EXHIBIT 4.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
WITH RESPECT TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO NEW ERA MARKETING, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.
Principal Amount: Issue Date: December __, 2006
18% SENIOR SECURED PROMISSORY NOTE
FOR VALUE RECEIVED, New Era Marketing, Inc., a Nevada corporation (the
"BORROWER"), hereby promises to pay to _____________________, with an address at
__________________, ________________ (the "HOLDER") or its registered assigns or
successors in interest or order, without demand, the sum of __________________
($__________) ("PRINCIPAL AMOUNT"), with simple and unpaid interest thereon, at
or before the close of business on the Maturity Date. For purposes of this Note,
the term "MATURITY DATE" shall mean the earliest to occur of: (i) April 1, 2007;
(ii) the closing of a private financing in which equity or equity-linked
securities are sold (the "FINANCING") and (iii) an Event of Default.
This 18% Senior Secured Promissory Note (the "NOTE") has been issued
pursuant to the terms of a contribution agreement (the "CONTRIBUTION AGREEMENT")
under which the Borrower agreed to issue this Note in exchange for the surrender
by the Holder of the note originally issued thereto by Fearless Yachts, LLC
("Fearless") pursuant that certain Securities Purchase Agreement (the "PURCHASE
AGREEMENT") between Fearless, the Holder, a Purchaser Designee and certain other
holders of other notes issued by Fearless, dated of even date herewith, and
shall, to the extent not inconsistent with the terms of this Note and the
Contribution Agreement, be governed by the terms of such Purchase Agreement.
Unless otherwise separately defined herein, all capitalized terms used in this
Note shall have the same meaning as is set forth in the Purchase Agreement. The
following terms shall apply to this and all other Notes:
1 INTEREST
1.1 INTEREST RATE. Interest on this Note shall accrue at a rate per
annum (the "INTEREST RATE") equal to eighteen percent (18%). Interest shall be
calculated on the basis of a 360-day year. Interest on the Principal Amount
shall accrue from the date of this Note and be payable pursuant to Section 2
hereof on the Maturity Date, whether by acceleration or otherwise.
1.2 TRANSFER. Subject to compliance with applicable securities laws,
this Note, and the rights evidenced hereby, may be transferred, sold, pledged,
hypothecated or otherwise granted as security by any registered holder hereof (a
"TRANSFEROR"). On the surrender for exchange of this Note, with a duly executed
Transferor's endorsement (the "TRANSFEROR ENDORSEMENT FORM") and together with
an executed Security Agreement and an opinion of counsel reasonably satisfactory
to the Company that the transfer of this Note will be in compliance with
applicable securities laws, the Company at the expense of the Transferor, will
issue and deliver to or on the order of the Transferor thereof a new Note or
Notes of like tenor, in the name of the Transferor and/or the transferee(s)
specified in such Transferor Endorsement Form (each a "TRANSFEREE"), calling in
the aggregate on the face or faces thereof for the Principal Amount called for
on the face or faces of the Note so surrendered by the Transferor. No such
transfers shall result in a public distribution of the Note.
1.3 REPLACEMENT. Upon receipt of a duly executed, notarized and
written statement (which shall include (a) a covenant from the Holder to
indemnify the Borrower against any and all loss or damage attributable to a
third-party claim in an amount in excess of the actual amount then due under the
Note, and (b) an express authorization that the Borrower may offset any such
amounts against amounts then due under the Note) from the Holder with respect to
the loss, theft or destruction of this Note (or any replacement hereof), or, in
the case
of a mutilation of this Note, upon surrender and cancellation of such Note, the
Borrower shall issue a new Note, of like tenor and amount, in lieu of such lost,
stolen, destroyed or mutilated Note.
2 REPAYMENT
2.1 PAYMENT IN CASH. All principal and interest shall be paid on the
Maturity Date.
2.2 PREPAYMENT PENALTY. The Borrower has the option of prepaying the
outstanding Principal Amount of this Note and any accrued interest thereon, in
whole or in part, at any time prior to the Maturity Date, PROVIDED, HOWEVER that
if the Note is paid prior to April 1, 2007, then the amount that will be payable
in order to satisfy the Note shall be equal to 103.333% of the principal amount
of this Note (the "PREPAYMENT AMOUNT"). If the Borrower fails to pay any portion
of the Prepayment Amount the unpaid portion shall remain outstanding and will
accrue interest at 18% until repaid in full.
