Contract
EXHIBIT
10.19
EXECUTION
VERSION
THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THIS TERM NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
TERM NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO EMTA PRODUCTION HOLDINGS, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.
AMENDED
AND RESTATED SECURED TERM NOTE
FOR VALUE RECEIVED, EMTA PRODUCTION
HOLDINGS, INC. a Nevada corporation (the “Borrower”), hereby promises to
pay to Shelter Island Opportunity Fund, LLC (the “Holder”) or its registered
assigns or successors in interest or order the sum of One Million Three Hundred
Thirty Six Thousand Six Hundred Ninety Two Dollars ($1,336,692.00) (the “Principal Amount”), on
December 31, 2010 (the “Maturity Date”), if not paid
sooner in accordance with the terms hereof.
Capitalized
terms used herein without definition shall have the meanings ascribed to such
terms in that certain Securities Purchase Agreement dated as of June 30, 2007,
as amended, between the Borrower and the Holder (the “Purchase Agreement”). This
Term Note amends and restates the Secured Term Note, dated December 10, 2007, in
the principal amount of $1,469,482 from the Borrower to the Holder, but does not
constitute an extinguishment or novation of the debt represented
thereby.
The
following terms shall apply to this Term Note:
ARTICLE
1
INTEREST
AND INTEREST PAYMENTS; PRINCIPAL PAYMENTS
1.1 Interest, Rate and
Payments. Subject to Sections 3.8 and 4.6 hereof, this Term Note shall
bear interest, on a monthly basis, at a rate per annum which is the greater of
twelve and one quarter percent (12.25%) or the prime interest
rate (as published in The Wall Street Journal on the business day prior to each
Repayment Date, as defined below) plus four percent (4%) of which interest rate one
percent (1%) shall be payable as a collateral monitoring fee pursuant to Section
1.2 (the “Collateral Monitoring
Fee”). Interest on the outstanding principal amount of this Term Note
shall accrue from the date hereof, and shall be due and payable on December 31,
2007 and on the last business day of each month thereafter until the Maturity
Date (each, a “Repayment
Date”), unless due sooner by acceleration or otherwise.
1.2 Collateral
Monitoring. On each Repayment Date, the Borrower shall pay to Midway
Management, LLC the Collateral Monitoring fee. Upon the Maturity Date, or at
such earlier Redemption Payment Date as provided herein, the Collateral
Monitoring Fee shall terminate.
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1.3 Principal Payments.
Principal payments in the amount of Thirty Thousand Dollars ($30,000) per month
shall be due on each Repayment Date from and after August 31, 2008, with the
remaining balance due on the Maturity Date.
ARTICLE
II
REPAYMENT
2.1 Optional Redemption of
Principal Amount. At any time after the date hereof, the Borrower will
have the option of prepaying the outstanding Principal Amount (“Optional Redemption”), in
whole or in part, by paying to the Holder a sum of money equal to one hundred
and ten percent (110%) of the remaining principal balance (the “Redemption Amount”) on the
Redemption Payment Date (as defined below). The Borrower shall deliver to the
Holder a notice of redemption (the “Notice of Redemption”)
specifying the date for such Optional Redemption (the “Redemption Payment Date”),
which date shall be not less than ten (10) business days after the date of the
Notice of Redemption (the “Redemption Period”). On the
Redemption Payment Date, the Redemption Amount shall be paid in good funds to
the Holder. In the event the Borrower fails to pay the Redemption Amount on the
Redemption Payment Date as set forth here, then such Notice of Redemption will
be null and void.
2.2
Repayment of Sale
Assets. Upon any sale of substantially all of the assets of the Borrower,
EMTA Holdings Inc. (“EMTA”) or any of it
subsidiaries, other than sales of inventory in the ordinary course of business,
the Borrower shall apply the net proceeds of any such sale to prepay all or a
portion (as the case may be) of the outstanding Principal Amount within ten (10)
business days of the receipt of such net proceeds.
2.3
Issuance of Replacement
Note. Upon any partial prepayment of this Term Note, a replacement note
containing the same date and provisions of this Term Note shall, at the written
request of the Holder and upon surrender to the Borrower of this Term Note, be
issued by the Borrower to the Holder for the outstanding Principal Amount of
this Term Note and accrued interest which shall not have been paid. Subject to
the provisions of Article III, the Holder will pay no costs, fees or any other
consideration to the Borrower for the production and issuance of a replacement
Note.
