PETALS DECORATIVE ACCENTS, LLC NONNEGOTIABLE UNSECURED PROMISSORY NOTE
EXHIBIT
10.22
PETALS
DECORATIVE ACCENTS, LLC
NONNEGOTIABLE
UNSECURED
PROMISSORY NOTE
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$________________________
(Principal
Amount at Maturity)
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Dated:
May __, 2006
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Ridgefield,
Connecticut
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Issue
No._____
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Petals
Decorative Accents, LLC, a limited liability company organized under the laws
of
the State of Delaware (the “Company”),
for
value received, hereby promises to pay to the order of
__________________________ or registered assigns (the “Holder”),
the
principal amount at maturity of [1.4 x PURCHASE PRICE] dollars ($_________)
(the
“Redemption
Amount”)
on
December 31,
2007
(the “Maturity
Date”),
or
such earlier date as this Note is required to be repaid as provided hereunder.
This Note is one of a series of subordinated nonnegotiable unsecured promissory
notes of like tenor issued by the Company pursuant to a subscription offering
dated April __, 2006. As used herein, the term “Notes”
shall
mean all of the nonnegotiable unsecured promissory notes issued pursuant to
such
subscription offering, and the term “Note”
shall
mean any one of said Notes.
1. Payment
Obligations of the Company Prior to the Maturity Date.
The
Company shall pre-pay this Note in quarterly installments on the fifteenth
day
of January, April, July and October, commencing on January 15, 2007 (each a
“Payment
Date”)
and
continuing until the earlier of the Note being paid in full or the Maturity
Date. On each Payment Date, the Company shall make a cash payment to the Holder
of an amount, if any, equal to the product of (x) $2.00 multiplied by the number
of Orders (as defined below) shipped by the Company during the previous calendar
quarter, multiplied by (y) a fraction, the numerator of which is equal to the
unpaid Redemption Amount of this Note and the denominator of which is equal
to
the aggregate unpaid Redemption Amount of all outstanding Notes. On
the
Maturity Date, the Company will pay to the Holder in cash an amount, if any,
equal to the Redemption Amount, less the sum of all payments therefore made
by
the Company to the Holder in respect of the Note. For purposes of this Note,
an
“Order”
shall
be an individual consumer purchase of one or more of our products made on a
single occasion through our call-center or our website. Shipment will be deemed
to have occurred when one or more items encompassed by an Order is placed in
the
hands of a common carrier for delivery to the purchaser. An order encompassing
multiple items will be considered a single Order, and will be deemed to have
been shipped on the earliest date when any of the items included in the Order
was shipped.
2. Manner
of Payment.
(a) All
payments by the Company under this Note shall be made by wire transfer, or
in
such other manner, as the Holder shall reasonably direct. Whenever any payment
hereunder shall be stated to be due on a day other than a day of the year on
which banks are not
required
or authorized to close in Connecticut (any such other day being a “Business
Day”), such payment shall be made on the next succeeding Business
Day.
(b) The
Company may prepay this Note at any time and from time to time in full or in
part. All payments received by the Holder hereunder will be applied first to
costs of collection, then to the balance of the Redemption Amount.
3. No
Security; Subordination.
(a) The
Notes
are not secured and no mortgage, security or lien is or shall be granted by
the
Company upon its assets as collateral security for the obligations of the
Company evidenced thereby.
(b) The
obligations of the Company evidenced by the Notes are expressly junior and
subordinate to the prior payment in full of all Senior Indebtedness of the
Company. “Senior
Indebtedness”
means
the principal of, and premium, if any, and interest on (i) all indebtedness
of
the Company for monies borrowed from banks, trust companies, insurance companies
and other financial institutions, including commercial paper and accounts
receivable sold or assigned by the Company to such institutions (whether or
not
secured), (ii) all indebtedness of the Company for monies borrowed by the
Company from other persons or entities, (iii) obligations of the Company as
lessee under leases of real or personal property, (iv) principal of, and
premium, if any, and interest on any indebtedness or obligations of others
of
the kinds described in (i), (ii) and (iii) above assumed or guaranteed in any
manner by the Company, (v) deferrals, renewals, extensions and refundings of
any
such indebtedness or obligations described in (i), (ii), (iii) and (iv) above,
and (vi) any other indebtedness of the Company which the Company and the Holders
of more that sixty seven percent (67%) of the aggregate outstanding principal
amount of the Notes (the “Requisite
Majority”)
hereafter from time to time expressly and specifically agree in writing shall
constitute Senior Indebtedness. Notwithstanding the foregoing, “Senior
Indebtedness”
shall
not include indebtedness of the Company evidenced by the other Notes, which
shall rank equally and ratably with this Note.
