of
the
obligations of the Company under this Note and the other Transaction Documents
pursuant to written agreements in form and substance satisfactory to the Holder
(such approval not to be unreasonably withheld or delayed) and (ii) issue to
the
Holder a new Note of such successor entity evidenced by a written instrument
substantially similar in form and substance to this Debenture, including,
without limitation, having a principal amount and interest rate equal to the
principal amount and the interest rate of this Debenture and having similar
ranking to this Debenture, which shall be satisfactory to the Holder (any such
approval not to be unreasonably withheld or delayed). The provisions of
this Section 7(i) shall apply similarly and equally to successive Fundamental
Transactions and shall be applied without regard to any limitations of this
Debenture.
*********************
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by a
duly
authorized officer as of the date first above indicated.
|
RESPONZETV
PLC
|
|
By:__________________________________________
Name:
Title:
Facsimile
No. for delivery of Notices: _______________
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