Contract
EXHIBIT 10.3
THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"). NO
INTEREST IN THIS NOTE MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT
APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE
ACT), OR (iii) AN EXEMPTION FROM REGISTRATION UNDER THE ACT WHERE PAYEE HAS
FURNISHED TO THE COMPANY AN OPINION OF ITS COUNSEL THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT IS AVAILABLE.
SMS
TEXT MEDIA, INC. AND XXX X XXXXXXX
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Original
Principal Amount: U.S. $1,211,717.34
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Issuance
Date: March 11, 2008
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FOR VALUE
RECEIVED, the undersigned, SMS TEXT MEDIA., a Delaware corporation and XXX X
XXXXXXX (the “Company” or collectively the “Payor”) hereby
promises to pay to Global Realty Development Corp. (the “Payee”) the principal
sum of ONE MILLION TWO HUNDRED AND ELEVEN THOUSAND and SEVEN HUNDRED and
SEVENTEEN DOLLARS and THIRTY-FOUR CENTS ($1,211,717.34) 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, on the first to occur of the following
dates: (i) receipt by the Company of cash or assets through the sale of any
assets or issuance of debt or equity or the merger into another company and (ii)
receipt by the Company for the sale of stock or interests in the Company by
selling stock holders. Any received cash or assets with a value up to
the amount of the outstanding principal and interest due on the Note will be
assigned directly and paid directly to Global.
This Note
is being issued in connection with the First Amendment Rescission Agreement of
SMS text Media, Inc. dated March 11, 2008 and represents $1,211,711.42 due under
the terms of the Rescission.
1. Interest and
Payment.
1.1. The
principal amount of this Note outstanding from time to time shall bear simple
interest at the annual rate (the "Note Rate") of twelve
(12%) percent from the date hereof and the principal shall be paid in cash on
the earliest to occur of (i) receipt by the Company of cash or assets
through the sale of any assets or issuance of debt or equity or the merger into
another company; (ii) receipt by the Company for the sale of stock or interests
in the Company by selling stockholders and (iii) no later than June 30th,
2008. In the event the Note is not paid when due, (i) a default
penalty shall equal ten percent (10%) of the Principal amount of the Note due;
and (ii) the Note Rate shall increase to twenty percent (20%) until the Note is
paid. Interest is payable monthly on the last day of each
month.
1.2. All
payments made by the Payor on this Note shall be applied first to the payment of
accrued unpaid interest on this Note and then to the reduction of the unpaid
principal balance of this Note.
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1.3. In the
event that the date for the payment of any amount payable under this Note falls
due on a Saturday, Sunday or public holiday under the laws of the State of New
York, the time for payment of such amount shall be extended to the next
succeeding Business Day (as defined in Section 13 of the Purchase Agreement) and
interest at the Note Rate shall continue to accrue on any principal amount so
effected until the payment thereof on such extended due date.
2. Security
and Ranking.
2.1. This Note
shall be a Senior Debt issued pursuant to the First Amendment Rescission
Agreement and senior to all other indebtedness of the Company.
2.2. The
Company shall issue a general corporate guarantee in favor of the
Notes.
3. Optional
Prepayment. The principal
amount of this Note may be prepaid in whole or in part at any time, at the sole
election of the Company or Xxxxxxx. Each partial prepayment of this
Note shall first be applied to interest accrued through the Maturity Date and
the Extended Maturity Date and then to accrued and unpaid
principal.
4. Mandatory
Prepayment.
4.1 Upon the
sale of any membership interest or stock in SMS by Selling Stockholders Xxxxxxx,
Xxxxxxxxx or SMS the net proceeds from such sale (the “Net Sale Proceeds”) shall
first be used to repay the outstanding Notes up to a maximum of $1,211,711.42
plus interest, the First Amendment Rescission agreed repayment. Net
Sale Proceeds shall be the sale price less any transaction, commission or
brokerage fees associated with the sale. The Net Sale Proceeds shall
be assigned to Global and payable at closing. Within three (3) Business Days of
any such sale, the Company shall give notice to Global of the amount of
prepayment. Such prepayments shall be assigned to Global and be made
directly to Global.
