EXHIBIT 10.1
NOTE PURCHASE AGREEMENT
By and Between
[Investor]
as the Purchaser
and
▇▇▇▇▇▇.▇▇▇, Inc.
as the Company
Dated:
As of February 11, 2003
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THIS NOTE PURCHASE AGREEMENT (this "Agreement"), is made as of February
11, 2003 by and between ▇▇▇▇▇▇.▇▇▇, Inc. a Delaware corporation (the "Company")
and [Investor], (the "Purchaser").
RECITALS
A. The Purchaser desires to purchase from the Company, and the Company
desires to issue to the Purchaser, or its designee, a note in the aggregate
principal amount of $XXX,XXX (the "Note") which is part of a series of notes in
the aggregate principal amount $2,000,000 (the "Notes");
B. The Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act"); and
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering an Intercreditors Agreement
referred to in Section 5(a) below (the "Intercreditors Agreement"). This
Agreement, the Intercreditors Agreement and the Note are sometimes hereinafter
collectively referred to as the "Transaction Documents."
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties, the Company and the Purchaser
hereby agree as follows:
ISSUANCE SALE AND DELIVERY OF SECURITIES.
Issuance of the Note. Subject to the terms and conditions set forth in
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this Agreement and in reliance upon the representations and warranties contained
herein, the Company agrees to issue and sell to Purchaser, or its designees, and
Purchaser hereby agrees to purchase from the Company, the Note. The Note shall
(a) have a maturity date of February 11, 2005, with interest at the rate of 10%
per annum with interest only payable quarterly, and (b) otherwise be
substantially in the form attached hereto as Exhibit A.
Closing. The closing of the purchase and sale of the Note (the
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"Closing") shall be held at the offices of Loeb & Loeb LLP in Los Angeles,
California, or at such other location as shall be agreed upon by the parties
hereto. At the Closing, the Company shall deliver the Note to the Purchaser, or
such other person as the Purchaser shall otherwise designate, and the Purchaser
shall pay an aggregate of $XXX,XXX to the Company by cashiers' check, certified
funds or wire transfer.
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PURCHASER'S REPRESENTATIONS AND WARRANTIES.
The Purchaser understands, agrees with, and represents and warrants to
the Company with respect to the purchase hereunder, that:
Investment Purposes; Compliance With Securities Act. The Purchaser is
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purchasing the Note for the Purchaser's own account, for investment only and not
with a view towards, or in connection with, the public sale or distribution
thereof, except pursuant to sales registered under or exempt from the Securities
Act.
Accredited Investor Status. The Purchaser is an "accredited investor"
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as that term is defined in Rule 501 (a) of Regulation D. The Purchaser is a
sophisticated investor and has such knowledge and experience in financial and
business matters that Purchaser is capable of evaluating the merits and risks of
an investment made pursuant to this Agreement.
Reliance on Exemptions. The Purchaser understands the Note is being
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offered and sold to in reliance on specific exemptions from the registration
requirements of the applicable United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and the
Purchaser's compliance with, the representations, warranties, acknowledgments,
understandings, agreements and covenants of the Purchaser set forth herein in
order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire the Note.
Information. The Purchaser and the advisors of the Purchaser, if any,
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have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Note that have been requested by the Purchaser. The Purchaser and the
Purchaser's advisors, if any, have been afforded the opportunity to ask all such
questions of the Company as they have in their discretion deemed advisable. The
Purchaser understands that the Purchaser's investment in the Note involves a
high degree of risk. The Purchaser has sought such accounting, legal and tax
advice as it has considered necessary to an informed investment decision with
respect to the investment made pursuant to this Agreement.
