SECURED PROMISSORY NOTE
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$4,000,000 JANUARY ___, 2003
SECTION 1. PAYMENT OF NOTE.
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FOR VALUE RECEIVED, E MERCHANT PROCESSING, INCORPORATED (the "Borrower"), a
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Colorado corporation, hereby promises to pay to the order of IIG CAPITAL LLC as
agent for IIG TRADE OPPORTUNITIES FUND N.V. or its successors or assigns (the
"Lender"), at its offices at 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
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10004, the principal sum of FOUR MILLION DOLLARS ($4,000,000), or such lesser
amount as may be advanced and outstanding hereunder, together with interest on
the outstanding principal balance from day to day remaining under this Secured
Promissory Note (this "Note") on the dates and in the amounts provided herein,
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until the amounts advanced hereunder plus interest shall be paid in full.
Amounts payable hereunder shall be payable to the Lender without set-off or
counterclaim by wire transfer of immediately available funds, in lawful money of
the United States of America, to the bank account of the Lender as provided by
the Lender in writing to the Borrower.
SECTION 2. PAYMENTS; INTEREST.
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(a) INTEREST RATE. The principal amount outstanding from time to time
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hereunder shall bear interest at a rate equal to 19% per annum, calculated daily
on the basis of a 360-day year and the actual number of days elapsed.
(b) PAYMENTS. The accrued interest on this Note shall be due and payable
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on the first day of each calendar month, beginning with February 1, 2003. The
outstanding principal on this Note shall be due and payable on the first day of
the months and in the amounts set forth in the following table:
PAYMENT DATE(S) PAYMENT AMOUNT
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Each of June 1, 2003 and July 1, 2003 $ 50,000
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Each of August 1, 2003, September 1, 2003 and $ 100,000
October 1, 2003
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Each of November 1, 2003 and December 1, 2003 $ 250,000
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January 1, 2004 $ 1,000,000
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Each of February 1, 2004 and March 1, 2004 $ 550,000
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April 1, 2004 $ 1,000,000
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In addition, all accrued and unpaid interest shall be due and payable on April
1, 2004 (the "Maturity Date").
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(c) Default Interest. If this Note is not paid in full on the Maturity
Date or if any payment required under this Note is not made on the date that
such payment is required or if any other Event of Default has occurred and is
continuing, default interest shall be payable on the unpaid
Secured Promissory Note -- Page 1
amount hereof at the rate of 21% per annum. All default interest on this Note
shall be calculated on the basis of a 360 day year, and the actual number of
days elapsed.
(d) Limitation on Interest. Notwithstanding anything herein to the
contrary, the interest (including default interest) payable by the Borrower with
respect to this Note shall not exceed the maximum amount permitted by applicable
law.
SECTION 3. CONDITIONS TO LOANS.
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Loans will not be made by the Lender to the Borrower under this Note prior
to the receipt by the Lender of all of the following, all in form and substance
satisfactory to the Lender:
(a) RESOLUTIONS. Duly adopted resolutions of the Board of Directors of
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each of the Borrower and the Parent which authorize the execution, delivery and
performance of the Loan Documents to which it is or is to be party;
(b) CERTIFICATE OF INCUMBENCY. A certificate of incumbency certified by
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the Secretary of each of the Borrower and the Parent certifying as to the name
of each officer (or other representative) who is authorized to sign the Loan
Documents to which it is or is to be a party, together with specimen signatures
of each such officer or other representative;
(c) ARTICLES OF INCORPORATION. The articles or certificate of
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incorporation of each of the Borrower and the Parent certified by the Secretary
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of State of the state of incorporation of such entity and dated as of a current
date;
(d) BYLAWS. The bylaws of each of the Borrower and the Parent certified by
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the Secretary or Manager of such entity;
(e) GOOD STANDING CERTIFICATES. Certificates of appropriate officials
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as to the existence and good standing of the Borrower in its jurisdiction of
incorporation and in all jurisdictions in which it is required qualify to do
business as a foreign corporation, all dated as of a current date;
(f) LIEN SEARCHES. Lien searches in the name of the Borrower (and in all
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names under which any of them has done business within the last five years) in
each jurisdiction where the Borrower maintains an office or has property,
showing no financing statements or other lien instruments of record affecting
the License Agreement or the Mexican Bond;
(h) ASSIGNMENT, PARENT GUARANTY AND LICENSEE AGREEMENT. Execution and
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delivery of (i) the Assignment by the Borrower and any additional documents or
instruments necessary for the Lender's perfection of the liens created thereby,
(ii) the Parent Guaranty by the Parent, and (iii) an agreement, in form and
substance satisfactory to the Lender, from the Licensee to make payments owing
under the License Agreement directly to the Lender for as long as any amount is
owing under this Note;
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(i) MEXICAN BOND. Delivery of the original Mexican Bond, accompanied by
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all required endorsements thereto executed in blank, and all assignment or other
documents required by the Lender in connection with the Mexican Bond; and
(j) PAYMENT OF FEES AND EXPENSES. Evidence of payment of all fees, costs
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and expenses of or incurred by the Lender and/or its legal counsel.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
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The Borrower represents and warrants to the Lender that:
(a) ORGANIZATION; POWER AND AUTHORITY. The Borrower is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Colorado, and is duly qualified as a foreign corporation and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Borrower has the corporate power and
authority to own or hold under lease the properties it purports to own or hold
under lease, to transact the business it transacts and proposes to transact, to
execute and deliver this Note and to perform the provisions hereof and of the
other Loan Documents to which it is a party.
