NOTE PURCHASE AGREEMENT
Exhibit 10.3
This
Note Purchase Agreement (this “Agreement”) is made as of
September 25, 2017 by and between Hispanica International Delights
of America, Inc. (the “Company”), a Delaware
corporation, with its principal place of business at 000 Xxxxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
XX 00000, and Shircoo, Inc., a California corporation, with its
principal place of business at 0000 X. Xxxxxxx Xxxxxxx, Xxx
Xxxxxxx, XX 00000 (the “Purchaser”).
WHEREAS, the Company desires to sell to
the Purchaser, and the Purchaser desires to purchase from the
Company, a Secured Promissory Note in the principal amount of
$650,000 (the “Note”); and
WHEREAS, the Company and the Purchaser
are executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the provisions
of the Securities Act of 1933, as amended (the “1933 Act”), and the rules and
regulations promulgated by the U.S. Securities and Exchange
Commission (the “SEC”) thereunder.
NOW, THEREFORE, in consideration of the
premises and mutual covenants and obligations hereinafter set forth
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the
Purchaser, intending to be legally bound, hereby agree as
follows:
ARTICLE
I PURCHASE AND SALE OF NOTE
1.1. Authorization
of Note. The Company has authorized the issuance of the
Note.
1.2. Agreement
to Sell and Purchase the Note. Subject to the terms and
conditions hereof, the Company agrees to issue and sell to the
Purchaser and the Purchaser agrees to purchase from the Company, at
the Closing (as defined below), the Note for a purchase price
(“Purchase
Price”) equal to $650,000. This purchase commitment is
made in accordance with and subject to the terms and conditions
described in this Agreement. The terms of the Note shall be as set
forth in the form of Note attached hereto as Exhibit A (the
“Form of
Note”).
1.3. Delivery
of Note. The Purchaser hereby authorizes and directs the
Company, upon the Closing, to deliver the Note to be issued to
Purchaser pursuant to this Agreement to the Purchaser’s
address indicated on the signature page hereto.
1.4. Issuance
of Common Stock. As additional consideration for the
purchase of the Note, the Company shall issue to Purchaser, at
Closing, 1,500,000 shares of the Company’s common
stock,
$0.001
par value (the “Shares”), which Shares shall be
restricted from resale except in compliance with the 1933
Act.
1.5. Consulting
Fee. At Closing, the Company shall pay Purchaser a
consulting fee equal to ten percent (10%) of the principal amount
of the Note (“Consulting
Fee”), in consideration for the provision of certain
consulting services provided by Purchaser to the Company in
connection with the transactions contemplated by this
Agreement.
1.6. The
Closing. The closing with respect to the transactions
contemplated by this Article I shall take place on the date hereof
(the “Closing”)
at the offices of the Company, or such other time and place as
agreed to by the parties.
ARTICLE II
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION
The
Purchaser hereby represents and warrants to and agrees with the
Company as follows:
2.1. Reliance
on Exemptions. The Purchaser acknowledges that the offering
and sale of the Note and the Shares (together, the
“Purchased
Securities”) (the “Offering”) has not been reviewed
or recommended by the SEC or any state agency because this is
intended to be a nonpublic offering exempt from the registration
requirements of the 1933 Act and state securities laws. The
Offering is being made solely to an “accredited
investor,” as defined in Rule 501 of Regulation D promulgated
under the 0000 Xxx. The Purchaser understands that the Company is
relying upon the truth and accuracy of, and the Purchaser’s
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth
herein in order to determine the availability of such exemptions
and the eligibility of the Purchaser to acquire the Purchased
Securities.
2.2. Investment
Purpose. The Purchaser represents that the Purchased
Securities are being purchased for its own account, for investment
purposes only and not with a view to distribution or resale to
others in contravention of the registration requirements of the
1933 Act. The Purchaser agrees that it will not sell or otherwise
transfer the Purchased Securities, unless they are registered under
the 1933 Act or unless an exemption from such registration is
available.