Transfer or Resale. The Purchaser understands that: (i) the Note has
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not been and is not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless either (a) subsequently registered thereunder or (b) the Purchaser shall
have delivered to the Company an opinion by counsel reasonably satisfactory to
the Company, in form, scope and substance reasonably satisfactory to the
Company, to the effect that the Note to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration,
and (ii) neither the Company nor any other person is under any obligation to
register such Note under the Securities Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
Legends. The Note shall bear the following legend:
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"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR, IF APPLICABLE, STATE SECURITIES LAWS. EXCEPT AS PROVIDED IN SECTION 2(E) OF
THE NOTE PURCHASE AGREEMENT, DATED AS OF THE DATE HEREOF. THIS NOTE MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENSE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS NOTE OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ▇▇▇▇▇▇.▇▇▇, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."
Authorization; Enforcement. The Transaction Documents have been duly
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and validly authorized, executed and delivered by the Purchaser and are each and
collectively valid and binding agreements of the Purchaser enforceable in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium, liquidation, or similar laws relating to, or
affecting, generally the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company understands, agrees with, and represents and warrants to
the Purchaser that:
Organization and Qualification. The Company and its subsidiaries are
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duly organized and existing in good standing under the laws of the respective
jurisdictions in which they are incorporated and have the requisite corporate
power to own their properties and to carry on their business as now being
conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary and where the failure so to qualify would have a Material Adverse
Effect. "Material Adverse Effect" as used herein means any material adverse
effect on the operations, properties or financial condition of the Company and
its subsidiaries taken as a whole.
Authorization; Enforcement. (i) The Company has the requisite corporate
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power and authority to enter into and perform the Transaction Documents, to
issue and sell the Note in accordance with the terms hereof, and to perform its
obligations under the Note in accordance with the requirements of the same, (ii)
the execution, delivery and performance of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board of Directors, or its
shareholders is required, (iii) the Transaction Documents have been duly and
validly authorized, executed and delivered by the Company, and (iv) the
Transaction Documents constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting, generally, the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
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No Conflicts. The execution, delivery and performance of this Agreement
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by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Certificate of
Incorporation or Bylaws or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries is bound
or affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a material adverse effect).
Consents. Except as set forth in Schedule 3(d) and the filing of a Form
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D with the United States Securities and Exchange Commission, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under the Transaction Documents.
SEC Reports. The Company has filed all proxy statements, reports and
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other documents required to be filed by it under the Securities Exchange Act of
1934 as amended (the "Exchange Act"). The Company has furnished the Purchaser
with copies of (i) its Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 and its Quarterly Report on Form 10-QSB for the quarter ended
September 30, 2002 (the "SEC Reports"). The SEC Reports were in substantial
compliance with the requirements of its respective form and neither the SEC
Reports, nor the financial statements (and the notes thereto) included in the
SEC Reports, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Absence ff Certain Changes. Since September 30, 2002, there has been no
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material adverse change and no material adverse development in the business,
properties, operation, financial condition, results of operations or prospects
of the Company; provided that the Company must raise additional cash to continue
its operations and that its auditor has expressed doubt regarding the Company's
ability to continue as a going concern in its report on the Company's financial
statements for the year ended December 31, 2001.
Absence of Litigation. Except as set forth in Schedule 3(g) and in the
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Company's filings with the SEC, which the Purchaser has reviewed, there is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board or body pending or, to the knowledge of the Company, threatened
against or affecting the Company, wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect or which would adversely affect the
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validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the documents
contemplated herein.
Title to Assets and Liens. Except as set forth on Schedule 3(h), the
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Company has good and marketable title to the Assets owned by it and the valid
and enforceable right to receive and/or use each of the Assets in which the
Company has any other interest, free and clear of all Liens. As used herein (i)
"Liens" shall mean any lien, encumbrance, pledge, mortgage, security interest,
lease, charge, conditional sales contract, option, restriction, reversionary
interest, right of first refusal, voting trust arrangement, preemptive right,
claim under bailment or storage contract, easement or any other adverse claim or
right whatsoever; and (ii) "Assets" shall mean all of the goodwill, assets,
properties and rights of every nature, kind and description, whether tangible or
intangible, real, personal or mixed, wherever located and whether or not carried
or reflected on the books and records of the Company, which are owned by the
Company or in which the Company has any interest (including the right to use).