(b) AUTHORIZATION, ETC. This Note and the other Loan Documents have been
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duly authorized by all necessary corporate action on the part of the Borrower,
and this Note and the other Loan Documents constitute the legal, valid and
binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms, subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The execution, delivery
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and performance by the Borrower of this Note and the other Loan Documents will
not (i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any lien or other encumbrance in respect of any
property of the Borrower or any subsidiary under, any indenture, mortgage, deed
of trust, loan, credit agreement, corporate charter or by-laws, or any other
material agreement, lease or instrument to which the Borrower or any subsidiary
is a party or by which the Borrower or any subsidiary or any of their respective
properties may be bound or affected, (ii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or governmental authority applicable to the
Borrower or any subsidiary or (iii) violate any provision of any statute or
other rule or regulation of any governmental authority applicable to the
Borrower or any subsidiary, which violation would reasonably be expected to have
a Material Adverse Effect.
(d) GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
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authorization of, or registration, filing or declaration with, any governmental
authority is required in connection with the
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execution, delivery or performance by the Borrower of this Note or any of the
other Loan Documents to which it is a party.
(e) LITIGATION; OBSERVANCE OF STATUTES AND ORDERS. (i) There are no
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actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any subsidiary or any property
of the Borrower or any subsidiary in any court or before any arbitrator of any
kind or before or by any governmental authority that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
(ii) Neither the Borrower nor any subsidiary is in default under any
order, judgment, decree or ruling of any court, arbitrator or governmental
authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation environmental laws) of any governmental
authority, which default or violation, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
(f) TAXES. The Borrower and its subsidiaries have filed all income tax
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returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments payable by them, to the extent such taxes and assessments have
become due and payable and before they have become delinquent, except for any
taxes and assessments (i) the amount of which, or the failure to file with
respect to which, is not individually or in the aggregate material or (ii) the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which the Borrower or a
subsidiary, as the case may be, has established adequate reserves in accordance
with generally accepted accounting principles.
(g) TITLE TO PROPERTY; LEASES. The Borrower and its subsidiaries have
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good title to their respective properties, in each case free and clear of liens,
except for (i) liens in favor of the Lender, and (ii) those defects in title and
liens that, individually or in the aggregate, would not have a Material Adverse
Effect. All material leases are valid and subsisting and are in full force and
effect in all material respects except to the extent that the failure to be so
would not, individually or in the aggregate, have a Material Adverse Effect.
(h) LICENSES, PERMITS, ETC. The Borrower and its subsidiaries own or
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possess all licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto, that are material,
without conflict with the rights of others, except for those conflicts that,
individually or in the aggregate, would not have a Material Adverse Effect.
(i) PRIVATE OFFERING BY THE BORROWER. Neither the Borrower nor anyone
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acting on its behalf has taken, or will take, any action that would subject the
issuance or sale of this Note to the registration requirements of Section 5 of
the Securities Act of 1933, as amended.