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ARTICLE
III
EVENTS
OF DEFAULT
Upon the
notice by the Holder to the Borrower of the occurrence and continuance of an
Event of Default beyond any applicable grace period, the Holder may make all
sums of principal, interest and other fees then remaining unpaid and all other
amounts payable under this Term Note immediately due and payable. In the event
of such an acceleration, the amount due and owing to the Holder shall be 125% of
the then outstanding principal amount of this Term Note (plus accrued and unpaid
interest and fees, if any) (the “Default Payment”). The Default
Payment shall be applied first to any fees due and payable to the Holder
pursuant to this Term Note, the Purchase Agreement or the Related Agreements,
then to accrued and unpaid interests due on the Note and then to the outstanding
principal balance of this Term Note.
The
occurrence of any of the following events set forth in Sections 3.1 through 3.8,
inclusive, is an “Event of
Default”:
3.1 Failure to Pay Principal,
Interest or other Fees. The Borrower fails to pay when due any
installment of principal, interest or other fees provided in this Term Note in
accordance with this Term Note.
3.2 Breach of Covenant.
The Borrower or EMTA breaches any covenant or any other term or condition of
this Term Note or the Purchase Agreement in any material respect, or the
Borrower or any of its Subsidiaries or EMTA breaches any covenant or any other
term or condition of any Related Agreement in any material respect and, in any
such case, such breach, if subject to cure, continues for a period of twenty
(20) days after the notice by the Holder to the Borrower of the occurrence
thereof.
3.3
Breach of Representations
and Warranties. Any representation or warranty made by the Borrower in
this Term Note or the Purchase Agreement, or by the Borrower or any of its
Subsidiaries in any Related Agreement, shall, in any such case, be false or
misleading in any material respect on the date that such representation or
warranty was made or deemed made, unless any Purchaser had actual knowledge of
such prior to the execution of the Documents.
3.4
Receiver or Trustee.
The Borrower or any of its Subsidiaries 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, and shall remain unvacated,
unbonded or unstayed for a period of forty-five days.
3.5
Judgments. Except
with respect to pending matters as disclosed by Borrower in its filings with the
United States Securities and Exchange Commission, any money judgment, writ or
similar final process shall be entered or filed against the Borrower or any of
its Subsidiaries or any of their respective property or other assets for more
than $100,000, and shall remain unvacated, unbonded or unstayed for a period of
forty-five days.
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3.6
Bankruptcy.
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 or against the Borrower or any of its
Subsidiaries and not stayed within forty-five days.
3.7
Stop Trade. A
Securities Exchange Commission (the “SEC”) stop trade order or
Principal Market trading suspension of the Common Stock shall be in effect for
five consecutive days or five days during a period of ten consecutive days,
excluding in all cases a suspension of all trading on a Principal Market,
provided that the Borrower shall not have been able to cure such trading
suspension within thirty (30) days of the notice thereof or list the Common
Stock on another Principal Market within sixty (60) days of such notice. The
“Principal Market” for the Common Stock shall include the Pink Sheets, the OTC
Bulleting Board, NASDAQ Capital Market, NASDAQ National Market System, American
Stock Exchange, or New York Stock Exchange (whichever of the foregoing is at the
time the principal trading exchange or market for the Common
Stock).
3.8
Default Under Related
Agreements or Other Agreements. The occurrence and continuance of any
Event of Default (as defined in the Purchase Agreement or any Related Agreement,
including but not limited to that certain Promissory Note dated June 30, 2007 by
and between EMTA Production Holdings, Inc. and EMTA) or any event of default (or
similar term) under any other indebtedness in an amount greater than $100,000
(it being understood and agreed that any event of default arising under the
credit arrangements between the Company and the “Subordinated Parties” referred
to in the Consent and Subordination Agreement, dated as of July 5, 2007, among
the Holder and such Subordinated Parties, shall not constitute an Event of
Default hereunder unless such event of default is still continuing on the
30th
day after the date hereof).
