Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - FUND.COM INC. | f8k032910_fund.htm |
| EX-10.5 - PLEDGE AND SECURITY AGREEMENT - FUND.COM INC. | f8k032910ex10v_fund.htm |
| EX-99.1 - PRESS RELEASE - FUND.COM INC. | f8k032910ex99i_fund.htm |
| EX-10.2 - FIFTH AMENDED AND RESTATED OPERATING AGREEMENT - FUND.COM INC. | f8k032910ex10ii_fund.htm |
| EX-10.3 - WARRANT TO PURCHASE CLASS A COMMON STOCK - FUND.COM INC. | f8k032910ex10iii_fund.htm |
| EX-10.1 - SECURITIES PURCHASE AND RESTRUCTURING AGREEMENT - FUND.COM INC. | f8k032910ex10i_fund.htm |
Exhibit 10.4
THIS
SENIOR SECURED PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THIS
NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THIS NOTE UNDER SUCH ACT
AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
BORROWER THAT SUCH REGISTRATION IS NOT REQUIRED.
SENIOR
SECURED PROMISSORY NOTE
|
Delivered
in New York, New York
March 29,
2010
|
$5,000,000
(Subject to
adjustment as provided herein)
|
THIS SENIOR SECURED PROMISSORY
NOTE (this “Note”) is issued by FUND.COM, INC., a Delaware
corporation (the “Maker”
or “FNDM”). This Note
is the “Reset Note”, as
that term is defined in the securities purchase and restructuring agreement
dated March 29, 2010 (the “Purchase Agreement”) among the
Maker, WESTON CAPITAL
MANAGEMENT, LLC, a Delaware limited liability company (the “Company”), PBC-WESTON HOLDINGS, LLC, a
Delaware limited liability company “PBC”); ALBERT HALLAC, an individual
(“A Hallac”), and those
other Persons who have executed the Purchase Agreement in their capacity as
“Members” of the Company
(together with A. Hallac, the “Hallac
Members”). Unless otherwise defined herein, all capitalized
terms used in this Note shall have the meanings given to them in the Purchase
Agreement.
1. PROMISE TO PAY. FOR VALUE
RECEIVED, on March 31, 2015 (the “Maturity Date”), or sooner in
accordance with the provisions of this Note, the Maker promises to pay to the
order of each of the Hallac Members or any subsequent Holder(s) of this Note, in
pro-rata amounts based upon the percentage by which (a) the
Percentage Interests in the Company sold to the Maker by each Hallac Member
pursuant to the Purchase Agreement, as set forth in column (3) of the Schedule
of Members, bears to (b) the Percentage Interests in the Company of all of the
Hallac Members that were sold pursuant to the Purchase Agreement, as set forth
in column (3) of the Schedule of Members, in lawful money of the United States
and immediately available funds at any address of the Holders, the sum of Five
Million Dollars ($5,000,000), or such greater or lesser amount as shall be equal
to the “Holders Aggregate
Percentage Interest” (as hereinafter defined) in the “Fair Market Value” (as
defined) of the Company as at each “Reset Date,” as hereinafter
defined (collectively, the “Principal
Amount”).
2. DEFINITIONS. As used in
this Note, the term:
“Business Day” shall mean any
day of the week other than Saturday and Sunday or any other day when national
banking institutions in New York, New York are not open for
business.
