Contract
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR
ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO
THIS
NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF
COUNSEL REASONABLY SATISFACTORY TO RONCO CORPORATION THAT SUCH REGISTRATION
IS
NOT REQUIRED.
SECURED
NON-CONVERTIBLE TERM NOTE
FOR
VALUE
RECEIVED, each of RONCO CORPORATION, a Delaware corporation (the “Parent”),
and
the other companies listed on Exhibit
A
attached
hereto (such other companies together with the Parent, each a “Company”
and
collectively, the “Companies”),
jointly and severally, promises to pay to LAURUS MASTER FUND, LTD., c/o M&C
Corporate Services Limited, P.O. Box 309 GT, Xxxxxx House, South Church Street,
Xxxxxx Town, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the “Holder”)
or its
registered assigns or successors in interest, the sum of Four Million Dollars
($4,000,000), together with any accrued and unpaid interest hereon, on October
18, 2008 (the “Maturity
Date”)
if not
sooner paid.
Capitalized
terms used herein without definition shall have the meanings ascribed to such
terms in the Security and Purchase Agreement among the Companies and the Holder
dated as of the date hereof (as amended, modified and/or supplemented from
time
to time, the “Security
Agreement”).
The
following terms shall apply to this Secured Non-Convertible Term Note (this
“Note”):
ARTICLE
I
CONTRACT
RATE
1.1 Contract
Rate.
Subject
to Sections 4.2 and 5.10, interest payable on the outstanding principal amount
of this Note (the “Principal
Amount”)
shall
accrue at a rate per annum equal to the “prime rate” published in The
Wall Street Journal
from
time to time (the “Prime
Rate”),
plus
two percent (2.0%) (the “Contract
Rate”).
The
Contract Rate shall be increased or decreased as the case may be for each
increase or decrease in the Prime Rate in an amount equal to such increase
or
decrease in the Prime Rate; each change to be effective as of the day of the
change in the Prime Rate. The Contract Rate shall not at any time be less than
eight percent (8.0%). Interest shall be (i) calculated on the basis of a 360
day
year, and (ii) payable monthly, in arrears, commencing on November 1, 2006
on
the first business day of each consecutive calendar month thereafter through
and
including the Maturity Date and on the Maturity Date, whether by acceleration
or
otherwise.
1.2 Contract
Rate Payments.
The
Contract Rate shall be calculated on the last business day of each calendar
month hereafter (other than for increases or decreases in the Prime Rate which
shall be calculated and become effective in accordance with the terms of Section
1.1) until the Maturity Date (each a “Determination
Date”).
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1.3 Principal
Payments.
Amortizing payments of the aggregate principal amount outstanding under this
Note at any time (the “Principal
Amount”)
shall
be made by the Company on January 1, 2007 and on the first business day of
each
succeeding month thereafter through and including the Maturity Date (each,
an
“Amortization
Date”).
Commencing on the first Amortization Date, the Company shall make monthly
payments to the Holder on each Amortization Date, each such payment in the
amount of $121,212.12 together with any accrued and unpaid interest on such
portion of the Principal Amount plus any and all other unpaid amounts which
are
then owing under this Note, the Security Agreement and/or any other Ancillary
Agreement (collectively, the “Monthly
Amount”).
Any
outstanding Principal Amount together with any accrued and unpaid interest
and
any and all other unpaid amounts which are then owing by the Company to the
Holder under this Note, the Security Agreement and/or any other Ancillary
Agreement shall be due and payable on the Maturity Date.
ARTICLE
II
LOANS;
PAYMENTS UNDER THIS NOTE
2.1 Loans.
All
Loans evidenced by this Note shall be made in accordance with the terms and
provisions of the Security Agreement.
2.2 Intentionally
Omitted.
2.3 Optional
Redemption in Cash.
The
Companies will have the option of prepaying this Note (“Optional
Redemption”)
by
paying to the Holder a sum of money equal to one hundred fifteen percent (115%)
of the principal amount of this Note then outstanding together with accrued
but
unpaid interest thereon and any and all other sums due, accrued or payable
to
the Holder arising under this Note, the Security Agreement, or any other
Ancillary Agreement (the “Redemption
Amount”)
outstanding on the Redemption Payment Date (as defined below). The Company
shall
deliver to the Holder a written notice of redemption (the “Notice
of Redemption”)
specifying the date for such Optional Redemption (the “Redemption
Payment Date”),
which
date shall be no later than ten (10) days after the date of the Notice of
Redemption (the “Redemption
Period”).
On
the Redemption Payment Date, the Redemption Amount (plus any additional interest
and fees accruing on the Notes during the Redemption Period) must be irrevocably
paid in full in immediately available funds to the Holder. In the event the
Companies fail to pay the Redemption Amount on the Redemption Payment Date,
then
such Redemption Notice shall be null and void.
ARTICLE
III
[INTENTIONALLY
OMITTED]
2
ARTICLE
IV
EVENTS
OF DEFAULT AND DEFAULT RELATED PROVISIONS
4.1 Events
of Default.
The
occurrence of an Event of Default under the Security Agreement shall constitute
an event of default (“Event
of Default”)
hereunder.
4.2 Default
Interest.