2.3. Accredited
Investor. The Purchaser represents and warrants that it is
an “accredited investor” as such term is defined in
Rule 501 of Regulation D promulgated under the 1933 Act and that it
is able to bear the economic risk of any investment in the
Purchased Securities. The Purchaser further represents and warrants
that all information provided to the Company by Purchaser is
accurate and complete in all material respects.
2.4. Loss
of Investment; Sophisticated Investor. The Purchaser
recognizes that the purchase of the Purchased Securities involves a
high degree of risk in that: (i) an investment in the Company is
highly speculative and only investors who can afford the loss of
their entire investment should consider investing in the Company
and the Purchased Securities; (ii) transferability of the Purchased
Securities is limited; and (iii) the Company may require
substantial additional funds to operate its business and there can
be no assurance that any other funds will be available to the
Company, in addition to all of the other risks to which the Company
may be subject. The Purchaser is an expert and sophisticated
investor and has such knowledge and experience in financial and
business matters so as to enable the Purchaser to utilize the
information made available to Purchaser in connection with the
Purchased Securities to evaluate the merits and risks of an
investment in the Purchased Securities, and to make an informed
investment decision with respect thereto. The Purchaser has
consulted with its own legal and tax and other relevant experts and
is not relying on the Company with respect to the tax, economic or
any other considerations of an investment in the Company or in the
Purchased Securities. The Purchaser recognizes that an investment
in the Company involves substantial risks, including loss of the
entire amount of such investment, and has taken full
cognizance of and understands
all of the risks related to the purchase of the Purchased
Securities.
2.5. Information.
The Purchaser acknowledges careful review of this Agreement and all
exhibits hereto (collectively, this “Agreement”), and hereby
represents that: (i) the Purchaser has been furnished by the
Company during the course of this transaction with all information
regarding the Company which it has requested; and, (ii) the
Purchaser has been afforded the access and the opportunity to ask
questions of and receive answers from duly authorized officers of
the Company concerning the Company, the terms and conditions of the
Offering, and any additional information which it has
requested.
2.6. No
Representations. Except for the representations and
warranties of the Company contained herein and in the Purchased
Securities, the Purchaser hereby acknowledges and agrees that no
oral or written representations or warranties of any kind have been
made to the Purchaser by the Company or any agent, employee or
affiliate of the Company and in entering into this transaction the
Purchaser is not relying on any information other than the results
of independent investigation by the Purchaser.
2.7. Tax
Consequences. The Purchaser acknowledges that the Offering
may involve tax consequences and the Company is not providing any
tax advice or information. The Purchaser acknowledges that it must
retain its own professional advisors to evaluate the tax and other
consequences of an investment in the Purchased
Securities.
2.8. Transfer
or Resale. The Purchaser will not sell or otherwise transfer
the Purchased Securities without registration under the 1933 Act or
applicable state securities laws, or pursuant to an exemption
therefrom. The Purchaser understands that Rule 144 promulgated
under the 1933 Act sets forth certain restrictions on the ability
to resell securities without having to satisfy the registration
requirements under the 0000 Xxx. The Purchaser consents that the
Company may, if it desires, permit the transfer of the Purchased
Securities out of the Purchaser’s name only when the
Purchaser’s request for transfer is accompanied by an opinion
of counsel reasonably satisfactory to the Company that neither the
sale nor the proposed transfer results in a violation of the 1933
Act or any applicable state “blue sky”
laws.
2.9. State
Securities Laws; Legends. The Purchaser agrees and
acknowledges that the Purchased Securities will bear a legend
substantially in the form presented below:
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE SECURITIES LAWS. THIS SECURITY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH
SECURITY UNDER THE SECURITIES ACT OR AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. ANY SUCH
TRANSFER MAY ALSO BE SUBJECT TO COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS.