COVENANTS.
Best Efforts. Each party shall use its best efforts timely to satisfy
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each of the conditions to be satisfied by it as provided in Sections 5 and 6 of
this Agreement.
Securities Laws. The Company agrees to timely file all reports and
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other documents required to be filed with the SEC, specifically, a Form D (or
equivalent form required by applicable state law) with respect to the Note if
and as required under Regulation D and applicable state securities laws and to
provide a copy thereof to the Purchaser promptly after such filing.
Expenses. Each party shall pay such party's expenses in connection with
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the transactions contemplated by the Agreement.
Use of Proceeds. The Company shall use the proceeds from the Note for
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working capital and general corporate purposes.
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligations of the Company hereunder are subject to the
satisfaction, on or before the Closing, unless otherwise specified, of each of
the following conditions, provided that these conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion:
The parties shall have executed this Agreement and the Intercreditors
Agreement.
The representations and warranties of the Purchaser shall be true and
correct in all material respects as of the Closing as though made at that time
(except for representations and warranties that speak as of a specific date).
The Purchaser shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Purchaser at or
prior to the Closing.
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No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self regulatory
organization having authority over the matters contemplated hereby which
restricts or prohibits the consummation of any of the transactions contemplated
herein.
All consents, approval, authorizations and orders required to be
obtained and all registrations, filings and notices required to be made with or
given to any regulatory authority or person as provided herein shall have been
made.
CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE.
The obligations of the Purchaser are subject to the satisfaction, on or
before the Closing, unless otherwise specified, of each of the following
conditions, provided that these conditions are for the sole benefit of the
Purchaser and may be waived by the Purchaser at any time in its sole discretion:
The Company shall have executed this Agreement.
The representations and warranties of the Company shall be true and
correct in all material respects as of the Closing (except for representations
and warranties that speak as of a specific date). The Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing. The Purchaser may
require a certificate, executed by the Chief Executive Officer of the Company,
dated as of the Closing, to the foregoing effect and as to such other matters as
may be reasonably requested by the Purchaser.
No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self regulatory
organization having authority over the matters contemplated hereby which
restricts or prohibits the consummation of any of the transactions contemplated
herein.
All consents, approval, authorizations and orders required to be
obtained and all registrations, filings and notices required to be made with or
given to any regulatory authority or person as provided herein shall have been
made.
POST CLOSING COVENANTS
Within sixty days from the Closing, the Company shall cause the
delivery to the Purchaser of an assignment of warrant or warrants to purchase
..667 shares of the Common Stock for each $1 principal amount of the Note (the
"Assigned Warrants"). The per share exercise price for the Assigned Warrants
will be $.8075 representing 85% of the closing price on the trading day prior to
the Closing, and each Assigned Warrant shall be for a term of two years from the
Closing.
GOVERNING LAW; MISCELLANEOUS.
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Governing Law and Venue. This Agreement shall be governed by and
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interpreted in accordance with the laws of the State of California without
regard to the principles of conflict of laws. In the event of any litigation
regarding the interpretation or application of this Agreement, the parties
irrevocably consent to jurisdiction in any of the state or federal courts
located in the City of Los Angeles, State of California and waive their rights
to object to venue in any such court, regardless of the convenience or
inconvenience thereof to any party. Service of process in any civil action
relating to or arising out of this Agreement (including also all Exhibits or
Schedules hereto) or the transaction(s) contemplated herein may be accomplished
in any manner provided by law. The parties hereto agree that a final,
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
Counterparts. This Agreement may be executed in two or more identical
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counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
signature pages from such counterparts have been delivered.