(j) EXISTING INDEBTEDNESS. Neither the Borrower nor any subsidiary is in
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default, and no waiver of default is currently in effect, in the payment of any
principal of or interest on any Indebtedness of the Borrower or such subsidiary
and no event or condition exists with respect to any such Indebtedness of the
Borrower or any subsidiary that would (i) permit (or that with notice or the
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lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment or (ii) prevent the Borrower or any
subsidiary from prepaying any such Indebtedness without prepayment penalty or
premium.
SECTION 5. COVENANTS.
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In addition to the other undertakings herein contained, the Borrower hereby
covenants to the Lender that so long as any amount payable hereunder is
outstanding the Borrower shall perform the following obligations:
(a) OTHER AGREEMENTS. The Borrower shall perform and shall cause its
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subsidiaries to perform all of its and their respective obligations as and when
required pursuant and with respect to (i) all Indebtedness of the Borrower or
such subsidiary outstanding from time to time, (ii) the License Agreement, and
(iii) all other material contracts and agreements.
(b) INFORMATION. The Borrower shall furnish to the Lender:
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(i) promptly, such financial and other information as the Lender may
from time to time reasonably request;
(ii) promptly, any financial and other information provided to any
Person that has provided any Indebtedness to the Borrower or any of its
subsidiaries; and
(iii) promptly, any financial and other information provided to the
shareholders or members of the Borrower.
(c) COMPLIANCE WITH LAW. The Borrower will and will cause each of its
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subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
environmental laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(d) INSURANCE. The Borrower will and will cause each of its subsidiaries
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to maintain, with financially sound and reputable insurers, insurance with
respect to their respective properties and businesses against such casualties
and contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
Secured Promissory Note -- Page 5
(e) MAINTENANCE OF PROPERTIES. The Borrower will and will cause each of
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its subsidiaries to maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection therewith
may be properly conducted at all times, provided that this Section shall not
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prevent the Borrower or any subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Borrower has concluded that such discontinuance
would not, individually or in the aggregate, have a Material Adverse Effect.
(f) PAYMENT OF TAXES. The Borrower will and will cause each of its
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subsidiaries to file all income tax or similar tax returns required to be filed
in any jurisdiction and to pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments, governmental charges,
or levies payable by any of them, to the extent such taxes and assessments have
become due and payable and before they have become delinquent, provided that
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neither the Borrower nor any subsidiary need pay any such tax or assessment if
(i) the amount, applicability or validity thereof is contested by the Borrower
or such subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Borrower or a subsidiary of the Borrower has established
adequate reserves therefor in accordance with generally accepted accounting
principles on the books of the Borrower or such subsidiary or (ii) the
nonpayment of all such taxes and assessments in the aggregate would not
reasonably be expected to have a Material Adverse Effect.
(g) CORPORATE EXISTENCE, ETC. The Borrower will at all times preserve and
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keep in full force and effect its corporate existence. The Borrower will at all
times preserve and keep in full force and effect the corporate existence of each
of its subsidiaries (unless merged or consolidated into the Borrower or a
subsidiary of the Borrower) and all rights and franchises of the Borrower and
its subsidiaries unless, in the good faith judgment of the Borrower, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise would not, individually or in the
aggregate, have a Material Adverse Effect.
(h) MERGER, CONSOLIDATION, ETC. The Borrower shall not consolidate with
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or merge with any other corporation or convey, transfer or lease all or
substantially all of its assets in a single transaction or series of
transactions to any Person.
(i) DISPOSITION OF PROPERTY. The Borrower shall not, and shall not permit
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any subsidiary of the Borrower to, sell, lease, assign, transfer or otherwise
dispose of its or their property or assets, except for (i) dispositions of
inventory in the ordinary course of business and (ii) dispositions of minor or
immaterial amounts of property or assets no longer used in the ordinary course
of business.
(j) TRANSACTIONS WITH AFFILIATES. The Borrower shall not, and shall not
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permit any subsidiary of the Borrower to, enter into any transaction, including,
without limitation, the purchase, sale or exchange of property or assets, or the
rendering of any service, with any affiliate of the Borrower or such subsidiary,
except in the ordinary course of and pursuant to the reasonable requirements of
the Borrower's or such subsidiary's business and upon fair and reasonable terms
no less favorable to the Borrower or such subsidiary than would be obtained in a
comparable arms-length transaction with a Person not an affiliate of the
Borrower or such subsidiary.