4.2 Upon a
financing by SMS, the net proceeds from such financing (the “Net Financing
Proceeds”) shall be used to repay the outstanding Notes up to a maximum of
$1,211,711.42 the First Amendment Rescission Agreement agreed
repayment. Net Financing Proceeds shall be the financing less any
transaction, commission or brokerage fees associated with the
financing. Within three (3) Business Days of any such financing, the
Company shall give notice to Global of the amount of prepayment. Such
prepayments shall be made within 5 (five) Business Days of the receipt of
payment.
4.3 Upon the
sale of any assets including intellectual property rights owned by SMS, up to
the first $1,211,711.42 plus interest, 100% of the Net Sale Proceeds from such
sales shall first be used to repay the outstanding
Notes. Net Sale Proceeds shall be the sale price less any
transaction, commission or brokerage fees associated with the
sale. Within three (3) Business Days of any such sale, the Company
shall give notice to Global of the amount of prepayment. Such
prepayments shall be made within 5 (five) Business Days of the receipt of
payment.
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5. Covenants of
Payor.
Payor
covenants and agrees that, so long as this Note remains outstanding and unpaid,
in whole or in part:
5.1. The
Company shall immediately repay this Note in full, including all accrued
interest thereon, upon receipt by the Company of at least $1.00 in net proceeds
through the sale of any assets, or the issuance of debt or equity securities or
gross revenues of $1.00 or more derived from net income.
5.2. Payor
will not sell, transfer or dispose of a material part of its
assets.
5.3. Payor
will not make any loan to any person who is or becomes a shareholder or
executive employee of Payor, other than for reasonable advances for expenses in
the ordinary course of business;
5.4. Any cash
flow, profits, assets, or earnings of the Company may only be used by and among
the Company and may not be, directly or indirectly, transferred or loaned to any
officer, stockholder, or any other subsidiary of the Payor.
5.5. Payor
will promptly pay and discharge all lawful taxes, assessments and governmental
charges or levies imposed upon it, its income and profits, or any of its
property, before the same shall become in default, as well as all lawful claims
for labor, materials and supplies which, if unpaid, might become a lien or
charge upon such properties or any part thereof; provided, however, that Payor
or such subsidiary shall not be required to pay and discharge any such tax,
assessment, charge, levy or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings and Payor or such subsidiary,
as the case may be, shall set aside on its books adequate reserves with respect
to any such tax, assessment, charge, levy or claim so contested;
5.6. Payor
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights and franchises and
substantially comply with all laws applicable to Payor as its counsel may
advise;
5.7. Payor
will at all times maintain, preserve, protect and keep its property used or
useful in the conduct of its business in good repair, working order and
condition (except for the effects of reasonable wear and tear in the ordinary
course of business) and will, from time to time, make all necessary and proper
repairs, renewals, replacements, betterments and improvements
thereto;
5.8. Payor
will keep adequately insured, by financially sound reputable insurers, all
property of a character usually insured by similar corporations and carry such
other insurance as is usually carried by similar corporations;
5.9. Payor
will, promptly following the occurrence of an Event of Default or of any
condition or event which, with the giving of notice or the lapse of time or
both, would constitute an Event of Default, furnish a statement of Payor's Chief
Executive Officer or Chief Financial Officer to Payee setting forth the details
of such Event of Default or condition or event and the action which Payor
intends to take with respect thereto;
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5.10. Payor
will, and will cause each of its subsidiaries to, at all times maintain books of
account in which all of its financial transactions are duly recorded in
conformance with generally accepted accounting principles;
5.11. Payor and
any Subsidiary shall not issue any debt, equity or other instrument which would
give the holder thereof, directly or indirectly, rights that are pari passu,
senior or superior to any right of the Payee, except as expressly permitted in
Section 2 herein.
5.12. Payor
shall not create, incur, assume or suffer to exist any pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, or security interest,
mortgage, deed of trust, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Uniform Commercial Code or comparable law of any
jurisdiction) with respect to the Assets of the Company’
5.13. Payor and
any subsidiary shall not issue any debt, equity or other instrument which would
give the holder thereof, directly or indirectly, any rights pari passu, senior
or superior to any right of the Payee; and
5.14. Notwithstanding
the foregoing, Payor and any subsidiaries of the Payor shall be permitted to
incur indebtedness, so long as any recourse to Payor is subordinated to the
claims of Global.
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6.