DEFAULT
RELATED PROVISIONS
3.9
Default Interest
Rate. Following the occurrence and during the continuance of an Event of
Default, the Borrower shall pay additional
interest on this Term Note in an amount equal to one and a half percent (1.5%)
per month (eighteen percent (18%) per annum), and all outstanding obligations
under this Term Note, including unpaid interest, shall continue to accrue such
additional interest from the date of such Event of Default until the date such
Event of Default is cured or waived.
3.10
Cumulative Remedies.
The remedies under this Term Note shall be cumulative.
ARTICLE
IV
MISCELLANEOUS
4.1
Failure or Indulgence Not
Waiver. No failure or delay on the part of the Holder hereof in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other rights,
power or privilege. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.
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4.2
Notices. All notices
required or permitted hereunder shall be in writing and shall be deemed
effectively given:
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(a)
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upon
personal delivery to the party to be
notified;
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(b)
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when
sent by confirmed facsimile if sent during normal business hours of the
recipient, if not, then on the next business
day;
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(c)
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three
(3) business days after having been sent by registered or certified mail,
return receipt requested, postage prepaid;
or
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(d)
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one
(1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of
receipt.
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4.3
Amended Provision.
The term “Term Note” and all reference thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if later
amended or supplemented, than as so amended or supplemented, and any successor
instrument issued pursuant to Section 2.1 hereof, as it may be amended or
supplemented.
4.4
Assignability. This
Term Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and assigns, and may
be assigned by the Holder in accordance with the requirements of the Purchase
Agreement. This Term Note shall not be assigned by the Borrower without the
consent of the Holder.
4.5
Governing Law. THIS
TERM NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION
BROUGHT BY EITHER PARTY AGAINST THE OTHER CONCERNING THIS TERM NOTE SHALL BE
BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN
THE STATE OF NEW YORK. THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER FROM
THE NON-PREVAILING PARTY ITS REASONABLE ATTORNEY’S FEES AND COSTS. XXXXXXXX AND
HOLDER EACH AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL
BY JURY. IN THE EVENT THAT ANY PROVISION OF THIS TERM NOTE OR ANY RELATED
AGREEMENT DELIVERED IN CONNECTION HEREWITH IS INVALID OR UNENFORCEABLE UNDER ANY
APPLICABLE STATUE OR RULE OF LAW, THEN SUCH PROVISION SHALL BE DEEMED
INOPERATIVE TO THE EXTENT THAT IT MAY CONFLICT THEREWITH AND SHALL BE DEEMED
MODIFIED TO CONFORM WITH SUCH STATUTE OR RULE OF LAW. ANY SUCH PROVISION WHICH
MAY PROVE INVALID OR UNENFORCEABLE UNDER ANY LAW SHALL NOT AFFECT THE VALIDITY
OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT OR ANY RELATED
AGREEMENT.
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4.6
Maximum Payments.
Nothing contained herein shall be deemed to establish or require the payment of
a rate of interest or other charges in excess of the maximum permitted by
applicable law. In the even that the rate of interest required to be paid or
other charges hereunder exceed the maximum permitted by such law, any payments
in excess of such maximum shall be credited against amounts owed by the Borrower
to the Holder and thus refunded to the Borrower.
4.7
Security Interest and
Guarantee. The Holder has been granted a security interest in certain
assets of the Borrower and its Subsidiaries as more fully described in the Term
Note Security Agreement dated as of the date hereof. The obligations of the
Borrower under this Term Note are guaranteed by certain Subsidiaries of the
Borrower pursuant to the Subsidiary Guaranty dated as of the date
hereof.
4.8
Construction. Each
party acknowledges that its legal counsel participated in the preparation of
this Term Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Term Note to favor any party against the
other.
4.9
Cost of Collection.
If default is made in the payment of this Term Note, the Borrower shall pay to
the Holder reasonable costs of collection, including reasonable attorney’s
fees.
4.10
Facsimile Signatures;
Counterparts. This Term Note may be executed by facsimile
signatures.
[REMAINDER
OF XXXX LEFT INENTIOANLLY BLANK]
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IN WITNESS WHEREOF, the
Borrower has caused this Term Note to be signed in its name effective as of June
30, 2008.
| EMTA PRODUCTION HOLDINGS, INC. | ||
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By:
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/s/ Xxxxxx X. Xxxxxxxx | |
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| Name: Xxxxxx X. Xxxxxxxx | ||
| Title: CEO - President | ||