“Fair Market Value” shall mean
the fair market value of 100% of the issued and outstanding Percentage Interests
in the Company, as a going concern and after adding back (i) any cash
distributions made to Hallac Members during the term of this Note pursuant to
Section 7.1 of the Operating Agreement, and (ii) any Indebtedness incurred from
and after the date hereof by the Company and any of its Subsidiaries, as at any
applicable Reset Date, in connection with a Mandatory Prepayment and Conversion
or Optional Prepayment and Conversion, as provided herein, in each case, as
shall be determined jointly by the Maker and the applicable Hallac Member(s) or
Holder(s); provided,
that if the Maker and the applicable Holder(s) are unable to reach
agreement within ten (10) calendar days after the occurrence of any Prepayment
and Conversion Notice or the Maturity Date, such fair market value shall be
determined within twenty (20) Business Days after the tenth (10th)
1
day
following the date of the Prepayment and Conversion Notice by an independent
appraiser jointly selected by the Maker and the applicable Holder(s); and each
of Maker and the Holder’s Representative hereby agree that Kidron Corporate
Advisors is acceptable as an independent appraiser. The determination
of such appraiser shall be deemed binding upon all parties absent manifest error
and the fees and expenses of such appraiser shall be shared equally by the Maker
and the applicable Holder(s). All such determinations to be
appropriately adjusted for any share dividend, share split, share combination or
other similar transaction during the applicable calculation
period. The Maker and the Company shall cause to be delivered to the
Holder(s) and the Maker an appraisal of the Fair Market Value as of each
applicable Reset Date by Kidron Corporate Advisors or such other appraiser
jointly selected by the Maker and the applicable Holder(s), on the first
Business Day of March for each of the Reset Dates.
“Holder(s)” shall mean and
include the Hallac Members and any transferee, assignee or successor of the
Holders, subject to the restrictions set forth at the beginning of this
Note.
“Holders Aggregate Percentage
Interests” shall mean an aggregate of Fifty and Nine-Tenths Percent
(50.9%) of all Percentage Interests in the Company that is allocable to all of
the Hallac Investors and/or all other Holder(s) of this Note; which aggregate
Fifty and Nine-Tenths Percent (50.9%) percentage interest shall be subject to
pro-rata dilution or adjustment in the event and to the extent that any
additional Membership Interests representing Percentage Interests in the Company
are issued following the Closing Date in accordance with this Note, whether
through the admission of new members or the payment of dividends or
distributions in Members Interests.
“Holders Representative” shall
mean A. Hallac, or in the event of his death or inability to serve, Keith
Wellner or such other person designated in writing by A. Hallac.
"Indebtedness" means (a) the
principal, premium (if any), interest and related fees and expenses (if any) in
respect of (i) Indebtedness for money borrowed and (ii) Indebtedness evidenced
by notes, debentures, bonds or other similar instruments, (b) all obligations in
respect of outstanding letters of credit, acceptances and similar obligations,
(c) that portion of obligations with respect to capital leases not entered into
in the ordinary course of business and properly accounted for as a liability,
(d) any obligation owed for all or any part of the deferred purchase price of
property or services except for trade liabilities incurred in the
ordinary course of business in accordance with customary practices, and (e) a
guaranty of any of the obligations described in clause (a) or (b) of this
definition.
“Insolvency Event” means, with
respect to any Person, the occurrence of any of the following: (i)
such Person shall be adjudicated insolvent or bankrupt, or shall generally fail
to pay or admit in writing its inability to pay its debts as they become due,
(ii) such Person shall seek dissolution or reorganization or the appointment of
a receiver, trustee, custodian or liquidator for it or a substantial portion of
its property, assets or business or to effect a plan or other arrangement with
its creditors, (iii) such Person shall make a general assignment for the benefit
of its creditors, or consent to or acquiesce in the appointment of a receiver,
trustee, custodian or liquidator for a substantial portion of its property,
assets or business, (iv) such Person shall file a voluntary petition under any
bankruptcy, insolvency or similar law, (v) such Person shall take any corporate
or similar act in furtherance of any of the foregoing or (vi) such Person, or a
substantial portion of its property, assets or business shall become the subject
of an involuntary proceeding or petition for (A) its dissolution, liquidation or
reorganization or (B) the appointment of a receiver, trustee, custodian or
liquidator, and (I) such proceeding shall not be dismissed or stayed within
sixty days or (II) such receiver, trustee, custodian or liquidator shall be
appointed.