2.10. No
General Solicitation. The Purchaser represents that the
Purchaser was not induced to invest by any form of general
solicitation or general advertising including, but not limited to,
the following: (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media
or broadcast over the news or radio; and (ii) any seminar or
meeting whose attendees
were invited by any general solicitation or
advertising.
2.11. Authorization;
Enforcement; Validity. If the Purchaser is a corporation,
partnership, trust, or other entity, the Purchaser represents and
warrants that: (a) it is authorized and otherwise duly qualified to
purchase and hold the Purchased Securities; and (b) that this
Agreement has been duly and validly authorized, executed and
delivered and constitutes the legal, binding and enforceable
obligation of the undersigned.
2.12. No
Conflicts. If the Purchaser is a corporation, partnership,
trust, or other entity, Purchaser represents and warrants that the
execution and delivery by the Purchaser of this Agreement will not
result in any violation of, or be in conflict with, or constitute a
default under, the organizational documents of such entity, any
agreement or instrument to which such entity is a party or by which
such entity or its respective properties are bound, or any
judgment, decree, order or, to its knowledge, any statute, rule or
regulation applicable to such entity.
2.13. Address.
The Purchaser hereby represents that the address of the Purchaser
furnished by Purchaser at the end of this Agreement is the
undersigned’s principal residence if the Purchaser is an
individual or its principal business address if it is a corporation
or other entity.
2.14. Authority
of Signatory. Any person executing this Agreement on behalf
of Purchaser represents and warrants that he or she is duly
authorized to enter into and execute this Agreement on behalf of
the Purchaser.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to the Purchaser as
follows:
3.1. Legality.
The Company has the requisite corporate power and authority to
enter into this Agreement and to issue and deliver the Purchased
Securities. The execution and delivery of this Agreement and the
issuance and delivery of the Purchased Securities hereunder and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action by the
Company. This Agreement has been duly and validly executed and
delivered by and on behalf of the Company and is the valid and
binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as enforceability may be
limited by general equitable principles, bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other laws
affecting creditors’ rights generally.
3.2. Organization.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of Delaware and is duly qualified
as a foreign corporation in all jurisdictions where the failure to
be so qualified would have a materially adverse effect on its
business.
3.3. Non-Contravention/Third
Party Consents. Neither the execution and delivery of this
Agreement, the issuance of the Purchased Securities nor the
consummation of the transactions contemplated by this Agreement
conflicts with or results in a breach by the Company of any of the
terms or provisions of, or constitutes a default under, the
Articles of Incorporation or by-laws of the Company, or any
indenture, mortgage, deed of trust or other material agreement or
instrument to which the Company
is a party or by which it or any of its properties or assets are
bound, or any existing applicable Federal or State law, rule, or
regulation or any applicable decree, judgment or order of any
court, Federal or State regulatory body, administrative agency or
other domestic governmental body having jurisdiction over the
Company or any of its properties or assets, except for such
conflicts, breaches or defaults as would not have a material
adverse effect on the Company’s business. To the extent that
any third-party consent is necessary, the Company will obtain such
consent prior to the Closing.
ARTICLE
IV COVENANTS
4.1 Use
of Proceeds. The Company shall use the net proceeds from the
issuance of the Note solely for the following purposes: (i) pay the
Consulting Fee set forth in Section 1.5 of this
Agreement;
(ii)
finance the acquisition of Giant Beverage, Inc.; (iii) for the
repayment and retirement of certain convertible promissory notes of
the Company; and (iv) for general working capital
purposes.
4.2 Right of First Refusal. For a
period terminating on the earlier to occur of the date that all
amounts due and owing under the terms of the Note have been paid in
full, or twelve (12) months from the date of Closing, before the
Company executes any definitive agreements to offer and/or sell any
debt and/or equity securities to a third party, the Company shall
first offer the Purchaser to the right to purchase such debt and/or
equity securities on the same terms and conditions as are offered
by the Company to the third party. Purchaser shall have five (5)
business days during which to accept such offer. If Purchaser does
not accept such offer within such five (5) day period, the Company
shall be free to accept the third- party offer. Notwithstanding
anything in this Section 4.2 to the contrary, the right of first
refusal set forth herein shall not apply to any offer and/or sale
of debt and/or equity securities currently in negotiation between
the Company and any third parties, or otherwise contemplated by the
Company, as of the date hereof.