Secured Promissory Note -- Page 6
(k) INSPECTION. The Borrower shall permit the representatives of the
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Lender, at the expense of the Borrower, to visit and inspect any of the offices
or properties of the Borrower or any subsidiary, to examine all their respective
books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants (and by this
provision the Borrower authorizes said accountants to discuss the affairs,
finances and accounts of the Borrower and its subsidiaries), all at such times
and as often as may be requested upon reasonable notice during normal business
hours.
(l) INDEBTEDNESS. The Borrower shall not, and shall not permit any
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subsidiary of the Borrower to, incur, create, assume or permit to exist any
Indebtedness, except Debt to the Lender pursuant to the Loan Documents.
(m) LIENS. The Borrower shall not, and shall not permit any subsidiary of
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the Borrower to, incur, create, assume or permit to exist any lien upon any of
its property (other than liens upon real property of the Borrower or any
subsidiary of the Borrower) or revenues, whether now owned or hereafter
acquired, except liens in favor of the Lender securing the Debt pursuant to the
Loan Documents.
(n) RESTRICTED PAYMENTS. The Borrower shall not, and shall not permit any
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subsidiary of the Borrower to, directly or indirectly declare, order, pay, make
or set apart any sum for (i) any dividend or other distribution, direct or
indirect, on account of any shares of any class of stock of the Borrower or any
of its subsidiaries now or hereafter outstanding, (ii) any redemption,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock of the Borrower or any of its subsidiaries now or hereafter outstanding,
(iii) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock of the
Borrower or any of its subsidiaries now or hereafter outstanding, or (iv) any
purchase, redemption or payment of or with respect to any Indebtedness (other
than the Debt), whether in the form of principal, interest, premium or
otherwise.
(o) PROCEEDS OF LICENSE AGREEMENT. The Borrower shall cause the Licensee
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under the License Agreement to make all payments required to be made to the
Borrower under the License Agreement to be made directly to the Lender. The
Lender shall apply all payments made by the Licensee to the Lender under the
License Agreement to be applied to the Debt until such time as the Debt has been
indefeasibly paid in full, at which time the Lender shall return any remaining
amounts to the Borrower.
(q) FURTHER DOCUMENTS. The Borrower shall execute all such other
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documents and instruments and do all such other acts and things as the Lender
may from time to time reasonably require to carry out the transactions
contemplated herein.
SECTION 6. EVENTS OF DEFAULT.
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Secured Promissory Note -- Page 7
Except upon the occurrence of an event under (e) or (f) below, whereupon
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this Note shall become immediately due and payable without notice or declaration
by the Lender, the Lender may, by written notice to the Borrower, declare this
Note immediately due and payable, whereupon this Note and all sums due hereunder
shall become immediately due and payable without protest, presentment, demand or
notice (except the notice referred to above in this Section 6) or without
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petition to any court, all of which are expressly waived by the Borrower, if any
of the following events (each an "Event of Default") shall occur:
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(a) principal or interest due under this Note shall not be paid as and
when due, whether at maturity, by declaration or otherwise; or
(b) any representation by the Borrower herein shall prove to be false or
incorrect in any material respect as of the date made; or
(c) the Borrower shall default in any material respect in the due
performance of any term or covenant of this Note (which is not the subject of
another subsection of this Section 6) which default, if remediable, shall
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continue unremedied for a period of five (5) days after the earlier of (i) the
day an officer of the Borrower obtains actual knowledge of such default, and
(ii) the day the Lender gives written notice of such default to the Borrower; or
(d) (i) the Borrower or any subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness that is outstanding in an
aggregate principal amount of at least $50,000 beyond any period of grace
provided with respect thereto, or (ii) the Borrower or any subsidiary is in
default in the performance of or compliance with any term of any Indebtedness in
an aggregate outstanding principal amount of at least $50,000 or of any
mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Indebtedness has
become, or has been declared, due and payable before its stated maturity or
before its regularly scheduled dates of payment; or
(e) the Borrower or any subsidiary shall (i) apply for or consent to the
appointment of a receiver, trustee or liquidator for itself or any of its assets
or properties, (ii) admit in writing its inability to pay its debts as they
mature, (iii) make a general assignment for the benefit of creditors, (iv) be
adjudicated a bankrupt or insolvent, (v) file a voluntary petition in
bankruptcy, or a petition or an answer seeking reorganization or an arrangement
with creditors or to take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law or statute, or
any answer admitting the material allegations of a petition filed against it in
any proceeding under any such law or if action shall be taken by the Borrower or