(c) Each
registered owner of Notes agrees to execute from time to time any subordination
agreement(s) the Company and the holders of Senior Indebtedness may request
to
better reflect the aforesaid subordination of the Notes to any Senior
Indebtedness incurred by the Company. In the event of any insolvency or
bankruptcy proceedings, or any receivership, liquidation, reorganization or
other similar proceedings in connection therewith, relative to the Company
or to
its property, or, in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Company or distribution or marshalling
of
its assets or any composition with creditors of the Company, whether or not
involving insolvency or bankruptcy, then and in any such event all Senior
Indebtedness shall be paid in full before any payment or distribution of any
character shall be made on account of this Note.
(d) The
Holder, by accepting this Note, agrees that the subordination effected hereby
is
for the benefit of the holders of Senior Indebtedness from time to time, and
that each holder of Senior Indebtedness, whether now outstanding or hereafter
created, incurred, assumed or guaranteed shall be deemed to have acquired Senior
Indebtedness in reliance upon the covenants and provisions contained herein.
The
subordination effected hereby shall be
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enforceable
by each holder of Senior Indebtedness from time to time. Subject to the rights
of the holders of Senior Indebtedness under this Section
0,
nothing
contained in this Section
0
shall
impair, as between the Company and the Holders, the obligations of the Company,
subject to the terms and conditions hereof, to pay the Holder the principal
hereof upon default hereunder, or shall prevent the Holder of this Note, upon
default hereunder, from exercising all rights, powers and remedies otherwise
provided herein or by applicable law.
4. Events
of Default and Right to Cure.
Event
of Default, whenever used herein, means any one of the following (regardless
of
the reason or cause of such Event of Default):
(a) The
failure to pay any amount when due which failure shall continue for ten (10)
Business Days after the Company shall receive written notice thereof from the
Holder;
(b) The
failure of the Company to perform any covenant or agreement set forth in this
Note, which failure shall continue un-remedied for a period of thirty (30)
days
following the date on which any Holder gives the Company written notice
thereof;
(c) The
entry
of any decree or order by a court having jurisdiction adjudging the Company
a
debtor or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the
Company under the Bankruptcy Code or any other applicable federal or state
law,
the appointment of a receiver, liquidator, assignee, trustee, sequestrator
or
other similar official of the Company, or of any substantial part of the
property of the Company, and the continuance of any such decree or order
unstayed, undischarged, or undismissed and in effect for more than ninety (90)
consecutive days;
(d) Institution
by the Company of proceedings, under the Bankruptcy Code or any other applicable
federal or state law, seeking an order for relief, or the consent of the Company
to the institution of bankruptcy or insolvency proceedings against the Company,
or the consent by the Company to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator or other
similar official of or for the Company or any substantial part of the property
of the Company, or the making by the Company of any assignment for the benefit
of creditors, or the admission by the Company of the Company’s inability to pay
its debts generally as they become due, or the taking of any action by the
Company in furtherance of any such action; or
(e) Any
default of the Company under any Senior Indebtedness that gives the holder
thereof the right to accelerate such Senior Indebtedness, if such Senior
Indebtedness is in fact accelerated by the Holder.