4.3 Grant of Security Interest. As
an inducement for the Purchaser to purchase the Note and to secure
the complete and timely payment, performance and discharge in full,
as the case may be, of all amounts due and owing Purchaser under
the terms of the Note, including accrued interest due and payable
thereunder, the Company hereby, unconditionally and irrevocably,
pledges, grants and hypothecates to the Purchaser, a continuing
security interest in all of the Company's assets.
ARTICLE
V MISCELLANEOUS
5.1 Notice.
Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (a) upon
receipt, when delivered personally; (b) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or
(c) one (1) business day after deposit with an overnight courier
service, in each case properly addressed to the party to receive
the same. The addresses and facsimile numbers for such
communications shall be:
If to the
Company:
000
Xxxxxxxxx Xxxxxx, 0xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention: Xxxxxxxx
Xxxxxxx Xxxxxx
Tel.
No.: 000-000-0000
Fax
No.: 000-000-0000
If to the
Purchaser:
Shircoo,
Inc.
0000 X.
Xxxxxxx Xxxxxxx
Xxx
Xxxxxxx, XX 00000
Attention:
Xxxxxx Xxxxxxxx
Tel.
No.: 000-000-0000
or to
such other address and/or facsimile number and/or to the attention
of such other person as specified by written notice given to the
Company five (5) days prior to the effectiveness of such
change.
5.2 Entire Agreement; Amendment.
This Agreement, along with the Note supersedes all other prior oral
or written agreements between the Purchaser, the Company, their
affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the Note contain
the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Purchaser make any
representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be amended or
waived other than by an instrument in writing signed by the Company
and the undersigned.
5.3 Severability. If any provision
of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect
the validity or enforceability of the remainder of this Agreement
in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.
5.4 Governing Law; Jurisdiction; Jury
Trial. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed
by the internal laws of the State of California, without giving
effect to any choice of law or conflict of law provision or rule
(whether of the State of California or any other jurisdictions)
that would cause the application of the laws of any jurisdictions
other than the State of California. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal
courts sitting in Los Angeles, California, for the adjudication of
any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, 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 any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. 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 to such party at the address for such
notices to it under this Agreement 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 manner permitted by law. Each
party hereby irrevocably waives any right it may have, and agrees
not to request, a jury trial for the adjudication of any dispute
hereunder or in connection with or arising out of this Agreement or
any transaction contemplated hereby.
5.5 Indemnification. The Purchaser
agrees to indemnify and hold harmless the Company, any agents and
each of their respective officers, directors, employees, agents,
attorneys, control persons and affiliates from and against all
losses, liabilities, claims, damages, costs, fees, and expenses
whatsoever (including, but not limited to, any and all expenses
incurred in investigating, preparing or defending against any
litigation commenced or threatened) based upon or arising out of
any breach by the Purchaser of any representation, warranty,
covenant or agreement made by the Purchaser herein.
The
Company agrees to indemnify and hold harmless the Purchaser, any
agents and each of their respective officers, directors, employees,
agents, attorneys, control persons and affiliates from and against
all losses, liabilities, claims, damages, costs, fees, and expenses
whatsoever (including, but not limited to, any and all expenses
incurred in investigating, preparing or defending against any
litigation commenced or threatened) based upon or arising out of
any actual or alleged false acknowledgment, representation or
warranty, or misrepresentation or omission to state a material
fact, or breach of the Company of any covenant or agreement made by
the Company herein or in any other document delivered by or on
behalf of the Company in connection with this
Agreement.
5.6 Headings. The headings of this
Agreement are for convenience of reference and shall not form part
of, or affect the interpretation of, this Agreement.
5.7 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns. Neither party
may assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other party.
