SECURED PURCHASE NOTE
Exhibit 10.3
This Secured Purchase Note (the “Purchase Note”) is executed April 30, 2010, by and between Hotel Management Systems, Inc., a Nevada corporation, (the “Company”) and Lionshare Ventures, LLC (the “Investor”).
All capitalized terms not otherwise defined herein shall have the same meaning ascribed to them in the Subscription Agreement dated of even date herewith.
RECITALS:
WHEREAS, the Company has authorized the sale and issuance of a note, a warrant and common stock issuable upon full or partial satisfaction of a Note or exercise of the warrant (collectively, the HMSM Debenture, the Warrant and the Underlying Shares shall be referred to as the “Securities”) in exchange for a loan by the Investor to the Company of One Million Five Hundred Thousand Dollars ($1,500,000) (the “Loan Amount”);
WHEREAS, certain investors have invested $500,000 and the Investor has paid $250,000 in cash and issued to the Company two (2) secured notes, as follows: (i) one (1) note for $250,000 due upon the expiration of ninety (90) days from the date hereof; and (ii) one (1) note for $500,000 due upon the expiration of one hundred eighty (180) days from the date hereof;
WHEREAS, at the Closing, the Company desires to sell, and the Investor desires to purchase the Securities upon the terms and conditions stated in this Subscription Agreement; and
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. The Note
(a) Amount. This Purchase Note shall be in the amount of $500,000 (the “Loan”), which the Investor shall deliver to the Company at the Closing.
(b) Interest. The Loan shall not bear interest.
(c) Maturity Date. This Purchase Note shall be due and payable in full and in cash on the date that is one hundred eighty (180) days from the date hereof or October 30, 2010 (the “Maturity Date”). The Investor shall be required to pay the full amount of the Loan in cash on the Maturity Date.
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(d) Recourse. The Company shall have full recourse against the Investor in the event that this Note is not paid when due.
2. Security Interest. The payment obligation of this Note is secured by Notes in the amount of $166,000 and 1,334,000 Warrants issued to the Investor under the Subscription Agreement for the original $250,000 that was invested by the Investor. In the event that this Purchase Note is not paid in full by the Maturity Date, then: (i) the 1,334,000 Warrants shall be forfeited back to the Company and cancelled; and (ii) with respect to $84,000 of the Notes, (a) the Conversion Price shall be increased to $0.16 per share and (b) Section 2.1(c) shall be of no further force or effect.
4. Investor’s Representations and Warranties. Investor warrants and represents as follows (and acknowledges that all of these warranties and representations are material): (a) The matters contained in this Purchase Note were true and complete in all material respects as of the date of filing and remain true and complete as of the date hereof; (b) Investor is authorized and legally and validly permitted to participate in this transaction; (c) Investor has the authority to enter into this Purchase Note; and (d) all representations and warranties made in this Purchase Note shall survive for a period of six (6) months following the Maturity Date.
5. Event of Default. In addition to any other “Events of Default” set forth elsewhere in this Purchase Note, the following shall constitute Events of Default under this Purchase Note: (a) any representation or warranty of the Investor is not accurate; (b) Investor fails to satisfy its obligation under this Purchase Note on or before the Maturity Date; or (c) Investor files or has filed against Investor any bankruptcy proceeding. If an Event of Default occurs hereunder, the Investor will be responsible for all costs incurred by the company in collection of this note, including reasonable legal fees, which costs will constitute part of the obligations of the Investor hereunder. This note constitutes one of a series of 11 notes issued by the Investor to the Company on the date hereof. An Event of Default occurring under one of such notes shall constitute an Event of Default under all of such notes.
6. Remedies. Upon the occurrence of an Event of Default pursuant to this Purchase Note, the Company may, at its sole and exclusive option, do any or all of the following, either concurrently or separately: (a) accelerate the maturity of this Purchase Note and demand immediate payment in full, whereupon the outstanding principal amount of the Purchase Note and all obligations of Company to Investor hereunder, together with accrued interest thereon and accrued charges and costs, including costs incurred by the Company with respect to the collection of this Purchase Note (including reasonable legal fees), if any, shall become immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived; (b) exercise all legally available rights and privileges; and (c) take appropriate recourse on the collateral.
7. Miscellaneous.
(a) As used in this Purchase Note, “Investor” shall mean all persons signing this Purchase Note and borrowing money from Company or any of its successors or assigns. The word “including” means “including (but not limited to)” unless specifically stated to the contrary.
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(b) Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Purchase Note shall be governed by, and construed in accordance with, the internal laws of the State of New York, without reference to the choice of law provisions thereof. The Company and, by accepting this Purchase Note, the Investor, each irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in the Southern District of New York and any United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Purchase Note and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Purchase Note. The Company and, by accepting this Purchase Note, the Investor, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company and, by accepting this Purchase Note, the Investor, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
(c) All notices required under this Purchase Note shall be in writing and addressed to Investor at 000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000 and to Company at c/o TouchIT Technologies, Attn: Xxxxxx Xxxxxx, 00 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000. Notice shall be mailed by certified mail, return receipt requested, postage properly prepaid, or hand delivered. Notice shall be deemed given, received, and effective 3 days from the date of mailing or on the date of delivery. Either party may change the address for notice by giving the other party notice of the new address in compliance with this section.
(d) This Purchase Note contains the entire agreement between the parties relating to the subject matter of this Purchase Note.
(e) This Purchase Note will inure to the benefit of and be binding upon the parties and their successors, representatives, and assigns.
(f) Investor agrees to perform any and all further acts and to execute and deliver any and all additional documents which may be reasonably necessary to carry out the terms of this Purchase Note or correctly set forth the terms of this Purchase Note.
(g) Investor may assign any right, benefit, or obligation of Investor under this Purchase Note without Company’s prior written approval.
(h) Neither party is an agent or representative of the other. Investor is solely responsible for procuring and providing all personnel, facilities, materials, and services necessary to perform Investor’s obligations under this Purchase Note. Nothing in this Purchase Note shall be construed to create a partnership or joint venture between the Investor and Company, and Investor acknowledges and agrees that the sole relationship of the parties is that of Investor and Company.
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[SIGNATURE PAGE TO LIONSHARE 90 DAY NOTE]
IN WITNESS WHEREOF, the parties have executed this Purchase Note on the above date.
INVESTOR:
LIONSHARE VENTURES, LLC
Name:_________________________________
Xxxxxxxxxxx Xxxxxxxx, Managing Partner
COMPANY:
By:____________________________________
Andi Brabin
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