If
any
Event of Default occurs, the Requisite Majority, by written notice to the
Company, may:
(i) declare
the entire unpaid Redemption Amount of the Notes due and payable and such amount
shall thereupon become due and payable without presentment, notice, protest
or
demand of any kind (all of which are expressly waived by the
Company);
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(ii) take
all
actions available to them, at law or in equity, to collect and otherwise enforce
the Notes (subject to the terms of the subordination in favor of the Senior
Indebtedness as hereinbefore provided); and
(iii) assess
interest on any payments which have become due pursuant to Section
0
of this
Note and which have not yet been paid at an annual interest rate equal to
eighteen percent (18%).
Without
the approval of the Requisite Majority, no Holder, upon the occurrence of an
Event of Default, shall have the right to undertake any of the types of actions
described in clauses (i), (ii) or (iii) hereof or any other enforcement or
collection action with respect to the Notes.
5. Amendment.
The
terms of the Notes (and this Note) may be modified by the Company and the
Requisite Majority; provided that the Company and the Requisite Majority may
not
authorize any amendment of the Notes that reduces the Redemption Amount or
that
does not amend or affect each Note and each Holder in the same
manner.
6. Assignment.
Subject
to the restrictions on transfer by the Holder, the rights and obligations of
the
Company and the Holder of this Note shall be binding upon and inure to the
benefit of the successors, assigns, heirs, administrators and transferees of
the
parties.
7. Additional
Terms and Conditions.
The
Company (i) waives presentment, demand, notice of demand, protest, notice of
protest, and notice of nonpayment and any other notice required to be given
under the law to the Company, in connection with the delivery, acceptance,
performance, default or enforcement of the Notes, except for notice of proposed
transfer of a Note in accordance with the terms hereof; (ii) agrees that any
failure to act or failure to exercise any right or remedy, on the part of the
registered owner shall not in any way affect or impair the obligations of the
Company or be construed as a waiver by the owner of, or otherwise affect, any
of
its rights under the Notes; and (iii) agrees to pay, on demand, all costs and
expenses of collection of Notes and/or the enforcement of the owner’s rights
thereunder, including reasonable attorney’s fees and disbursements.
8. Invalidity.
In the
event any one or more of the provisions of the Notes shall for any reason be
held to be invalid, illegal or unenforceable, in whole or in part or in any
respect, or in the event that any one or more of the provisions of the Notes
operate or would prospectively operate to invalidate the Notes, then and in
either of those events, such provision or provisions only shall be deemed null
and void and shall not affect any other provision of the Notes and the remaining
provisions of the Notes shall remain operative and in full force and effect
and
shall in no way be affected, prejudiced and disturbed thereby.
9. Governing
Law.
This
Note shall be governed by and construed in accordance with the laws of the
State
of Connecticut and the laws of the United States applicable therein (without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of the laws of any other jurisdiction) and shall be
treated in all respects as a Connecticut contract.
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10. Notices.
Except
as otherwise provided, all notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (i) five
(5) days after deposit with the U.S. postal service or other applicable postal
service, if delivered by first class mail, postage prepaid, (ii) upon delivery,
if delivered by hand, (iii) one (1) business day after the day of deposit with
Federal Express or similar overnight courier, freight prepaid, if delivered
by
overnight courier or (iv) one (1) business day after the day of facsimile
transmission, if delivered by facsimile transmission with copy by first class
mail, postage prepaid, and shall be addressed, (a) if to the Holder, at
________________________________________, or at such other address as such
Holder shall have furnished the Company in writing, or (b) if to the Company,
at
Executive Pavilion, 00 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000, or at such
other address as the Company shall have furnished to the Holder in writing,
with
a copy to Xxxxx X. Xxxxxxxx, Esq., Xxxxx Xxxx LLP, Seaport World Trade Center
West, 000 Xxxxxxx Xxxxxxxxx, Xxxxxx, XX 00000; fax (000) 000-0000.
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IN
WITNESS WHEREOF, this Note has been duly executed and delivered by the Company
as of the date first written above.
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HOLDER:
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COMPANY: | |||
| PETALS DECORATIVE ACCENTS, LLC | ||||
| By: |
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By: |
/s/
Xxxxxxxxxxx Xxxxxxx
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| Xxxxxxxxxxx
Xxxxxxx
Chief
Executive Officer
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