3 EVENTS OF DEFAULT.
3.1 The occurrence of any of the following events, after fifteen
(15) days written notice thereof by the Holder or Purchaser Designee to the
Borrower, shall be an "EVENT OF DEFAULT" under this Note:
3.1.1 the Borrower shall fail to make the payment of any
amount outstanding on the date such payment is due hereunder; or
3.1.2 the Borrower 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 United States Bankruptcy Code (as now or
hereafter in effect) 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, (v) acquiesce in writing to any
petition filed against it in an involuntary case under United States Bankruptcy
Code (as now or hereafter in effect) or under the comparable laws of any
jurisdiction (foreign or domestic), (vi) issue a notice of bankruptcy or winding
down of its operations or issue a press release regarding same, or (vii) take
any action under the laws of any jurisdiction (foreign or domestic) analogous to
any of the foregoing; or
3.1.3 a proceeding or case shall be commenced in respect of
the Borrower, 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 in connection with the liquidation
or dissolution of the Borrower or (iii) similar relief in respect of it under
any law providing for the relief of debtors, and such proceeding or case
described in clauses (i), (ii), or (iii) shall continue undismissed, or unstayed
and in effect, for a period of sixty (60) days or any order for relief shall be
entered in an involuntary case under United States Bankruptcy Code (as now or
hereafter in effect) or under the comparable laws of any jurisdiction (foreign
or domestic) against the Borrower or action under the laws of any jurisdiction
(foreign or domestic) analogous to any of the foregoing shall be taken with
respect to the Borrower and shall continue undismissed, or unstayed and in
effect for a period of sixty (60) days; or
3.1.4 any material breach of any representation, warranty or
covenant of the Company made herein; or
3.1.5 the security interests granted to the Holder in the
security agreement dated of even date herewith and entered into by and among the
Borrower, the Holder and Xxxxxx Xxxxxxxxx as the Lender's Agent (the "SECURITY
AGREEMENT") shall be determined to be void, voidable, invalid or unperfected or
are ineffective to provide the Lender's Agent on behalf of Holder with a
perfected, security interest in the collateral covered by the Security Agreement
senior to all other security interests in the collateral other than as
contemplated by said agreement.
3.2 REMEDIES UPON AN EVENT OF DEFAULT. If an Event of Default shall
have occurred and
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shall be continuing, the Lender's Agent on behalf of the Holder may at any time
at its option declare by Notice in writing to the Borrower (the "ACCELERATION
NOTICE"), (a) declare the entire unpaid principal balance of this Note, together
with all interest accrued hereon, due and payable as of the date of the such
Acceleration Notice, and thereupon, the same shall be accelerated and so due and
payable, PROVIDED, HOWEVER, that upon the occurrence of an Event of Default
described in Sections 3.1.2 or 3.1.3 above, the outstanding principal balance
and accrued interest hereunder shall be automatically due and payable and/or (b)
exercise or otherwise enforce any one or more of the Holder's rights, powers,
privileges, remedies and interests under the Purchase Agreement, the
Contribution Agreement, the guaranty to be issued by Xxxx Xxxxx substantially as
attached hereto as EXHIBIT A (the "FEARS GUARANTY"), the guaranty to be issued
by Fearless substantially as attached hereto as EXHIBIT B (the "FEARLESS
GUARANTY"), the warrant to be issued by the Company substantially as attached
hereto as EXHIBIT C (the "WARRANT") and this Note or applicable law. No course
of delay on the part of the Lender's Agent or Holder shall operate as a waiver
thereof or otherwise prejudice the right of the Holder. 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.
4 MISCELLANEOUS
4.1 NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be as follows:
(i) if to the Borrower:
New Era Marketing, Inc.
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
Attn.: Xxxxxxx Xxxxxx, CEO
Tel.: (000) 000-0000
Fax: (000) 000-0000
With a copy to (which shall not constitute notice):
Xxxxxxx Xxxx LLP
00 Xxxx 00xx Xx., 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxxxxx X. Xxxxx, Esq.
Tel.: (000) 000-0000
Fax.: (000) 000-0000
(ii) if to the Holder:
To the name and address set forth above,
With a copy to the Purchaser Designee at:
Xxxxxx Xxxxxxxxx
00 X. 00xx Xxxxxx, Apt. 15J
New York, NY 10023
Fax: 000-000-0000
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4.2 AMENDMENT PROVISION. The term "Note" and all reference 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. This Note may only be amended by written agreement executed by the
issuer and Xxxxxx or the Purchaser Designee acting on such Xxxxxx's behalf.
4.3 ASSIGNABILITY. This Note shall be binding upon the Borrower and
its successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns.
4.4 GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles that would result in the application of the substantive laws
of another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the state of
New York. Both parties and the individual signing this Note on behalf of the
Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. 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 unenforceability of any other provision of this
Note.
4.5 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.
4.6 CONSTRUCTION. Each party acknowledges that it has been afforded
the opportunity to have its legal counsel participate 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.
4.7 SHAREHOLDER STATUS. The Holder shall not have rights as a
shareholder of the Borrower as a result of being a holder of this Note.
4.8 PURCHASER DESIGNEE. The Lender's Agent shall be the Purchaser
Designee, as defined in the Purchase Agreement and as may be replaced from time
to time in accordance therewith. Any notice to or by the Lenders or any actions,
waiver or enforcement rights that may be taken or asserted by Lender may only be
taken by the then acting Purchaser Designee on such Xxxxxx's behalf. In the
event that no Purchaser Designee is appointed, then all actions or consents that
may be taken by the Lender's Agent may be taken upon consent of holders of a
majority of the outstanding principal amount of Notes.
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IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be signed in its name
by an authorized officer as of the ___ day of December, 2006.
NEW ERA MARKETING, INC.
By:
--------------------------------
Name: Xxxxxxx Xxxxxx
Title: Chief Executive Officer
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