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Events
of Default. Each of the
following events shall constitute an "Event of
Default":
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6.1. The
dissolution of Payor or any vote in favor thereof by the Members or shareholders
of Payor;
6.2. Payor
makes an assignment for the benefit of creditors, or files with a court of
competent jurisdiction an application for appointment of a receiver or similar
official with respect to it or any substantial part of its assets, or Payor
files a petition seeking relief under any provision of the Federal Bankruptcy
Code or any other federal or state statute now or hereafter in effect affording
relief to debtors, or any such application or petition is filed against Payor,
which application or petition is not dismissed or withdrawn within sixty (60)
days from the date of its filing;
6.3. Payor
fails to pay the principal amount, or interest on, or any other amount payable
under this Note as and when the same becomes due and payable;
6.4. Payor
sells all or substantially all of its assets or merges or is consolidated with
or into another corporation;
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6.5. A final
judgment for the payment of money in excess of $100,000 is entered against Payor
by a court of competent jurisdiction, and such judgment is not discharged (nor
the discharge thereof duly provided for) in accordance with its terms, nor a
stay of execution thereof procured, within sixty (60) days after the date such
judgment is entered, and, within such period (or such longer period during which
execution of such judgment is effectively stayed), an appeal therefrom has not
been prosecuted and the execution thereof caused to be stayed during such
appeal;
6.6. Payor
defaults in the due observance or performance of any covenant, condition or
agreement on the part of Payor to be observed or performed pursuant to the terms
of this Note (other than the default specified in Section 6.3 above), and such
default continues uncured for a period of thirty (30) days then, upon the
occurrence of any such Event of Default under this Section and any of the
sections above and at any time thereafter, Payee shall have the right (at
Payee's option), upon delivery of written notice to Payor which expressly
identifies the nature of default under this Section or any of the sections
above, to declare the principal of, accrued unpaid interest on, and all other
amounts payable under this Note to be forthwith due and payable, whereupon all
such amounts shall be immediately due and payable to Payee, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived.
6.7. Payor
fails to pay the principal amount, or interest on, or any other amount payable
under this Note as and when the same becomes due and payable (as specified in
Section 6.3 above), then the Company will pay the Payee a default interest rate
of two (2%) per month on all amounts due and owing under the Note for each month
or part thereof beyond the Maturity Date or the Extended Maturity
Date. The default interest rate is in addition to the Note Rate and
shall cease to accrue hereunder as of the date Payor has cured such Event of
Default.
6.8. Any event
of default occurs on any other senior indebtedness of Payor or subsidiary
indebtedness to which the Payor is a guarantor. Any default occurs
under any indebtedness of the Company that results in redemption of or
acceleration prior to maturity of $1,000,000 or more of such indebtedness in the
aggregate.
6.9. Payor
issues any debt, equity or other instrument which would give the holder thereof,
directly or indirectly, a right in any asset of Payor that are senior or
superior to any right of the Payee in or to such assets, other than as expressly
permitted herein.
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7.
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Replacement of
Note.
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7.1. In the
event that this Note is mutilated, destroyed, lost or stolen, Payor shall, at
its sole expense, execute, register and deliver a new Note, in exchange and
substitution for this Note, if mutilated, or in lieu of and substitution for
this Note, if destroyed, lost or stolen. In the case of destruction,
loss or theft, Payee shall furnish to Payor indemnity reasonably satisfactory to
Payor, and in any such case, and in the case of mutilation, Payee shall also
furnish to Payor evidence to its reasonable satisfaction of the mutilation,
destruction, loss or theft of this Note and of the ownership
thereof. Any replacement Note so issued shall be in the same
outstanding principal amount as this Note and dated the date to which interest
shall have been paid on this Note or, if no interest shall have yet been paid,
dated the date of this Note.
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7.2. Every
Note issued pursuant to the provisions of Section 7.1 above in substitution for
this Note shall constitute an additional contractual obligation of the
Payor.
8. Suits for
Enforcement and Remedies. If any one or
more Events of Default shall occur and be continuing, the Payee may proceed to
(i) protect and enforce Payee's rights either by suit in equity or by
action at law, or both, whether for the specific performance of any covenant,
condition or agreement contained in this Note or in any agreement or document
referred to herein or in aid of the exercise of any power granted in this Note
or in any agreement or document referred to herein, (ii) enforce the
payment of this Note, or (iii) enforce any other legal or equitable right
of Payee. No right or remedy herein or in any other agreement or
instrument conferred upon Payee is intended to be exclusive of any other right
or remedy, and each and every such right or remedy shall be cumulative and shall
be in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise.