5.8 No Third-Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not
for the benefit of, nor may any provision hereof be enforced by,
any other person.
5.9 Survival. The representations
and warranties of the Company and the Purchaser contained in
Articles II and III and the agreements set forth in this Article V
shall survive for a period of one year after the
Closing.
5.10 Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions
contemplated hereby.
5.11 No
Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be
applied against any party.
5.12 Legal
Representation. The Purchaser acknowledges that: (a) it has
read this Agreement and the exhibits hereto; (b) it has either been
represented in the preparation, negotiation, and execution of this
Agreement by legal counsel of its own choice, or has chosen to
forego such representation by legal counsel after being advised to
seek such legal representation; and (c) it understands the terms
and consequences of this Agreement and is fully aware of its legal
and binding effect.
5.13 Confidentiality.
The Purchaser agrees that it shall keep confidential and not
divulge, furnish or make accessible to anyone, the confidential
information concerning or relating to the business or financial
affairs of the Company to which it has become privy by reason of
this Agreement until such information has been publicly disclosed
by the Company or until such information is no longer material;
provided, however, that the Purchaser may
disclose any such confidential information (i) as has become
generally available to the public, other than as a result of a
breach of this Section 4.13 by the Purchaser, (ii) to the
Purchaser’s members, managers, equity holders, agents and
professional advisors who need to know such information and agree
(or are under a duty) to keep it confidential, and (iii) to the
extent disclosure is necessary in order to comply with any law,
order, regulation, ruling, summons or subpoena applicable to the
Purchaser, provided (x) the Purchaser shall, to the extent
practicable, give the Company notice of such request and shall
cooperate with the Company, at its request and expense, to seek a
protective or similar order and (y) in the absence of such order,
shall furnish only that portion of the information which, in
accordance with the advice of counsel, is legally required to be
furnished.
5.14 Counterparts.
This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party; provided
that a facsimile signature or counterpart delivered by other
electronic transmission (such as electronic mail of .pdf files),
shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature or
counterpart delivered by other electronic
transmission.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto
have executed and delivered this Agreement as of the date first
above written.
By:
Name: Xxxxxxxx
Xxxxxxx Xxxxxx
Title:
Chief Executive Officer
PURCHASER
SHIRCOO,
INC.
By:
Name:
Xxxxxx Xxxxxxxx
Authorized
Signatory
Purchase
Price:
$650,000
PURCHASER
NOTIFICATION INFORMATION
Street
Address: 0000 X. Xxxxxxx Xxxxxxx
Xxxx,
Xxxxx, Xxx: Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx
Toghraiem
Phone:
000-000-0000
EXHIBIT
A
FORM
OF NOTE
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES
LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE COMPANY SHALL HAVE RECEIVED AN
OPINION OF COUNSEL THAT THE REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
Secured
Promissory Note
$650,000
Issuance Date: September 25, 2017
Maturity Date:
FOR VALUE RECEIVED, HISPANICA
INTERNATIONAL DELIGHTS OF
AMERICA, INC., a
Delaware corporation (the “Company”), hereby promises to pay
to the order of Shircoo, Inc., a California corporation, or any
permitted holder of this Secured Promissory Note (the
“Payee”), at
the principal office of the Payee set forth herein, or at such
other place as the Payee may designate in writing to the Company,
the principal sum of Six Hundred Fifty Thousand Dollars ($650,000),
with interest on the unpaid principal balance hereof at a rate
equal to seven percent (7%) per annum commencing on the date
hereof, in such coin or currency of the United States of America as
at the time shall be legal tender for the payment of public and
private debts and in immediately available funds, as provided in
this Senior Promissory Note (this “Note”). This Note is issued
pursuant to the terms of the Note Purchase Agreement, by and
between the Company and Payee, dated as of the date hereof
(“Purchase
Agreement”).
1. Principal and Interest
Payments.
