Attached files
| file | filename |
|---|---|
| 8-K - AFH HOLDING II, INC. | v194634_8k.htm |
| EX-10.4 - AFH HOLDING II, INC. | v194634_ex10-4.htm |
| EX-10.1 - AFH HOLDING II, INC. | v194634_ex10-1.htm |
| EX-10.2 - AFH HOLDING II, INC. | v194634_ex10-2.htm |
Exhibit
10.3
THIS
NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
10%
PROMISSORY NOTE
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August
17, 2010
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$__________
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FOR VALUE RECEIVED, FIRST BLUSH BRANDS INC., a
Delaware corporation (hereinafter called the “Borrower”), hereby
promises to pay to the order of ___________________, a __________, or its
registered assigns (the “Holder”) the sum of
____________________ Dollars ($__________), in accordance with the terms
hereinafter provided. Commencing on January 1, 2012 and on the first
day of each calendar month thereafter, Borrower shall make monthly principal
payments in equal installments of $__________. The outstanding
principal balance of this Note, together with interest accrued with respect
thereto, shall be due and payable in full on December 31, 2012 (the “Maturity
Date”). All payments of principal and interest due hereunder
shall be made in lawful money of the United States of America without setoff,
demand or counterclaim. All payments shall be made at such address as the Holder
shall hereafter give to the Borrower by written notice made in accordance with
the provisions of this Note. Whenever any amount expressed to be due
by the terms of this Note is due on any day which is not a business day, the
same shall instead be due on the next succeeding day which is a business
day. As used in this Note, the term “business day” shall mean any day
other than a Saturday, Sunday or a day on which commercial banks in the city of
New York, New York are authorized or required by law or executive order to
remain closed.
The following terms shall apply to this
Note:
ARTICLE
I.
PURCHASE
AND INTEREST
1.1. Purchase Agreement.
This Note is being issued pursuant to a Securities Purchase Agreement entered
into between the Borrower and Holder (the “Purchase Agreement”),
dated of even date herewith. Each capitalized term used herein, and
not otherwise defined, shall have the meaning ascribed thereto in the Purchase
Agreement.
1.2. Interest. Interest on
the original principal amount of this Note shall be calculated at the rate of
ten percent (10%) per annum (the “Interest Rate”) from
August __, 2010 (the “Issue Date”), and
accrued interest shall be paid quarterly in arrears commencing on September 30,
2010. Interest shall be computed on the basis of a year of 360 days
for the actual number of days elapsed. Upon the occurrence of an
Event of Default hereunder, the interest rate shall increase to twelve (12%) per
annum (prorated for partial months) on the outstanding principal balance of the
Note and on all unpaid interest from the date of the Event of Default (“Default
Interest”). Notwithstanding any provision contained
herein, in no event shall interest accrue or be payable hereunder, including,
without limitation late charges, in excess of the maximum amount of permitted by
law to be charged, collected, or received from Borrower.
ARTICLE
II.
PREPAYMENT
2.1. Borrower’s
Prepayment Option. Notwithstanding
anything to the contrary contained herein, at Borrower’s option at any time
following the Issue Date, upon at least three (3) days prior written notice, the
Borrower shall have the right to prepay the entire principal amount of the Note
plus all amounts due in respect of interest and otherwise payable hereunder (the
“Prepayment
Option”). On the day designated for prepayment in such notice,
the Borrower shall make payment to the Holder of an amount in cash equal to the
sum of (a) the principal amount of the Note outstanding on such day; plus (b)
Default Interest, if any, on the amounts referred to in clause (a) plus (c) any
other amounts owed to the Holder pursuant to this Note (the “Prepayment
Amount”).
ARTICLE
III.
CERTAIN
COVENANTS
3.1. Distributions
on Capital Stock. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the Holder’s written
consent (a) pay, declare or set apart for such payment, any dividend or other
distribution (whether in cash, property or other securities) on shares of
capital stock other than dividends on shares of Common Stock solely in the form
of additional shares of Common Stock or (b) directly or indirectly or through
any Subsidiary make any other payment or distribution in respect of its capital
stock except for distributions pursuant to any shareholders’ rights plan which
is approved by a majority of the Borrower’s disinterested
directors.