Following the occurrence and during the continuance of an Event of Default,
the
Companies shall, upon written notice from the Holder of such Event of Default,
jointly and severally, pay additional interest on the outstanding principal
balance of this Note in an amount equal to one-half of one percent (0.5%) per
month, and all outstanding Obligations, including unpaid interest, shall
continue to accrue interest at such additional interest rate from the date
of
notice of such Event of Default until the date such Event of Default is cured
or
waived.
ARTICLE
V
MISCELLANEOUS
5.1 Issuance
of New Note.
Upon
any partial payment of this Note, a new Note containing the same date and
provisions of this Note shall, at the request of the Holder, be issued by the
Companies to the Holder for the principal balance of this Note and interest
which shall not have been paid.
5.2 Cumulative
Remedies.
The
remedies under this Note shall be cumulative.
5.3 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 right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not exclusive
of,
any rights or remedies otherwise available.
5.4 Notices.
Any
notice herein required or permitted to be given shall be in writing and shall
be
deemed effective: (a) upon personal delivery to the party notified, (b) when
sent by confirmed telex or facsimile if sent during normal business hours of
the
recipient, if not, then on the next business day, (c) five days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid, or (d) one day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt.
All
communications shall be sent to the respective Company at the address provided
for such Company in the Security Agreement executed in connection herewith,
and
to the Holder at the address provided in the Security Agreement for such Holder,
with a copy to Xxxx X. Xxxxxx, Esq., 000 Xxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, xxxxxxxxx number (000) 000-0000, or at such other
address as the respective Company or the Holder may designate by ten days
advance written notice to the other parties hereto.
5.5 Amendment
Provision.
The
term “Note” and all references thereto, as used throughout this instrument,
shall mean this instrument as originally executed, or if later amended or
supplemented, then as so amended or supplemented, and any successor instrument
as such successor instrument may be amended or supplemented.
3
5.6 Assignability.
This
Note shall be binding upon each Company 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 Security
Agreement. No Company may assign any of its obligations under this Note without
the prior written consent of the Holder, any such purported assignment without
such consent being null and void.
5.7 Cost
of Collection.
In case
of any Event of Default under this Note, the Companies shall, jointly and
severally, pay the Holder’s reasonable costs of collection, including reasonable
attorneys’ fees.
5.8 Governing
Law, Jurisdiction and Waiver of Jury Trial.
(a) THIS
NOTE
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.
(b) EACH
COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
IN
THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION
TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY COMPANY, ON THE ONE HAND,
AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE, THE SECURITY
AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING
OUT
OF OR RELATED TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY
AGREEMENTS; PROVIDED,
THAT
EACH COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK;
AND FURTHER PROVIDED,
THAT
NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
HOLDER. EACH COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY
HEREBY WAIVES ANY OBJECTION THAT IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS.
EACH
COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL
ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE SECURITY AGREEMENT
AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
4
(c) EACH
COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH COMPANY HERETO WAIVES ALL RIGHTS
TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER, AND/OR
ANY
COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, THE SECURITY
AGREEMENT, ANY OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO
OR
THERETO.
5.9 Severability.
In the
event that any provision of this Note is invalid or unenforceable under any
applicable statute 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 Note.
5.10 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 event that the rate of interest required to be paid or other charges
hereunder exceed the maximum rate permitted by such law, any payments in excess
of such maximum rate shall be credited against amounts owed by the Companies
to
the Holder and thus refunded to the Companies.
5.11 Security
Interest.
The
Holder has been granted a security interest (i) in certain assets of the
Companies as more fully described in the Security Agreement and (ii) pursuant
to
the Stock Pledge Agreement dated as of the date hereof.
5.12 Construction.
Each
party acknowledges that its legal counsel participated in the preparation of
this 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 Note to favor any party against the
other.
5.13 Registered
Obligation.
This
Note is intended to be a registered obligation within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i) and the Companies (or their agent) shall
register this Note (and thereafter shall maintain such registration) as to
both
principal and any stated interest. Notwithstanding any document, instrument
or
agreement relating to this Note to the contrary, transfer of this Note (or
the
right to any payments of principal or stated interest thereunder) may only
be
effected by (i) surrender of this Note and either the reissuance by the
Companies of this Note to the new holder or the issuance by the Company of
a new
instrument to the new holder, or (ii) transfer through a book entry system
maintained by the Company (or its agent), within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i)(B).
[Balance
of page intentionally left blank; signature page follows]
5
IN
WITNESS WHEREOF,
each
Company has caused this Secured Non-Convertible Term Note to be signed in its
name effective as of this 18 day of October 2006.
|
WITNESS:
|
RONCO
CORPORATION
|
|
unintelligible
|
By:
/s/ Xxxx
Xxxxxxxxx
|
|
Name:
Xxxx Xxxxxxxxx
|
|
|
Title:
Interim President
|
|
|
WITNESS:
|
RONCO
MARKETING CORPORATION
|
|
unintelligible
|
By:
/s/ Xxxx
Xxxxxxxxx
|
|
Name:
Xxxx Xxxxxxxxx
|
|
|
Title:
Interim President
|
6
EXHIBIT
A
OTHER
COMPANIES
Ronco
Marketing, Corporation, a Delaware corporation
7
