Exhibit 10.44
THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATE TO CERTAIN OTHER
INDEBTEDNESS OF MAKER AS PROVIDED IN THAT SUBORDINATION AGREEMENT DATED MAY 7,
1997, BY AND AMONG LASALLE BUSINESS CREDIT, INC., IMPERIAL BANK, THE CRUTTENDEN
XXXX BRIDGE FUND, LLC, AND XXXXXX X. XXXXXX, XX., AS AGENT.
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PROFIT NOTE
PROMISSORY NOTE
$855,000.00 Phoenix, Arizona
May 7, 1997
FOR VALUE RECEIVED, the undersigned SOUTHHAMPTON ENTERPRISES CORP., a
British Columbia Corporation (hereinafter called "Maker"), promises to pay to
the order of XXXXXX X. XXXXXX, XX., as agent for the Sellers, defined below, at
00000 Xxxx Xxxxxx Xxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000 (together with all
subsequent holders of this Note, hereinafter called "Payee"), or at such other
place as Payee may from time to time designate in writing, the principal sum of
EIGHT HUNDRED FIFTY FIVE THOUSAND AND NO/100THS DOLLARS ($855,000.00), plus
interest calculated on a daily basis (based on a 360-day year) from the date
hereof on the principal balance from time to time outstanding as hereinafter
provided, payable as follows:
A. Interest shall accrue at the rate of Eight and One Quarter percent (8
1/4%) per annum.
B. All accrued interest shall be due and payable quarterly on the first
day of each August, November, February and May, commencing August
1997.
C. Upon any Securities Offering that is not a Qualified Securities
Offering, a repayment of principal in the amount of $213,750.00 shall
be due and payable immediately upon demand by Payee.
D. Upon any Qualified Securities Offering, the entire outstanding
principal balance of this Note shall be due and payable immediately
upon demand by Payee.
E. Notwithstanding any other provision hereof, if not earlier due and
payable, the entire unpaid principal balance, all accrued and unpaid
interest, and all other amounts payable hereunder shall be due and
payable in full on May 7, 1999.
As used in this Note, "Securities Offering" means any registered equity
securities offering in the United States of America of the common stock of Maker
(other than on Form S-4, or securities issued pursuant to an employee benefit
plan or in connection with a transaction subject to Rule 145 of the Securities
Act of 1933); and "Qualified Securities Offering" means a Securities Offering in
which the gross proceeds, together with the gross proceeds of all prior
Securities Offerings, total at least $12,000,000,00.
Upon a Securities Offering, or at any time and from time to time
thereafter, at the election of Payee, all or any part of the outstanding
principal amount of this Note may be converted into shares of Maker's common
stock at the lesser of: (i) $7.50 per share, or (ii) the price of such common
stock in the first Securities Offering, (hereinafter referred to as the
"Conversion Price"). If the entire outstanding principal balance of this Note is
not converted at the time of the Securities Offering, the Conversion Price shall
be adjusted upon certain events affecting Maker's common stock, as provided in
Exhibit "A" attached hereto. All shares of common stock of Maker obtained by
Payee as a result of its exercise of the conversion rights in this Note shall be
subject to the Registration Rights Agreement attached hereto as Exhibit "B".
Maker shall not have any right to prepay this Note prior to a Securities
Offering. Thereafter Maker may prepay this Note in full but not in part, without
penalty, upon not less than ten (10) business days prior written notice of the
proposed prepayment; subject, however, to any exercise by Payee of its
conversion rights under this Note at any time prior to receipt of the
prepayment.
Maker agrees to an effective rate of interest that is the rate stated above
plus any additional rate of interest resulting from any other charges in the
nature of interest paid or to be paid by or on behalf of Maker, or any benefit
received or to be received by Payee, in connection with this Note.
Principal, interest and all other sums payable hereunder shall be paid in
lawful money of the United States of America in immediately available funds.
If any payment required under this Note is not paid when due, then Maker
shall pay a "late charge" equal to three percent (3%) of the amount of that
payment. This late charge may be assessed without notice, shall be immediately
due and payable and shall be in addition to all other rights and remedies
available to Payee.
All payments on this Note shall be applied first to the payment of any
costs, fees or other charges incurred in connection with the indebtedness
evidenced hereby, next to the payment of accrued interest and then to the
reduction of the principal balance.
This Note is executed pursuant to that Stock Purchase Agreement, dated
April 21, 1997, among the parties identified on the attached Schedule 1 (the
"Sellers), Maker, and Southhampton Enterprises, Inc., a Texas corporation
("SEI"), which provides for the purchase by SEI from the Sellers of all of the
issued and outstanding capital stock of The Antigua Group, Inc., a Nevada
corporation ("Antigua") upon the terms and conditions set forth therein (the
"Stock Purchase Agreement"). This Note is secured by certain security agreements
and pledge agreements, of even date herewith, executed by Maker, SEI, and
Antigua. This Note and such security agreements and pledge agreements, together
with all other documents or instruments evidencing, securing, or executed or
delivered in connection with the indebtedness evidenced by this Note, and which
specifically refer to this Note, are hereinafter called the "Transaction
Documents."