Headings; Gender, Etc. The headings of this Agreement are for
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convenience of reference and shall not form a part of, or affect the
interpretation of this Agreement. As used herein, the masculine shall refer to
the feminine and neuter, the feminine to the masculine and neuter, and the
neuter to the masculine and feminine, as the context may require. As used
herein, unless the context clearly requires otherwise, the words "herein,"
"hereunder" and "hereby," shall refer to this entire Agreement and not only to
the Section or paragraph in which such word appears. If any date specified
herein falls upon a Saturday, Sunday or public or legal holidays, the date shall
be construed to mean the next business day following such Saturday, Sunday or
public or legal holiday. For purposes of this Agreement, a "business day" is any
day other than a Saturday, Sunday or public or legal holiday.
Severability. If any provision of this Agreement shall be invalid or
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unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
Entire Agreement; Amendments. This Agreement and the instruments
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referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Purchaser makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.
Notices. Any notices required or permitted to be given under the terms
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of this Agreement shall be sent by U.S. Mail or delivered personally or by
courier or via facsimile (if via facsimile, to be followed within three (3)
business days by an original of the notice document via U.S. Mail or courier)
and shall be effective five (5) days after being placed in the mail, if mailed,
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certified or registered, return receipt requested, or upon receipt, if delivered
personally or by courier or by facsimile, in each case properly addressed to the
party to receive the same. The addresses for such communications shall be:
If to the Company: ▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser, at the address on the signature of this Agreement. Each
party shall provide written notice to the other party of any change in address.
Successors and Assigns. This Agreement shall be binding upon and inure
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to the benefit of the parties and their respective successors and assigns.
Neither the Company nor the Purchaser shall assign this Agreement or any rights
or obligations hereunder without the prior written consent of the other (which
consent shall not be unreasonably withheld), and in any event any assignee of
the Purchaser shall be an accredited investor (as defined in Regulation D), in
the written opinion of counsel who is reasonably satisfactory to Company, and
such assignment shall be in form, substance and scope reasonably satisfactory to
the Company. Notwithstanding anything herein to the contrary, Purchaser may
pledge the Note as collateral for a bona fide loan with a third party lender,
and such pledge shall not be considered an assignment in violation of this
Agreement so long as it is made in compliance with all applicable law.
No Third Party Beneficiaries. This Agreement is intended for the
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benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
Survival. The representations and warranties of the Company and the
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Purchaser contained in Sections 2 and 3 and the agreements and covenants set
forth in Section 4 shall survive the final Closing of the purchase and sale of
the Note purchased and sold hereby.
Further Assurance. Each party shall do and perform, or cause to be done
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and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
Remedies. No provision of this Agreement providing for any specific
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remedy to a party shall be construed to limit such party to the specific remedy
described, and any other remedy that would otherwise be available to such party
at law or in equity shall be so available. Nothing in this Agreement shall limit
any rights a party may have with any applicable federal or state securities laws
with respect to the transactions contemplated hereby.
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IN WITNESS WHEREOF, the Purchaser and the Company have caused this Note
Purchase Agreement to be duly executed as of the date first written above.
THE COMPANY:
▇▇▇▇▇▇.▇▇▇, INC.
By:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
THE PURCHASER:
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[Investor]
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SCHEDULE 3(D)/
CONSENTS
o The Company may have to file a transaction notice under Section 25102 of
the California Corporations Code. The Company may be required to make
additional filings under applicable state securities laws.
o The Company may have to file a Form D with the Securities and Exchange
Commission and comply with certain Blue Sky requirements.
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SCHEDULE 3(G)
LITIGATION
On June 4, 1999, a complaint was filed against the Company in the Court
of Chancery of the State of Delaware in and for New Castle County entitled
▇▇▇▇▇▇ Von Opel v. Youbet Inc. (C.A. No. 17200 NC). In the complain Mr. Von Opel
alleges that the Company breached its contractual obligation pursuant to a
Private Placement Memorandum by failing to register the shares of common stock
underlying 400,000 warrants issued by the Company to an affiliate of Mr. Von
Opel. The complain seeks specific performance of the alleged obligation to
register such shares and damages for alleged breach of contract in the amount of
$8.7 million. The Company has answered the complaint and intends to defend
itself vigorously in the action. On August 19, 1999, Mr. Von Opel moved for
summary judgment on the issue of liability, which on June 2, 2000, the court
denied. The Company is proceeding with discovery and has noticed the deposition
of Mr. Von Opel. As the litigation is at an initial stage, an outcome cannot be
predicted at this time.
