EXHIBIT 10.1
THE SECURITIES DESCRIBED IN THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (II) TO THE EXTENT
APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (III) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
8% PROMISSORY NOTE
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$600,000 September 10, 2002
FOR VALUE RECEIVED, the undersigned, Interruption Television, Inc./
Bongiovi Entertainment, Inc. (the "Maker" or "Company"), hereby promises to pay
to the order of Samartan Development, Ltd., the holder, or its assigns
(the"Noteholder"), in lawful money of the United States of America, and in
immediately payable funds, the principal sum of six hundred thousand ($600,000)
(the "Note").
Bongiovi Entertainment, Inc., a Florida corporation ("Bongiovi") and
Interruption Television, Inc., a Nevada corporation ("ITV") have entered into an
Agreement and plan of Reorganization dated as of August 23, 2002 pursuant to
which all of the class "A" common stock of Bongiovi will be acquired by ITV in
exchange for common stock of ITV (the "Acquisition"). The closing of Acquisition
is expected to take place on or about September 10, 2002 (the "Closing Date").
All references to the Company or Maker in this Note refer to the
combined entity of Bongiovi and ITV as if the Acquisition had taken place.
The principal hereof together with any unpaid accrued interest thereon,
shall be due and payable eight months from the Closing Date, on April 30, 2003
(the "Maturity Date"). The first payment under this Note shall be due sixty (60)
days after the Closing Date. Subsequent payments shall be due and payable every
calendar month, on the same date as the first payment. Each payment shall be
equal to the greater of one hundred thousand dollars ($100,000) or twenty
percent (20%) of the net equity proceeds received by the Company in the period
since the last payment due date. Payment of all amounts due hereunder shall be
made at the address of the Noteholder provided for in this Note. The Maker
further promises to pay interest at the rate of eight per cent (8%) per annum on
the outstanding principal balance hereof. The accrued interest shall be payable
in cash quarterly on December 31, 2002 and April 30, 2003, however, such accrued
interest shall be waived by the Noteholder with respect to each Note payment
made timely on the respective due date.
This Note has not and will not be registered under the Securities Act
of 1933, as amended (the "Act") or applicable state securities laws, in reliance
on the exemption from registration afforded by Regulation D promulgated under
the Act. This Note may not be offered, sold, transferred or otherwise disposed
of, unless such securities are registered under the Act, or an exemption from
the registration requirements of the Act is available.
1. SUBORDINATION For purposes of this Note and specifically this
Section 1 hereof, the term "Superior Bank Indebtedness" shall be defined as
follows:
The principal of, and accrued and unpaid interest on (a) indebtedness
of the Company incurred in the ordinary course of business for money borrowed or
in respect of letters of credit issued for its own account, to (i) any bank or
trust company organized under the laws of the United States or any state or (ii)
any savings and loan association; (b) obligations of the Company incurred
pursuant to agreements to factor the accounts receivable of the Company (c)
purchase money obligations entered into in the ordinary course of business,
evidenced by notes, lease-purchase agreements, purchase contracts or agreements,
or similar instruments for the payment of which the Company is responsible or
liable, by guarantees or otherwise; (d) obligations of the Company incurred in
the ordinary course of business under any agreement to lease, or lease of, any
real or personal property which are required to be capitalized in accordance
with generally accepted accounting principles, or any other agreement to lease,
or lease of, any real or personal property for the benefit of the Company which,
by the terms thereof, are expressly designated as Superior Bank Indebtedness;
and (e) any modification, renewal, extension or refunding of any such
indebtedness, guarantee or obligation; in every case, whether such indebtedness,
guarantee or obligation, or such modification, renewal, extension or refunding
thereof, was outstanding on the date of execution of this Note or thereafter
created, incurred or assumed; unless, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is provided that such
indebtedness, guarantee or obligation, or such modification, renewal, extension
or refunding thereof, is not superior in right of payment to the Notes.
The Maker agrees, and the Noteholder of the Note issued hereunder by
its acceptance thereof likewise agrees, that the Note shall be issued subject to
the provisions of this Section 1, each person holding any Note, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions. This Note issued hereunder shall, to the extent and in
the manner hereinafter set forth, be subordinated and subject in right of
payment or satisfaction to the prior payment of Superior Bank Indebtedness.