such subsidiary for the purpose of effecting any of the foregoing, (vi) have
commenced against it any case, proceeding or other action of a nature described
in (i) through (v) above which results in the entry of an order for relief, or
which remains undismissed for a period of 60 days or (vii) take or be subject to
any action similar to those specified in clauses (i) through (vi) in any
jurisdiction; or
(f) an order, judgment or decree shall be entered, without the
application, approval or consent of the Borrower or any subsidiary, with respect
to the Borrower or such subsidiary or all or a
Secured Promissory Note -- Page 8
substantial part of the assets of the Borrower or any such subsidiary,
appointing a receiver, trustee or liquidator of the Borrower or such subsidiary,
or any similar order, judgment or decree shall be entered or appointment made in
any jurisdiction, and such order, judgment or decree or appointment shall
continue unstayed and in effect for a period of 60 days; or
(g) a final judgment or judgments for the payment of money aggregating in
excess of $25,000 are rendered against one or more of the Borrower and its
subsidiaries and which judgments are not, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within 60
days after the expiration of such stay; or
(h) the Lender in good xxxxx xxxxx itself insecure; or
(i) the occurrence of any event or condition which constitutes a Material
Adverse Effect.
SECTION 7. APPLICATION OF PAYMENTS.
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This Note may be prepaid, in whole or in part, without premium or penalty.
All prepayments shall be applied, first, to the payment of accrued interest on
this Note to the date of such payment and second, to the payment of the
principal amount of this Note. Each payment received by the Lender following
the Maturity Date shall be applied, first, to the payment of accrued default
interest on this Note to the date of such payment and second, to the payment of
the principal amount of this Note.
SECTION 8. SECURITY.
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To secure the full and complete payment and performance of the Debt of the
Borrower under this Note, the Borrower will assign to Lender all of its right,
title and interest in and to the following property, whether now owned or
hereafter acquired, pursuant to the Assignment and such other agreemetns,
instrument or other documetns as are required by Lender:
(a) all of the Borrower's right, title and interest in and to the Mexico
Bond and the License Agreement; and
(b) all proceeds of the same.
SECTION 9. ADDITIONAL DEFINITIONS.
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As used herein, the following terms have the respective meanings set forth
below:
"Business Day" means, for the purposes of this Note, any day other than a
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Saturday, a Sunday or a day on which commercial banks in New York City are
required or authorized to be closed.
"Capital Leases" means, at any time, a lease with respect to which the
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lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with generally accepted accounting
principles.
Secured Promissory Note -- Page 9
"Assignment" means the Assignment of License Agreement dated of even date
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herewith between the Borrower and the Lender, pursuant to which the Borrower
grants to the Lender an assignment of Xxxxxxxx's right, title and interest in
and to the License Agreement.
"Debt" means collectively the unpaid principal of and interest on
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(including, without limitation, default interest accruing after the maturity
date of this Note and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) this Note and all other
indebtedness of the Borrower in respect hereof, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
incurred, in each case whether on account of principal, premium, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise.
"Default" means an event or condition the occurrence or existence of which
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would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"Guaranty" means, with respect to any Person, any obligation (except the
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endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Indebtedness" with respect to any Person, means, on any date of
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determination (without duplication):
Secured Promissory Note -- Page 10
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business consistent with past practice);
(c) all liabilities appearing on its balance sheet in accordance with
generally accepted accounting principles in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any lien with
respect to any property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks and
other financial institutions (whether or not representing obligations for
borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof.
"License Agreement" means the License Agreement dated January ___, 2003
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between the Borrower and the Licensee, in form and substance satisfactory to the
Lender.
"Licensee" means Divisas Mexicanas, S.A. de C.V., a Mexican company, and
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includes any successor or assign to such entity's right and obligations under
the License Agreement.
"Loan Documents" means this Note, the Assignment, the Parent Guaranty and
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all other agreements, documents, instruments and certificates now or hereafter
executed and/or delivered pursuant to or in connection with any of the
foregoing, and all amendments, modifications, supplements, renewals, extensions
or restatements thereof.