9. Unconditional Obligation;
Fees, Waivers, Other.
9.1. The
obligations to make the payments provided for in this Note are absolute and
unconditional and not subject to any defense, set-off, counterclaim, rescission,
recoupment or adjustment whatsoever.
9.2. If,
following the occurrence of an Event of Default, Payee shall seek to enforce the
collection of any amount of principal of and/or interest on this Note, there
shall be immediately due and payable from Payor, in addition to the then unpaid
principal of, and accrued unpaid interest on, this Note, all reasonable costs
and expenses incurred by Payee in connection therewith, including, without
limitation, reasonable attorneys' fees and disbursements.
9.3. No
forbearance, indulgence, delay or failure to exercise any right or remedy with
respect to this Note shall operate as a waiver or as acquiescence in any
default, nor shall any single or partial exercise of any right or remedy
preclude any other or further exercise thereof or the exercise of any other
right or remedy.
9.4. This Note
may not be modified or discharged (other than by payment or exchange) except by
a writing duly executed by Payor and Payee or as otherwise provided in the
Purchase Agreement.
9.5. Payor
hereby expressly waives demand and presentment for payment, notice of
nonpayment, notice of dishonor, protest, notice of protest, bringing of suit,
and diligence in taking any action to collect amounts called for hereunder, and
shall be directly and primarily liable for the payment of all sums owing and to
be owing hereon, regardless of and without any notice, diligence, act or
omission with respect to the collection of any amount called for hereunder or in
connection with any right, lien, interest or property at any and all times which
Payee had or is existing as security for any amount called for
hereunder.
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10. Restriction
on Transfer. This Note has
been acquired for investment, and this Note has not been registered under the
securities laws of the United States of America or any state
thereof. Accordingly, no interest in this Note may be offered for
sale, sold or transferred in the absence of registration and qualification of
this Note, under applicable federal and state securities laws or an opinion of
counsel of Payee reasonably satisfactory to Payor that such registration and
qualification are not required.
11. Most
Favored Nation Exchange. If (i) there is
an Event of Default that is not cured within the prescribed cure period or (ii)
the Note is not fully repaid by the Original Maturity Date, and the Company
completes a private equity or equity-linked financing at any time prior to full
repayment of the Note, each Investor will have the right to exchange all or any
portion of the unpaid principal amount of its Notes, plus all accrued but unpaid
interest thereon, for securities in such financing, provided that the exchange
is in compliance with applicable securities laws. In addition, each Investor has
the right of participation with respect to each and every offering of securities
that the Company proposes to effect at any time for a period of one (1) year
after the date herein.
12. Miscellaneous.
12.1. The
headings of the various paragraphs of this Note are for convenience of reference
only and shall in no way modify any of the terms or provisions of this
Note.
12.2. All
notices required or permitted to be given hereunder shall be in writing and
shall be deemed to have been duly given when personally delivered or sent by
registered or certified mail (return receipt requested, postage prepaid),
facsimile transmission or overnight courier to the address of the intended
recipient as set forth in the preamble to this Note or at such other address as
the intended recipient shall have hereafter given to the other party hereto
pursuant to the provisions of this Note.
12.3. This Note
and the obligations of Payor and the rights of Payee shall be governed by and
construed in accordance with the substantive laws of the State of Florida
without giving effect to the choice of laws rules thereof.
12.4. This Note
shall bind Payor and its successors and assigns.
SIGNATURE
PAGE TO FOLLOW
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SMS
TEXT MEDIA INC. AND XXX X XXXXXXX.
| SMS TEXT MEDIA INC
a
Delaware corporation
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By:
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/s/ | |
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Xxxx
Xxxxxxxxx
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President
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| XXX X XXXXXXX | |||
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By:
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/s/ | |
| Xxx X. Xxxxxxx | |||
SMS
TEXT MEDIA AND XXX X XXXXXXX.
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Original
Principal Amount: U.S. $1,211,717.34
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Issuance
Date: March 11, 2008
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The
signatures below Relate ONLY to the Sale of Interests or Stock of SMS Text
Media, Inc by Xxxxxxxxx, Xxxxxxx or Xxxxxxxxx Under Sections 4.1 and Section 6
Only and does not bind the Signatory to Any Terms of the Note Except for
Sections 4.1 and 6.
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Name:
Xxx
X. Xxxxxxx
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Name:
Xxxx
Xxxxxxxxx
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