The occurrence of any of the following shall constitute an "Event of
Default" under this Note:
(1) the failure to pay any sum due and owing under this Note or under
any of the other Transaction Documents and such failure continues for a period
of ten days;
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(2) the failure to perform or observe the covenants, conditions,
provisions or agreements of this Note or any of the other Transaction Documents
(other than a failure described in one or more other subparagraphs of this
provision) and such failure continues for a period of fifteen days after notice
thereof to Maker;
(3) any representation by Maker in the Transaction Documents shall
prove to have been false in any material respect;
(4) the filing by Maker or any endorser, guarantor or surety hereof
(or against Maker or any endorser, guarantor or surety hereof to which Maker or
such endorser, guarantor or surety acquiesces or which is not dismissed within
60 days after the filing thereof) of any proceeding under the federal bankruptcy
laws of the United States of American, the Bankruptcy and Insolvency Act
(Canada) or other similar laws now or hereafter in effect; or the entry of an
order for relief under such laws with respect to Maker or any endorser,
guarantor or surety hereof;
(5) the appointment of a receiver, trustee, custodian or conservator
of any assets of Maker or any endorser, guarantor or surety hereof;
(6) the insolvency, assignment for the benefit of creditors, failure
to pay its debts as they mature or admission in writing of its inability or
failure to pay its debts as they mature, by Maker or any endorser, guarantor or
surety hereof;
(7) the liquidation, termination or dissolution of Maker or any
endorser, guarantor or surety hereof, if other than a natural person;
(8) any attachment, garnishment, levy or execution upon or judicial
seizure of any assets of Maker or any endorser, guarantor or surety hereof in
excess of $50,000.00 in the aggregate;
(9) the existence or filing of any lien or encumbrance in excess of
$50,000.00 in the aggregate, other than any lien or encumbrance permitted by the
Transaction Documents, against any collateral or security for this Note;
(10) the institution of any legal action or proceedings to enforce any
lien or encumbrance in excess of $50,000.00 in the aggregate upon any collateral
or security for this Note;
(11) the occurrence of any default under any financing to Maker by
Lasalle Business Credit, Inc., Imperial Bank, or The Cruttenden Xxxx Bridge
Fund, LLC, or under any other financing to Maker in excess of $50,000.00 in the
aggregate, which default remains uncured after any applicable notice and period
for cure provided in connection therewith;
(12) except as permitted in the Transaction Documents, any sale,
transfer, assignment or other disposition by Maker of any of the outstanding
capital stock of Southhampton Enterprises, Inc., a Texas corporation ("SEI"), or
any sale, transfer, assignment or other disposition by SEI of any of the
outstanding capital stock of the Antigua Group, Inc., a Nevada corporation;
(13) the direct or indirect ownership by any single person or entity
of more than fifty percent (50%) of the outstanding capital stock of Maker.
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Upon the occurrence of any Event of Default, at the option of Payee, the
entire unpaid principal balance, all accrued and unpaid interest and all other
amounts payable hereunder shall become immediately due and payable without
notice.
After maturity, including maturity upon acceleration, the unpaid principal
balance, all accrued and unpaid interest and all other amounts payable hereunder
shall bear interest at Thirteen and One Quarter percent (13 1/4%) per annum.
Maker shall pay all costs and expenses, including reasonable attorneys' fees and
court costs, incurred in the collection or enforcement of all or any part of
this Note. All such costs and expenses shall be secured by the Transaction
Documents. In the event of any court proceedings, court costs and attorneys'
fees shall be set by the court and not by jury and shall be included in any
judgment obtained by Payee.
Failure of Payee to exercise any option hereunder shall not constitute a
waiver of the right to exercise the same in the event of any subsequent default
or in the event of continuance of any existing default after demand for strict
performance hereof.
Maker, sureties, guarantors and endorsers hereof: (a) agree to be jointly
and severally bound, (b) severally waive demand, diligence, presentment for
payment, protest and demand, and notice of extension, dishonor, protest, demand
and nonpayment of this Note, (c) consent that Payee may extend the time of
payment or otherwise modify the terms of payment of any part or the whole of the
debt evidenced by this Note, at the request of any other person primarily liable
hereon, and such consent shall not alter nor diminish the liability of any
person, and (d) agree that Payee may setoff at any time any sums or property
owed to any of them by Payee.
This Note shall be binding upon Maker and its successors and assigns and
shall inure to the benefit of Payee and their successors and assigns.