Subject to the payment of Superior Bank Indebtedness as provided above
and subject to applicable law, the rights of the Noteholder shall be
appropriately subrogated to the rights of the holders of Superior Bank
Indebtedness to receive payments or distributions of cash, property or
securities of the Company to the extent applicable to the Superior Bank
Indebtedness until the principal of, and premium, if any, and interest on the
Notes shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Superior Bank Indebtedness of
any cash, property or securities to which the Holder of the Note would be
entitled except for the provisions of this Section 1. It is understood that the
provisions of this Section 1 are and are intended solely for the purpose of
defining the relative rights of the Noteholder, on the one hand, and the holders
of the Superior Bank Indebtedness, on the other hand.
Nothing contained in this Section 1 or in the Note is intended to or
shall impair, as between the Company, its creditors other than the holders of
Superior Bank Indebtedness, and the Noteholder, the obligation of the Company,
which is absolute and unconditional, to pay to the Noteholder the principal of,
and premium, if any, and interest on the Note as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Noteholder and creditors of the Company other
than the holders of Superior Bank Indebtedness, nor shall anything herein
prevent the Noteholder from exercising all remedies otherwise permitted by
applicable law upon default under this Note, subject to the rights, if any,
under this Section 1 of the holders of Superior Bank Indebtedness in respect of
cash, property or securities of the Company received upon the exercise of any
such remedy.
2. PREPAYMENT. The Maker may, at its option, at any time and from time
to time, prepay all or any part of the principal balance of this Note, without
penalty or premium.
3. REPAYMENT. The Maker shall have a ten (10) day grace period for each
repayment. If the payment is not received by the Noteholder within such time,
then there shall be assessed a five percent (5%) penalty on that payment, plus
an additional ten percent (10%) penalty on such amount due every thirty (30)
days thereafter, until paid, on pro-rata basis.
4. CONVERSION. Anytime after the Maturity Date, if any amount of the
principal amount of the Note, the interest and /or the penalties thereon are
still outstanding and payable, the Noteholder shall be entitled to convert the
Note into shares of common stock of Maker, in whole or in part. The Note, or
portion hereof (including any accrued interest and/or penalties), shall be
convertible into such number of the Shares as will be determined by dividing the
principal amount of the Note, and accrued interest and/or penalties, if any, by
the Conversion Price (the "Conversion Shares"). The Conversion Price shall be
equal to seventy percent (70%) of the average closing bid price for the ten (10)
lowest of the thirty (30) trading days immediately preceding the conversion
date. For the purposes of this section, the closing bid price of the Company's
common stock shall be the closing bid price as reported by the National
Association of Securities Dealers, Inc. NASDAQ SmallCap or National Markets, or
the closing bid price in the over-the-counter market or, in the event the common
stock is listed on a stock exchange, the closing bid price on such exchange as
reported in THE WALL STREET JOURNAL. Such Shares shall have immediate demand and
piggy back registration rights.
5. DEFAULT. The occurrence of any one of the following events shall
constitute an Event of Default:
(a) The non-payment of any principal and/or interest pursuant to this
Note at maturity; and such failure continues for a period of ten (10) days;
(b) The material breach of any representation or warranty, covenant or
undertaking in this Note; and such default continues for ten (10) days after
written notice of such default is received by Maker;
(c) The commencement by the Maker of any voluntary proceeding under any
bankruptcy, reorganization, insolvency, receivership, dissolution, or
liquidation law or statute or any jurisdiction, whether now or hereafter in
effect; or the adjudication of the Maker as insolvent or bankrupt by a decree of
a court of competent jurisdiction; or the petition or application by the Maker
for, acquiescence in, or consent by the Maker to, the appointment of any
receiver or trustee for the Maker or for all or a substantial part of the
property of the Maker; or the assignment by the Maker for the benefit of
creditors; or the written admission of the Maker of its inability to pay its
debts as they mature; or
(d) The commencement against the Maker of any proceeding relating to
the Maker under any bankruptcy, reorganization, insolvency, receivership,
dissolution or liquidation law or statute or any jurisdiction, whether now or
hereafter in effect, provided, however, that the commencement of such a
proceeding shall not constitute an Event of Default unless the Maker consents to
the same or admits in writing the material allegations of same, or said
proceeding shall remain undismissed for 60 days; or the issuance of any order,
judgment or decree for the appointment of a receiver or trustee for the Maker or
for all or a substantial part of the property of the Maker, which order,
judgment or decree remains undismissed for 60 days; or a warrant of attachment,
execution, or similar process shall be issued against any substantial part of
the property of the Maker.