(a) The Company shall
repay in cash the entire principal balance then outstanding under
this Note together with all accrued but unpaid interest thereon on
March 25, 2019 (the “Maturity Date”).
(b) Interest on the
outstanding principal balance of this Note shall accrue at a rate
of seven percent (7%) per annun commencing on the “Issuance
Date” of this Note (as indicated above), which interest shall
be computed on the basis of the actual number of days elapsed and a
year of three hundred and sixty-five (365) days. All accrued and
unpaid interest due under this Note shall be payable monthly
beginning thirty (30) days from the Issuance Date in cash.
Furthermore, upon the occurrence of an Event of Default (as defined
below), or following the Maturity Date the Company will pay
interest to the Payee on the then outstanding principal balance of
the Note from such date until this Note is paid in full at the rate
of twelve percent (12%) per annum, with interest payable
monthly.
(c) At the
Company’s sole option, the Company may prepay all or a
portion of the outstanding principal amount of this Note and/or all
or a portion of the accrued and unpaid
interest hereon in cash at any time prior to the Maturity Date, in
the case of the outstanding principal amount, or prior to the date
due, in the case of accrued but unpaid interest, without penalty or
premium. Any payments made under this Note shall be applied first
to the accrued and unpaid interest, if any, and the remainder to
the unpaid principal amount.
2. Non-Business Days. Whenever any
payment to be made shall be due on a Saturday, Sunday or a public
holiday under the laws of the State of New York, such payment may
be due on the next succeeding business day and such next succeeding
day shall be included in the calculation of the amount of accrued
interest payable on such date.
3. Representations and Warranties of the
Company. The Company represents and warrants to the Payee as
follows:
(a) The Company has
been duly incorporated and validly exists and is in good standing
under the laws of the State of Delaware, with full corporate power
and authority to own, lease and operate its properties and to
conduct its business as currently conducted.
(b) This Note has been
duly authorized, validly executed and delivered on behalf of the
Company and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
subject to limitations on enforcement by general principles of
equity and by bankruptcy or other laws affecting the enforcement of
creditors’ rights generally.
(c) The execution,
delivery and performance of this Note will not: (i) conflict with
or result in a material breach of or a default under any of the
terms or provisions of, (A) the Company’s Certificate of
Incorporation or by-laws, or (B) any material provision of any
indenture, mortgage, deed of trust or other material agreement or
instrument to which the Company is a party or by which it or any of
its material properties or assets is bound; (ii) result in a
violation of any material provision of any law, statute, rule,
regulation, or any existing applicable decree, judgment or order by
any court, Federal or state regulatory body, administrative agency,
or other governmental body having jurisdiction over the Company, or
any of its material properties or assets; or
(iii)
result in the creation or imposition of any material lien or
encumbrance upon any material property or assets of the Company
pursuant to the terms of any agreement or instrument to which the
Company is a party or may be bound or to which the Company or any
of its property is subject.
(d) No consent,
approval or authorization of or designation, declaration or filing
with any governmental authority on the part of the Company is
required in connection with the valid execution and delivery of
this Note.