3.2. Restriction
on Stock Repurchases. So long as the Borrower shall have any
obligation under this Note, the Borrower shall not without the Holder’s written
consent redeem, repurchase or otherwise acquire (whether for cash or in exchange
for property or other securities or otherwise) in any one transaction or series
of related transactions any shares of capital stock of the Borrower or any
warrants, rights or options to purchase or acquire any such
shares.
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3.3. Sale of
Assets. So long as the
Borrower shall have any obligation under this Note, the Borrower shall not,
without the Holder’s written consent, sell, lease or otherwise dispose
(collectively, a “Disposition”) of any
significant portion of its assets, other than to a wholly-owned Subsidiary of
the Borrower, outside the ordinary course of business unless the proceeds of
such Disposition shall be used to repay this Note. Any consent to the
disposition of any assets may be conditioned on a specified use of the proceeds
of disposition.
3.4. Advances
and Loans. So long as the Borrower shall have any obligation
under this Note, the Borrower shall not, without the Holder’s written consent,
lend money, give credit or make advances to any person, firm, joint venture or
corporation, including, without limitation, officers, directors, employees,
subsidiaries and Affiliates of the Borrower, except loans, credits or advances
(a) in existence or committed on the date hereof and which the Borrower has
informed Holder in writing prior to the date hereof or (b) made in the ordinary
course of business.
3.5. Contingent
Liabilities. So long as the Borrower shall have any obligation
under this Note, the Borrower shall not, without the Holder’s written consent,
assume, guarantee, endorse, contingently agree to purchase or otherwise become
liable upon the obligation of any Person, except by the endorsement of
negotiable instruments for deposit or collection and except assumptions,
guarantees, endorsements and contingencies (a) in existence or committed on the
date hereof and which the Borrower has informed Holder in writing prior to the
date hereof, (b) guarantees of any of its Subsidiaries obligation incurred in
the ordinary course of business and (c) similar transactions in the ordinary
course of business.
ARTICLE
IV.
EVENTS
OF DEFAULT
4.1. Events of
Default. Each of the
following events shall be deemed an “Event of Default” under this
Note:
(a) Failure
to Pay Principal or Interest. The Borrower fails to pay the
principal hereof or interest thereon when due on this Note, whether at maturity
or otherwise.
(b) Breach of
Covenants. The Borrower breaches any material covenant or
other material term or condition contained herein or in the Purchase Agreement
and such breach continues for a period of thirty (30) days after written notice
thereof to the Borrower from the Holder.
(c) Breach of
Representations and Warranties. Any representation or warranty
of the Borrower made herein or in any agreement, statement or certificate given
in writing pursuant hereto or in connection herewith (including, without
limitation, the Purchase Agreement and the Guaranty), shall be false or
misleading in any material respect when made and the breach of which has (or
with the passage of time will have) a material adverse effect on the rights of
the Holder with respect to this Note, the Guaranty or the Purchase
Agreement.
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(d) Receiver
or Trustee. The Borrower or any subsidiary of the Borrower
shall make an assignment 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 process shall be entered or filed against the
Borrower or any subsidiary of the Borrower or any of their property or other
assets for more than $500,000, and shall remain un-vacated, un-bonded or
un-stayed for a period of twenty (20) days unless otherwise consented to by the
Holder;
(f) Bankruptcy. Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for
relief under any bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Borrower, any subsidiary of the Borrower and if
instituted against the Borrower is not dismissed within sixty (60) days;
or
(g) Cross-Default. The
occurrence of a default or an “event of default” of the Borrower which, if
applicable, results in acceleration, under any: (x) indebtedness or (y)
obligation exceeding $250,000 (or its equivalent, if such obligation is not
denominated in U.S. dollars).
(h) Transaction
Documents Unenforceable. If at any time
any provision of this Note, the Purchase Agreement or the Guaranty shall cease
to be enforceable in accordance with its terms.
4.2. Effect of
Event of Default. Upon the
happening of any Event of Default, as set forth in Section 4.1 above, then, or
at any time thereafter, and in each and every such case, unless such Event of
Default shall have been waived in writing by the Holder (which waiver shall not
serve as a waiver of any subsequent default) at the option of the Holder and in
the Holder’s sole discretion, the Holder may consider this Note immediately due
and payable, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrower, anything herein
notwithstanding, and the Holder may immediately enforce any and all of the
Holder’s rights and remedies provided herein or any other right or remedy
afforded by law.