"Material Adverse Effect" means a material adverse effect on (i) the
-------------------------
business, operations, financial condition, assets, properties or prospects of
the Borrower individually or of the Borrower and its subsidiaries taken as a
whole, or (ii) the ability of the Borrower to perform its obligations under this
Note or any of the Loan Documents, or (iii) the validity or enforceability of
this Note or any of the Loan Documents.
"Mexico Bond" means the Bond dated January ___, 2003 made by Afianzadora
------------
Sofimex S.A. payable to the Borrower in an aggregate amount of U.S.$4,900,000,
in form and substance satisfactory to the Lender.
"Parent" means EGX Funds Transfer, Inc., a Delaware corporation.
------
Secured Promissory Note -- Page 11
"Parent Guaranty" means a guaranty agreement in form and substance
----------------
satisfactory to the Lender, pursuant to which the Parent Guaranties payment and
performance of the Borrower's Debt to the Lender.
"Person" means an individual, partnership, corporation, limited liability
------
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"subsidiary" means, as to any Person, any corporation, association or other
----------
business entity in which such Person or one or more of its subsidiaries or such
Person and one or more of its subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its subsidiaries or such Person and one or more of its
subsidiaries. Unless the context otherwise clearly requires, any reference to a
"subsidiary" is a reference to a subsidiary of the Borrower.
"Swaps" means, with respect to any Person, payment obligations with respect
-----
to interest rate swaps, currency swaps and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. For the purposes of this Note, the amount of the obligation under
any Swap shall be the amount determined in respect thereof as of the end of the
then most recently ended fiscal quarter of such Person, based on the assumption
that such Swap had terminated at the end of such fiscal quarter, and in making
such determination, if any agreement relating to such Swap provides for the
netting of amounts payable by and to such Person thereunder or if any such
agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall be the net
amount so determined.
SECTION 10. MAXIMUM RATE.
-------------
It is the intention of the Borrower and the Lender to conform strictly to
any usury laws in force that apply to this transaction. Accordingly, all
agreements among the parties hereto whether previously existing, now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of acceleration of the maturity of the amounts
owing under this Note or otherwise, shall the interest (and all other sums that
are deemed to be interest) contracted for, charged or received by the Lender
with respect to this Note, exceed the Highest Lawful Rate. The "Highest Lawful
--------------
Rate" means the maximum nonusurious interest rate that at any time or from time
----
to time may be contracted for, taken, reserved, charged or received under the
laws of the United States and the laws of such states as may be applicable
thereto which are presently in effect or, to the extent allowed under such
applicable laws of the United States and the laws of such states, which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws now allow. If, from any circumstance whatsoever,
interest under any agreement to which the Borrower and the Lender are parties
would otherwise be payable in excess of the Highest Lawful Rate, and if from any
circumstance the Lender shall ever receive anything of value deemed interest by
applicable law in excess of the Highest Lawful Rate, then the Lender's receipt
of such excess interest shall be deemed a mistake and the same shall, so long as
no Event of Default
Secured Promissory Note -- Page 12
under this Note, the Parent Guaranty or the Assignment shall be continuing, at
the option of the Borrower, either be repaid to the Borrower or credited to the
unpaid principal; provided, however, that if an Event of Default shall have
-------- -------
occurred and be continuing, and the Lender shall receive excess interest during
such period, then the Lender shall have the option of either crediting such
excess amount to principal or refunding such excess amount to the Borrower. All
interest paid or agreed to be paid to the Lender shall, to the extent allowed by
applicable law, be amortized, prorated, allocated, and spread throughout the
full period of the Lender's credit relationship with the Borrower until payment
in full of the principal (including the period of any renewal or extension) so
that the interest for such full period shall not exceed the Highest Lawful Rate.
SECTION 11. ASSIGNMENT, ETC.
-----------------
This Note shall be binding upon each of the Borrower, the Lender and
their respective successors and assigns; provided, however, the Borrower may not
-------- -------
assign this Note without the prior written consent of the Lender. The Lender
may sell, assign or transfer this Note without any requirement of consent by the
Borrower.
SECTION 12. INDEMNIFICATION.