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SCHEDULE 3(H)
PLEDGED ASSETS
1) Operating leases:
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NUMBER OF PAYMENTS
MONTHLY REMAINING PURCHASE OPTION
PAYMENTS AT END OF LEASE
DESCRIPTION LEASE # LESSOR
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Toshiba 5560 - copier 6703893-002 Toshiba easy lease $694 4 Fair market value
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Toshiba 6560 - copier 1482410 Citicorp $811 17 Fair market value
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2) The Company has two restricted cash accounts with respect to credit card
charges:
Surefire $485,939
PRI $54,344
The amounts will vary depending on charges.
3) With respect to deposits from customers/subscribers:
a) The Company has a deposit with the State of California that is
restricted ($500,000) and with the State of Oregon that is
restricted ($XXX,XXX).
b) Deposits from customers/subscribers are held in a trust
account with Comerica Bank and are not the property of the
estate in the case of bankruptcy
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EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
OR, IF APPLICABLE, STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ▇▇▇▇▇▇.▇▇▇, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
NOTE
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FOR VALUE RECEIVED, ▇▇▇▇▇▇.▇▇▇, Inc. a Delaware corporation
(the "Borrower"), hereby promises to pay to [Investor] (the "Holder") or order,
without demand, the sum of [DOLLAR AMOUNT] ($XXX,XXX), with interest at the rate
of 10% per annum. The principal amount of the Note shall be due and payable on
February 11, 2005 (the "Maturity Date").
The following terms shall apply to this Note:
ARTICLE I
PAYMENT
1.1 Payment of Interest. Interest shall be paid quarterly
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in arrears commencing on May 11, 2003.
1.3 Maturity. On the Maturity Date, the entire principal
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amount and any unpaid accrued interest shall be paid to the Holder without
offset or deduction of any kind.
1.4 Prepayment. Any prepayment shall include all accrued
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interest to the date of such prepayment. This Note may be prepaid without
penalty prior to the Maturity Date upon at least 15 days notice.
ARTICLE II
EVENTS OF DEFAULT
2.1 Events of Default. The occurrence of any of the following
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events of default ("Event of Default") shall, at the option of the Holder
hereof, make the principal balance then remaining unpaid hereon and all other
amounts payable hereunder immediately due and payable, all without demand,
presentment or notice, or grace period, all of which hereby are expressly
waived, except as set forth below:
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(a) Failure to Pay Principal and/or Interest. The Borrower
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fails to pay any installment of principal or interest hereon when due and such
failure continues for a period of ten (10) days after the due date.
(b) Breach of Covenant. The Borrower breaches any material
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covenant or other term or condition of this Note, the Note Purchase Agreement
entered into by the Holder and Borrower in connection with this Note (the "Note
Purchase Agreement"), and the Intercreditors Agreement, each dated as of the
date hereof, (together with the Note Purchase Agreement, collectively, the
"Transactional Documents") in any material respect and such breach, if subject
to cure, continues for a period of ten (10) days after written notice to the
Borrower from the Holder.
(c) Breach of Representations and Warranties. Any material
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representation or warranty of the Borrower made herein in any Transactional
Document shall be false or misleading in any material respect.
(d) Receiver or Trustee. The Borrower shall make an assignment
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for the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business; or such a receiver or trustee shall otherwise be appointed.
(e) Judgments. Any money judgment, writ or similar final
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process, shall be entered or filed against Borrower or any of its property or
other assets for more than $500,000, and shall remain unvacated, unbonded or
unstayed for a period of forty-five (45) days.