4.3. Notice of
Event of Default. Upon becoming
aware of the occurrence of an Event of Default, or an event which, with the
passage of time or the giving of notice, would become an Event of Default, the
Borrower shall promptly, within two (2) business days of becoming aware, provide
written notice of the same to the Holder and describing the nature of the
default and, if such default is of a nature which may be remedied, describing
whether and how such remedy is to be cured.
ARTICLE
V.
MISCELLANEOUS
5.1. Failure
or Indulgence Not Waiver. No failure or delay on the part of
the Holder 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 privileges. All rights and remedies
existing hereunder are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
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5.2. Notices. Any
notice herein required or permitted to be given shall be in writing and may be
personally served or delivered by courier or sent by United States mail or
electronic mail and shall be deemed to have been given upon receipt if
personally served (which shall include telephone line facsimile transmission) or
sent by courier or electronic mail or three (3) days after being deposited in
the United States mail, certified, with postage pre-paid and properly addressed,
if sent by mail. For the purposes hereof, the address of the Holder
shall be as shown on the records of the Borrower; and the address of the
Borrower shall be 9595 Wilshire Blvd., Suite 900, Beverly Hills, California
90212, Fax #: 310-861-0840, E-mail: barett@firstblush.com. Both the
Holder and the Borrower may change the address for service by service of written
notice to the other as herein provided.
5.3. Amendments. This
Note and any provision hereof may only be amended by an instrument in writing
signed by the Borrower and the Holder. The term “Note” and all
reference 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.
5.4. Assignability. This
Note shall be binding upon the Borrower and its successors and permitted
assigns, and shall inure to the benefit of the Holder and its successors and
assigns. The Borrower shall not assign its obligations under this
note without the prior written consent of the Holder, in its sole
discretion. Any purported assignment in violation of the prior
sentence shall be void ab initio. Each transferee of this Note must
be an “accredited investor” (as defined in Rule 501(a) of the 1933
Act).
5.5. Costs of
Collection. If an Event of Default occurs, the Borrower shall
pay the Holder hereof costs of collection, including reasonable attorneys’ fees
and expenses.
5.6. Governing
Law. This Note shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware without regard to
the choice of law principles thereof. Any dispute arising out of this Note shall
be resolved pursuant to the terms of Section 9 of the Purchase
Agreement.
5.7. Denominations. At
the request of the Holder, upon surrender of this Note, the Borrower shall
promptly issue new Notes in the aggregate outstanding principal amount hereof,
in the form hereof, in such denominations as the Holder shall
request.
[THE
REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by its duly authorized
representative this ____ day of ______ 2010.
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FIRST
BLUSH BRANDS, INC.
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By:
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Name:
Barrett Carrere
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Title:
Chief Financial Officer
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6
FORM
OF ASSIGNMENT
(To be
executed by the registered holder if such holder desires to transfer the
attached Note)
FOR VALUE
RECEIVED, (the
“Holder”) hereby sells, assigns, and transfers unto
Name:
Address:
Social
Security or Tax Identification Number
$
Notes, together with all right, title, and interest therein, and does hereby
irrevocably constitute and appoint _________________________ attorney to
transfer such Note on the books of First Blush Brands, Inc. (the “Borrower”),
with full power of substitution.
Dated:
_________________
Name of
Holder
Signature
If
executed in a representative or fiduciary capacity, print name and title of
individual executing this notice on behalf of the Holder.
NOTE: The
above signature should correspond exactly with the name on the first page of the
attached Note.
Social
Security or Tax Identification Number of Holder
Address
of Holder:
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The
undersigned transferee, by execution hereof, (i) represents and warrants to the
Borrower that (a) such transferee is an accredited investor, and agrees to
provide such evidence thereof as may be reasonably requested by the Borrower,
(b) the undersigned is acquiring the Note for investment and without a view to a
distribution other than pursuant to a registration statement under the
Securities Act of 1933, as amended, and applicable state securities laws, or an
exemption therefrom, and (c) the name, address, and social security or tax
identification number of the undersigned is as set forth above, and (ii) agrees
to be bound by the terms of the Note and the Purchase Agreement (as defined in
the Note).
Dated:
_________________
Name of
Transferee
Signature
If
executed in a representative or fiduciary capacity, print name and title of
individual executing this notice on behalf of the transferee.
(NOTE:
The above signature should correspond exactly with the name set forth
above.)
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