4. Events of Default. The
occurrence of any of the following events shall be an
“Event of
Default” under this Note:
(a) the Company shall
fail to make the payment of any principal amount outstanding
for a period of five (5) business days after the date such payment
shall become due and payable hereunder; or
(b) the Company shall
fail to make the payment of any accrued and unpaid interest for a
period of five (5) business days after the date such interest shall
become due and payable hereunder; or
(c) any material breach
by the Company of any representations or warranties made by the
Company herein or any covenant or agreement of the Company
contained herein; or
(d) the holder of any
indebtedness of the Company shall accelerate any payment of any
amount or amounts of principal or interest on any such indebtedness
(the “Indebtedness”) (other than with
respect to this Note and notes of like tenor) prior to its stated
maturity or payment date, the aggregate principal amount of which
Indebtedness is in excess of $500,000, whether such Indebtedness
now exists or shall hereinafter be created, and such accelerated
payment entitles the holder thereof to immediate payment of such
Indebtedness which is due and owing and such indebtedness has not
been discharged in full or such acceleration has not been stayed,
rescinded or annulled within fifteen (15) business days of such
acceleration; or
(e) A judgment or
judgments for the payment of money shall be rendered against the
Company for an amount in excess of $500,000 in the aggregate (net
of any applicable insurance coverage) for all such judgments that
shall remain unpaid for a period of sixty (60) consecutive days or
more after its entry or issue or that shall not be discharged,
released, dismissed, stayed or bonded (due to an appeal or
otherwise) within the sixty (60) consecutive day period after its
entry or issue; or
(f) the Company shall
(i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property or assets,
(ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the Federal Bankruptcy Code,
as amended (the “Bankruptcy
Code”) or under the comparable laws of any
jurisdiction (foreign or domestic), (iv) file a petition seeking to
take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of
creditors’ rights generally, or (v) acquiesce in writing to
any petition filed against it in an involuntary case under the
Bankruptcy Code or under the comparable laws of any jurisdiction
(foreign or domestic); or
(g) a proceeding or
case shall be commenced in respect of the Company without its
application or consent, in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, moratorium,
dissolution, winding up, or composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of it or of all or any substantial part of
its assets or (iii) similar relief in respect of it under any law
providing for the relief of debtors, and such proceeding or case
described in clause (i), (ii) or (iii) shall continue undismissed,
or unstayed and in effect, for a period of forty-five (45)
consecutive days or any order for relief shall be entered in an
involuntary case under the Bankruptcy Code or under the
comparable laws of
any jurisdiction (foreign or domestic) against the Company or any
of its subsidiaries and shall continue undismissed, or unstayed and
in effect for a period of forty-five (45) consecutive
days.
5. Remedies Upon an Event of
Default. If an Event of Default shall have occurred and
shall be continuing, the Payee of this Note may at any time at its
option, (a)declare, by providing the Company with not less than
five (5) days prior written notice, the entire unpaid principal
balance of this Note together with all interest accrued and unpaid
hereon, due and payable, and upon the Company’s receipt of
such notice, the same shall be accelerated and so due and payable;
provided, however, that
upon the occurrence of an Event of Default described in (i)
Sections 4(f) and (g), without presentment, demand, protest, or
notice, all of which are hereby expressly unconditionally and
irrevocably waived by the Company, the outstanding principal
balance and accrued and unpaid interest hereunder shall be
immediately due and payable, and (ii) Sections 4(a) through (e),
the Payee may exercise or otherwise enforce any one or more of the
Payee’s rights, powers, privileges, remedies and interests
under this Note or applicable law. No course of delay on the part
of the Payee shall operate as a waiver thereof or otherwise
prejudice the right of the Payee. No remedy conferred hereby shall
be exclusive of any other remedy referred to herein or now or
hereafter available at law, in equity, by statute or otherwise.
Notwithstanding anything to the contrary contained in this Note,
Payee agrees that its rights and remedies hereunder are limited to
receipt of cash in the amounts described herein.
6. Replacement. Upon receipt of a
duly executed and notarized written statement from the Payee with
respect to the loss, theft or destruction of this Note (or any
replacement hereof), and without requiring an indemnity bond or
other security, or, in the case of a mutilation of this Note, upon
surrender and cancellation of such Note, the Company shall issue a
new Note, of like tenor and amount, in lieu of such lost, stolen,
destroyed or mutilated Note.
7. Parties in Interest;
Transferability. This Note shall be binding upon the Company
and its successors and assigns and the terms hereof shall inure to
the benefit of the Payee and its successors and permitted assigns.
This Note may not be transferred or sold, pledged, hypothecated or
otherwise granted as security by the Payee without the prior
written consent of the Company, which consent will not be
unreasonably withheld.
8. Amendments. This Note may not
be modified or amended in any manner except in writing executed by
the Company and the Payee.