(f) Bankruptcy. Bankruptcy, insolvency, reorganization or
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liquidation proceedings or other proceedings or relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Borrower and if instituted against Borrower are not dismissed within 60 days of
initiation.
(g) Cross Default. The Company shall default in any of its
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obligations under any mortgage, indenture or instrument, other than the lease
for the premises located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
under which there may be issued any indebtedness of the Company in an amount
exceeding $500,000 and such default shall result in such indebtedness becoming
or being declared due and payable prior to the date on which it would otherwise
become due and payable.
2.2 Enforcement. Upon the occurrence of any Event of Default,
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the Holder may thereupon proceed to protect and enforce its rights either by
suit in equity and/or by action at law or by other appropriate proceedings
whether for the specific performance (to the extent permitted by law) of any
covenant or agreement contained in this Note or in aid of the exercise of any
power granted in this Note, and proceed to enforce the payment of this Note held
by it, and to enforce any other legal or equitable right of such Holder.
2.3 Waiver; Release. Except as expressly provided for herein,
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the Company specifically (i) waives all rights it may have (A) to notice of
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nonpayment, notice of default, demand, presentment, protest and notice of
protest with respect to any of the obligations hereunder and (B) to notice of
acceptance hereof or of any other action taken in reliance hereon, notice and
opportunity to be heard before the exercise by the Holder of the remedies of
self-help, set-off, or other summary procedures and all other demands and
notices of any type or description except for cure periods; and (ii) releases
the Holder, its officers, directors, agents, employees and attorneys from all
claims for loss or damage caused by any act or failure to act on the part of the
Holder, its officers, attorneys, agents, directors and employees except for
gross negligence or willful misconduct.
2.4 Intercreditors Agreement. Notwithstanding anything herein
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to the contrary, all of Holder's rights hereunder shall be subject to the terms
of the Intercreditors Agreement dated as of the date hereof among Holder, the
Borrower and other holders of notes of the Borrower of which this Note is part
of a series of notes. To the extent of any conflict between the Intercreditors
Agreement and this Note, the provisions of the Intercreditors Agreement shall
prevail.
ARTICLE III
MISCELLANEOUS
3.1 Failure or Indulgence Not Waiver. No failure or delay on
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the part of Holder hereof in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.
3.2 Notices. Any notice herein required or permitted to be
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given shall be in writing and may be personally served or sent by fax
transmission (with copy sent by certified or registered mail or by overnight
courier). For the purposes hereof, the address and fax number of the Holder is
as set forth on the first page hereof. The address and fax number of the
Borrower shall be ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇. Both Holder and Borrower may change the
address and fax number for service by service of notice to the other as herein
provided.
3.3 Amendment Provision. The term "Note" and all reference
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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.
3.4 Assignability. This Note shall be binding upon the
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Borrower and its successors and assigns, and shall inure to the benefit of the
Holder and its successors and assigns, and may be assigned by the Holder.
3.5 Cost of Collection. If default is made in the payment of
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this Note, Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.
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3.6 Maximum Payments. Nothing contained herein shall be deemed
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to establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.
3.7 Governing Law and Venue. This Note shall be governed by
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and interpreted in accordance with the laws of the State of California without
regard to the principles of conflict of laws. In the event of any litigation
regarding the interpretation or application of this Note, the parties
irrevocably consent to jurisdiction in any of the state or federal courts
located in the City of Los Angeles, State of California and waive their rights
to object to venue in any such court, regardless of the convenience or
inconvenience thereof to any party. Service of process in any civil action
relating to or arising out of this Agreement or the transaction(s) contemplated
herein may be accomplished in any manner provided by law. The parties hereto
agree that a final, non-appealable judgment in any such suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its
name by its President on this 11th day of February, 2003.
▇▇▇▇▇▇.▇▇▇, INC.
By:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
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