---------------
The Borrower shall pay, indemnify, and hold the Lender harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys' fees and
expenses) or disbursements of any kind or nature whatsoever ("Losses") arising
------
out of or in connection with (a) the enforcement of any rights of the Lender
under this Note or any of the other Loan Documents, and (b) any claim (whether
or not asserted in any legal proceeding), litigation, investigation, arbitration
or proceeding relating to this Note (collectively, "indemnified liabilities");
-----------------------
provided that the Borrower shall have no obligation hereunder to the Lender with
--------
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of the Lender. The agreements in this Section 12 shall survive the
----------
repayment of this Note, the repayment of all other amounts payable hereunder and
the termination of the Loan Documents.
SECTION 13. NO WAIVER, CUMULATIVE REMEDIES.
---------------------------------
The Lender shall not by any act (except by a written instrument signed
by the Lender), delay, indulgence, omission or otherwise be deemed to have
waived any right or remedy hereunder or to have acquiesced in any Event of
Default or in any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Lender
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
Secured Promissory Note -- Page 13
SECTION 14. WAIVER OF PROTEST, PRESENTMENT, ETC.
----------------------------------------
The Borrower hereby waives protest, presentment, notice of dishonor
and notice of acceleration of maturity and agrees to continue to remain bound
for the payment of principal, interest and all other sums due under this Note
notwithstanding any change or changes by way of release, surrender, exchange,
modification or substitution of any security for this Note or by way of any
extension or extensions of time for the payment of principal and interest.
SECTION 15. EXPENSES.
--------
The Borrower agrees to pay or reimburse, or cause to be paid or
reimbursed, all of its and the Lender's costs and expenses incurred in
connection with the preparation, execution, and delivery of this Note and the
other Loan Documents, including, without limitation, the fees and disbursements
of their respective counsel.
SECTION 16. NOTICE.
------
All notices, demands and other communications provided for or
permitted hereunder shall be made in writing and shall be sent by registered or
certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
a. if to the Borrower:
E Merchant Processing, Incorporated
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
b. if to the Lender:
IIG Trade Opportunities Fund N.V.
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; when delivered by courier, if
delivered by commercial overnight courier service; five Business Days after
being deposited in the mail, post prepaid, if mailed; and when receipt is
acknowledged, if telecopied. The Borrower or the Lender may change the address
to which notices, demands and other communications hereunder are to be delivered
by giving the other party notice in the manner herein set forth.
Secured Promissory Note -- Page 14
SECTION 17. GOVERNING LAW.
--------------
THIS NOTE AND THE LEGAL RELATIONS BETWEEN THE BORROWER AND THE HOLDER SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK.
SECTION 4. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
----------------------------------------------------
Any legal action, suit or proceeding arising out of or relating to this
Note, the other Loan Documents or the agreements and transactions contemplated
hereby or thereby may be instituted only in a state or federal court of the
State of New York located in New York County and the Borrower agrees not to
assert, by way of motion, as a defense or otherwise, in any such action, suit or
proceeding, any claim that it is not subject personally to the jurisdiction of
such court, that its property is exempt or immune from attachment or execution,
that the action, suit or proceeding is brought in an inconvenient forum, that
the venue of the action, suit or proceeding is improper or that this Note, the
agreements contemplated hereby or the subject matter hereof or thereof may not
be enforced in or by such court. The Borrower further irrevocably submits to the
jurisdiction of any such court in any such action, suit or proceeding. Any and
all service of process and any other notice in any such action, suit or
proceeding shall be effective against the Borrower if given by registered or
certified mail, return receipt requested, or by any other means of mail that
requires a signed receipt, postage prepaid, mailed to the Borrower as herein
provided.
SECTION 19. WAIVER OF JURY TRIAL.
-----------------------
THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY
AGREEMENT OR TRANSACTIONS CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM IN
CONNECTION HEREWITH.
[Remainder of page intentionally left blank.]
Secured Promissory Note -- Page 15
EXECUTED AS OF THE DATE FIRST WRITTEN ABOVE.
E MERCHANT PROCESSING,
INCORPORATED
By:
--------------------------------
Name:
Title:
AGREED TO AND ACCEPTED:
IIG CAPITAL LLC, AS AGENT FOR IIG TRADE
OPPORTUNITIES FUND N.V.
By:
-------------------------------------
Name:
Title:
Secured Promissory Note -- Page 16