9. Notices. Any notice, demand,
request, waiver or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a) upon
hand delivery by telecopy or facsimile at the address or number
designated in the Purchase Agreement.
10. Governing Law. This Note shall
be governed by and construed in accordance with the internal laws
of the State of California, without giving effect to the choice of
law provisions. This Note shall not be interpreted or construed
with any presumption against the party causing this Note to be
drafted.
11. Headings. Article and section
headings in this Note are included herein for purposes of
convenience of reference only and shall not constitute a part of
this Note for any other purpose.
12. Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief. The remedies provided
in this Note shall be cumulative and in addition to all other
remedies available under this Note, at law or in equity (including,
without limitation, a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a
waiver of compliance with the provisions giving rise to such remedy
and nothing herein shall limit a Payee’s right to pursue
actual damages for any failure by the Company to comply with the
terms of this Note. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable and material harm
to the Payee and that the remedy at law for any such breach may be
inadequate. Therefore, the Company agrees that, in the event of any
such breach or threatened breach, the Payee shall be entitled, in
addition to all other available rights and remedies, at law or in
equity, to seek and obtain such equitable relief, including but not
limited to an injunction restraining any such breach or threatened
breach, without the necessity of showing economic loss and without
any bond or other security being required.
13. Failure or Delay Not Waiver. No
failure or delay on the part of the Payee 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 right, power or privilege.
14. Enforcement Expenses. The
Company agrees to pay all reasonable costs and expenses of
enforcement of this Note, including, without limitation, reasonable
attorneys’ fees and expenses.
15. Binding Effect. The obligations
of the Company and the Payee set forth herein shall be binding upon
the successors and permitted assigns of each such
party.
16.
Compliance with Securities
Laws. The Payee acknowledges and agrees that this
Note is being, and will be, acquired solely for the Payee’s
own account and not as a nominee for any other party, and for
investment purposes only and not with a view to the resale or
distribution of any part thereof, and that the Payee shall not
offer, sell or otherwise dispose of this Note other than in
compliance with applicable federal and state laws. The Payee
understands that this Note is a “restricted security”
under applicable federal and state securities laws and that such
security has not been, and will not be, registered under the
Securities Act of 1933, as amended (the
“Securities
Act”). The Payee represents and
warrants to the Company that the Payee is an “accredited
investor” as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act. This Note and any Note issued
in substitution or replacement therefore shall be stamped or
imprinted with a legend in substantially the following
form:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY SHALL HAVE
RECEIVED AN OPINION OF COUNSEL THAT THE REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.”
17. Severability. The provisions of
this Note are severable, and if any provision shall be held invalid
or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall not in any manner affect such
provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
18. Consent to Jurisdiction. Each
of the Company and the Payee (i) hereby irrevocably submits to the
jurisdiction of the United States District Court sitting in Los
Angeles, California and the courts of the State of California
located in Los Angeles county for the purposes of any suit, action
or proceeding arising out of or relating to this Note and (ii)
hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Payee
consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address
set forth in the Purchase Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 18 shall affect or limit any right
to serve process in any other manner permitted by applicable
law.
19. Waivers. Except as otherwise
specifically provided herein, the Company hereby waives
presentment, demand, notice of nonpayment, protest and all other
demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note, and does hereby consent
to any number of renewals or extensions of the time for payment
hereof and agrees that any such renewals or extensions may be made
without notice and without affecting its liability herein, AND DOES
HEREBY WAIVE TRIAL BY JURY. No delay or omission on the part of the
Payee in exercising its rights under this Note, or course of
conduct relating hereto, shall operate as a waiver
of such rights or any other right of the Payee, nor shall any
waiver by the Payee of any such right or rights on any one occasion
be deemed a waiver of the same right or rights on any future
occasion.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company has
executed and delivered this Note as of the date first written
above.
By: /s/ Xxxxxxxx Xxxxxxx
Xxxxxx
Name: Xxxxxxxx
Xxxxxxx Xxxxxx
Title: Chief
Executive Officer
