PROMISSORY NOTE AND SECURITY AGREEMENT DATED APRIL 30, 2008
EXHIBIT 10.1
DATED APRIL 30, 2008
.
Lakewood,
Colorado
April 30,
2008
FOR
VALUE RECEIVED, V2K Window Fashions, Inc., a Colorado corporation (“Borrower”), hereby
promises to pay to the order of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ (the “Lenders”), at the
address of Lenders set forth herein, the principal amount of FIFTY THOUSAND DOLLARS
($50,000), with TWENTY-FIVE THOUSAND DOLLARS ($25,000) payable to each
Lender (the “Loan”), together with
interest. This Promissory Note (“Note”) has been
executed by Borrower on the date set forth above (the “Effective
Date”).
1. Collateral. As
security for the obligations of the Note, the Borrower pledges and grants to
Lenders a subordinate security position in Borrower’s accounts
receivable.
2. Interest. The
Loan shall bear interest from the Effective Date at the rate of two percent (2%)
over the prime rate of interest as published in the Money Rate Table of the
Western Edition of The Wall Street Journal and continuing until payment in full
of the Loan. Interest is payable by the Borrower on a quarterly basis in arrears
on the first business day of the month beginning July 1, 2008. Upon the
occurrence of an Event of Default and for so long as such Event of Default
continues, interest shall accrue on the outstanding Loan amount at the Default
Interest Rate of sixteen percent (16%).
3. Repayment.
3.1 Repayment
of this Note shall commence upon the earlier of (a) Borrower or its parent
company, V2K International, Inc., having obtained debt or equity financing of at
least $500,000; or (b) October 1, 2008.
3.2 If
repayment commences pursuant to Section 3.1(a) above, the entire amount of the
Note, shall be repaid from the proceeds of the financing within five (5)
business days of receipt of financing proceeds.
3.3 If
repayment commences pursuant to Section 3.1(b) above, then the interest rate
shall be fixed at twelve percent (12%) per annum and the Borrower shall set
aside and pay to Lenders collectively, three thousand dollars ($3,000) from the
sale of each franchise, which payments shall be applied as set forth in Section
4 below. Borrower shall remit payments to Lenders pro rata in accordance with
the outstanding principal amount owed to each Lender at least monthly, together
with a statement identifying the franchises which have been sold. Within three
(3) months after the end of Borrower’s fiscal year, Borrower shall provide each
Lender with an accounting of all payments made during the completed fiscal year
and a copy of Borrower’s audited financial statements for the most recently
completed fiscal year.
4. Application of
Payments.
4.1 Except
as otherwise expressly provided herein, payments under this Note shall be
applied (i) first to the repayment of any sums incurred by Lenders for the
payment of any expenses in enforcing the terms of this Note if an Event of
Default shall have occurred, (ii) then to the payment of the Default Interest
Rate, if applicable, (iii) then to the payment of the accrued and unpaid
interest, and (iv) then to the reduction of the Loan.
4.2 Upon
payment in full of the Loan and applicable accrued and unpaid interest thereon,
this Note shall be marked “Paid in Full” and returned to Borrower.
5. Waiver of
Notice. Borrower hereby waives diligence, notice, presentment,
protest and notice of dishonor.
6. Transfer. This
Note may be transferred by Lenders at any time, provided that such transfer
complies with applicable securities laws.
7. Events of
Default. The occurrence of any of following events (each an
“Event of
Default”), not cured in any applicable cure period, shall constitute an
Event of Default of Borrower:
7.1 The
failure to make when due any payment described in this Note whether on or after
the Maturity Date, by acceleration or otherwise; and
7.2 A
breach of any representation, warranty, covenant or other provision of this Note
which, if capable of being cured, is not cured within ten (10) business days
following notice thereof to the Borrower;
7.3 (i)
The application for the appointment of a receiver or custodian for Borrower or
the property of Borrower, (ii) the entry of an order for relief or the filing of
a petition by or against Borrower under the provisions of any bankruptcy or
insolvency law, (iii) any assignment for the benefit of creditors by or against
Borrower, or (iv) the insolvency of Borrower.
7.4 Upon
the occurrence of any Event of Default that is not cured within any applicable
cure period, if any, Lenders may elect, by written notice delivered to Borrower,
to take at any time any or all of the following actions: (i) declare this Note
to be forthwith due and payable, whereupon the entire unpaid Loan, together with
all accrued and unpaid interest thereon (including the Default Interest Rate),
and all other cash obligations hereunder, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by Borrower, anything contained herein
to the contrary notwithstanding, and (ii) exercise any and all other remedies
provided hereunder or available at law or in equity.
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8. Miscellaneous.
8.1 Successors and
Assigns. Subject to the exceptions specifically set forth in
this Note and the Loan Agreement, the terms and conditions of this Note shall
inure to the benefit of and be binding upon the respective executors,
administrators, heirs, successors and permitted assigns of the parties. This
Note (or a portion hereof) may be assigned by Lenders without the consent of
Borrower.
8.2 Loss or Mutilation of
Note. Upon receipt by Borrower of evidence satisfactory to
Borrower of the loss, theft, destruction or mutilation of this Note, together
with indemnity reasonably satisfactory to Borrower, Borrower shall execute and
deliver to Lenders a new promissory note of like tenor and denomination as this
Note.
8.3 Notices. Any
notice, demand, offer, request or other communication required or permitted to
be given pursuant to the terms of this Note shall be in writing and shall be
deemed effectively given the earlier of (i) when received, (ii) when delivered
personally, (iii) one business day after being delivered by facsimile (with
receipt of appropriate confirmation), or (iv) one business day after being
deposited with an overnight courier service, and addressed to the recipient at
the addresses set forth below unless another address is provided to the other
party in writing.
If to Borrower,
to:
V2K
Window Fashions, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇
▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Lenders,
to:
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▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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▇. ▇▇▇▇▇
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8.4 Governing
Law. This Note shall be governed in all respects by the laws
of the State of Colorado as applied to agreements entered into and performed
entirely within the State of Colorado by residents thereof, without regard to
any provisions thereof relating to conflicts of laws among different
jurisdictions.
8.5 Waiver and
Amendment. Any term of this Note may be amended, waived or
modified only with the written consent of Borrower and Lenders.
8.6 Remedies; Costs of
Collection; Attorneys’ Fees. No delay or omission by Lenders
in exercising any of its rights, remedies, powers or privileges hereunder or at
law or in equity and no course of dealing between Lender and the undersigned or
any other person shall be deemed a waiver by Lenders of any such rights,
remedies, powers or privileges, even if such delay or omission is continuous or
repeated, nor shall any single
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or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise thereof by Lenders or the exercise of any other right, remedy,
power or privilege by Lenders. The rights and remedies of Lenders described
herein shall be cumulative and not restrictive of any other rights or remedies
available under any other instrument, at law or in equity. If an Event of
Default occurs, Borrower agrees to pay, in addition to the Loan and interest
payable thereon, reasonable attorneys’ fees and any other reasonable costs
incurred by Lenders in connection with its pursuit of its remedies under this
Note.
IN
WITNESS WHEREOF, Borrower has caused this Note to be signed on the Effective
Date.
| BORROWER: | |||
| V2K WINDOW FASHIONS, INC. | |||
|
Date
|
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Financial Officer | |||
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