Upon the occurrence of any Event of Default, the Noteholder may, by
written notice to the Maker, declare all or any portion of the unpaid principal
amount due to Noteholder, together with all accrued interest and/or penalties
thereon, immediately due and payable. The Noteholder may also proceed against
any guarantor of this obligation without waiving any rights under the terms of
this Note.
6. NOTICES. Notices to be given hereunder shall be in writing and shall
be deemed to have been sufficiently given if delivered personally or sent by
overnight courier or messenger or sent by registered or certified mail (air mail
if overseas), return receipt requested, or by telex, facsimile transmission,
telegram or similar means of communication. Notice shall be deemed to have been
received on the date of personal delivery, telex, facsimile transmission,
telegram or similar means of communication, or if sent by overnight courier or
messenger, shall be deemed to have been received on the next delivery day after
deposit with the courier or messenger, or if sent by certified or registered
mail, return receipt requested, shall be deemed to have been received on the
third business day after the date of mailing. The address of the Maker is: 000
XX Xxxxxxxx Xx., Xxxx Xxxxx Xxxxx, XX 00000; and the Maker shall give written
notice of any change of address to the Noteholder. The address of the Noteholder
is as set forth on the signature page to this Note, and the Noteholder shall
give written notice of any change of address to the Maker.
7. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Maker consents
to the jurisdiction of any court of the State of Florida and of any federal
court located in the State of Florida. The Maker waives personal service of any
summons, complaint or other process in connection with any such action or
proceeding and agrees that service thereof may be made, as the Noteholder may
elect, by certified mail directed to the Maker at the location provided for in
Section 6 hereof, or, in the alternative, in any other form or manner permitted
by law.
8. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO
CONTRACT MADE AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT GIVING EFFECT TO THE
RULES AND CONFLICTS OF LAW.
9. CONFORMITY WITH LAW. All agreements between the Noteholder and Maker
are hereby expressly limited so that in no contingency or event whatsoever,
whether by reason of deferment or acceleration of the maturity of this Note or
otherwise, shall the rate of interest hereunder exceed the maximum rate
permissible under applicable law. If, from any circumstances whatsoever, the
rate of interest resulting from the payment and/or accrual of any amount of
interest hereunder, at any time that payment of interest is due and/or at any
time that interest is accrued, shall exceed the limits prescribed by such
applicable law, then payment and/or accrual of such interest shall be reduced to
that resulting from the maximum rate of interest permissible under such
applicable law. This provision shall never be superseded or waived.
10. ATTORNEYS FEES. In the event of any action by the Noteholder of
this Note to enforce the terms hereof, the Maker shall be obligated to pay all
of the Noteholder's reasonable attorneys' fees and costs in connection
therewith.
11. SEVERABILITY. Every provision hereof is intended to be several. If
any provision of this Note is determined by a court of competent jurisdiction to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall not effect the other provisions hereof, which shall
remain binding and enforceable.
12. WAIVER. The makers, endorsers, and/or guarantors of this Note do
hereby severally waive presentment, demand, protest and notices of protest,
demand, dishonor and nonpayment.
13. WAIVER AND AMENDMENT. Any provision of this Note may be amended,
waived or modified only upon the written consent of the parties hereto.
14. SUCCESSORS AND ASSIGNS. All the terms and provisions of this note
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
15. ASSIGNABILITY. Maker's obligations hereunder are nontransferable
and nonassignable without the prior written consent of Noteholder.
16. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof. This Agreement alone
fully and completely expresses the agreement of the parties relating to the
subject matter hereof. There are no other courses of dealing, understandings,
agreements, representations or warranties, written or oral, except as set forth
herein. This Agreement may not be amended or modified, except by a written
agreement signed by all parties hereto.
17. COUNTERPARTS This Note may be executed in multiple counterparts,
each of which shall be deemed an original and all of which taken together shall
be but a single instrument.
18. LEGAL REPRESENTATION. Maker and Noteholder, respectively, agree and
represent that each party has been represented by such party's legal counsel
with regard to all aspects of this Note, or if such party is acting without
legal counsel, that such party has had adequate opportunity and has been
encouraged to seek the advice of such party's legal counsel prior to the
execution of this Note.
IN WITNESS WHEREOF, the Maker has signed and sealed this Note and
delivered it in the state of Florida as of August___, 2002.
No._____ INTERRUPTION TELEVISION, INC.
By:
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Its:______________________
BONGIOVI ENTERTAINMENT, INC.
By:
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Its:______________________
NOTEHOLDER:
SAMARTAN DEVELOPMENT, LTD.
Address:______________________