All notices required or permitted in connection with this Note shall be
given at the place and in the manner provided in the Stock Purchase Agreement
for the giving of notices.
This Note shall be governed by and construed according to the laws of the
State of Arizona.
All exhibits and schedules attached to this Note are incorporated herein by
each reference thereto.
Payee may bring any action or proceeding to enforce or arising out of this
Note in any court of competent jurisdiction. Any action or proceeding brought by
Maker arising out of this Note shall be brought solely in a court of competent
jurisdiction located in the County of Maricopa, State of Arizona, or in the
United States District Court for the District of Arizona. Maker waives any
objection which it may now or hereafter have to venue of any such action or
proceeding and waives any right to seek removal of any action or proceeding
commenced in accordance herewith. If either party commences any action or
proceeding arising out of this Note, in a court located in the County of
Maricopa, State of Arizona, or the United States District Court for the District
of Arizona, the other party hereby agrees that it will submit and does hereby
irrevocably submit to the personal jurisdiction of such courts and will not
attempt to have such action dismissed, abated, or transferred on the ground of
forum non convenience or similar grounds; provided, however, that nothing
contained herein shall prohibit any party from seeking, by appropriate motion,
to remove any action brought in a Arizona state court to the United States
District Court for the District of Arizona. If such action is so removed,
however, neither party
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shall seek to transfer such action to any other district, nor shall either party
seek to transfer to any other district any action which the other party
originally commences in such federal court.
Maker agrees that a summons and complaint or equivalent documents
commencing an action or proceeding in any court shall be validly and properly
served and shall confer personal jurisdiction over Maker if served upon Bonn,
Luscher, Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000,
Attention: Xxxx X. Xxxxx, Esq., whom Maker hereby designates and appoints as
Maker's authorized agent to accept and acknowledge on its behalf service of any
and all process which may be served in such action or proceeding in any such
court. Maker shall be sent, by certified mail to Maker's notice address as
provided herein, a copy of such summons and complaint at the time of service
upon such agent; provided, however, that any such copy shall be sent solely as a
courtesy for Maker and its failure to receive such copy shall in no way affect
the validity and propriety of the service made on Maker through such agent.
Maker agrees that if it desires to make any change in its agent for service,
such change shall be subject to Payee's written approval, which approval shall
not be unreasonably withheld.
MAKER AND PAYEE (BY ITS ACCEPTANCE OF THIS NOTE) HEREBY WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING UNDER OR IN CONNECTION WITH
THIS NOTE OR THE OTHER TRANSACTION DOCUMENTS, THE INDEBTEDNESS EVIDENCED BY THIS
NOTE, ANY COLLATERAL OR SECURITY FOR THIS NOTE, OR ANY DEALINGS BETWEEN MAKER
AND PAYEE IN CONNECTION WITH THE TRANSACTIONS THAT ARE THE SUBJECT OF THIS NOTE
AND THE OTHER TRANSACTION DOCUMENTS, AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION
SHALL APPLY TO ANY SUCH ACTION OR PROCEEDING, WHETHER INVOLVING A CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION BASED IN CONTRACT, TORT OR OTHERWISE. EITHER PARTY MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF ANY RIGHT THEY MIGHT
OTHERWISE HAVE TO TRIAL BY JURY.
IN WITNESS WHEREOF, these presents are executed as of the date first
written above.
SOUTHHAMPTON ENTERPRISES CORP., a British
Columbia Corporation
By /s/ Xxxxxx X. Xxxxxx
Its President
MAKER
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SCHEDULE 1
Sellers
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Xxxxxx X. Xxxxxx, Xx. and Xxxx X. Xxxxxx, Trustees under the Xxxxxx X.
Xxxxxx and Xxxx Xxxxxx Revocable Trust of 1988, dated 10/4/88
Xxxxxx X. Xxxxxx as Custodian Under the Uniform Gifts to Minors Act fbo Xxx
X. Xxxxxx
Xxxxxx X. Xxxxxx as Custodian Under the Uniform Gifts to Minors Act fbo
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Xx. and Xxxx X. Xxxxxx, Trustees under the Xxxxxx X.
Xxxxxx and Xxxx Xxxxxx Revocable Trust of 1988, dated 10/4/88
E. Xxxxx Xxxxxx, Xx. Trustee, E. Xxxxx Xxxxxx, Xx. Revocable Intervivos
Trust dated December 31, 1982
Xxxxx X. Xxxxxx, Trustee under the 1989 Trust Agreement established
separate irrevocable Gift Trusts f/b/o the children of Xxxxxx and Xxxx
Xxxxxx dated March 7, 1989
Page 1 of 1
EXHIBIT A
[Provisions for adjustment of Conversion Price]
Page 2 of 1
EXHIBIT B
[Registration Rights Agreement]
Page 3 of 1