2
“Operating Agreement” shall
mean the Fifth Amended and Restated Operating Agreement of the Company, dated of
even date herewith.
“Person” means: (i) any
individual, corporation, partnership, limited liability company, joint venture,
trust or unincorporated association, (ii) any court or other governmental
authority or (iii) any other entity, body organization or
group.
“Prepayment and Conversion
Notice” shall mean any written notice given by any one or more Holder(s)
of a Mandatory Prepayment and Conversion of all or part of this Note (as
provided in Section 4.2 below), or by FNDM in connection with a permitted
Optional Prepayment and Conversion of this Note (as provided in Section 4.3
below).
“Purchase Agreement” shall mean
the Securities Purchase and Restructuring Agreement, among the Company, the
Maker PBC-Weston Holdings, LLC and the Hallac Members, dated as of March 15,
2010.
“Reset Date” shall mean, as
applicable, March 31, 2013 (the “First Reset Date”), March 31,
2014 (the “Second Reset
Date”, March 31, 2015 (the “Third Reset Date”), or any
other date (including those set forth in Section 4.3 and Section 4.5 below)
based on which the Fair Market Value of the Company shall be
calculated.
“Restricted Payment” shall
mean, except for distributions as provided in the Operating Agreement, the
payment or distribution of any cash amounts from the Company to FNDM or any
Affiliate of FNDM (other than the Company) in any amount in excess of $100,000
during any consecutive twelve (12) month period ending March 31st
commencing with the twelve months ending March 31, 2011 (each an “Anniversary Year”), until the
entire Principal Amount of this Note shall have been paid in full.
“Sale of Control” shall mean
any transaction or series of related transactions involving the sale of all or
substantially all of the assets or equity securities of FNDM, whether by asset
sale, sale of securities, merger, tender offer, consolidation or like
combination, as a result of which the ability to elect the members of the board
of directors of FNDM shall no longer be vested in the holders of a majority of
the voting shares of capital stock of FNDM immediately prior to consummation of
such transaction.
“Securities Exchange” shall
mean any one of the FINRA OTC Bulletin Board, the NASDAQ Stock Exchange, the
NYSE: Amex Exchange or the New York Stock Exchange, or on any recognized
European or Asian stock exchange.
“Subsidiary” means any
corporation or other entity of which at least a majority of the securities or
other ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Maker and/or any
of its other subsidiaries.
“VWAP” shall mean the volume
weighted average closing prices of the Class A Common Stock of FNDM, as traded
on a Securities Exchange for the twenty (20) consecutive trading days
immediately prior to the date of calculation of any such shares of Class A
Common Stock.
3
3. INTEREST.
3.1 Subject
to Section 3.2 of this Note, the Maker shall pay annual interest (calculated on
the basis of a 360-day year for the actual number of days of each year) on the
outstanding unpaid portion of the Principal Amount of this Note (the “Outstanding Principal Amount”)
on each of March 31, 2011, March 31, 2012, March 31, 2013, March 31, 2014 and on
the Maturity Date (each an “Interest Payment Date”) at a
rate equal to four (4%) percent per annum; provided,
however, that until the First Reset Date the aggregate Outstanding
Principal Amount for purposes of this Section 3.1 shall be deemed to be
Five Million Dollars ($5,000,000). Unless otherwise approved in
advance by the Holders Representative, all Interest Payments shall be paid in
cash.
3.2 From
and after the occurrence or existence and during the continuation of any Event
of Default (as defined below), the rate of interest referred to in Section 3.1
of this Note shall be increased to eight percent (8%) per annum (the “Penalty Interest”); which
Penalty Interest shall be due and payable from the occurrence or existence of
such Event of Default and shall continue until the earlier of the date on which
(a) such Event of Default is cured or waived, or (b) the entire Outstanding
Principal Amount of this Note shall be paid in full..
3.3 In
no event shall interest payable under this Note be payable at a rate in excess
of the maximum rate permitted by applicable law. Any amount deemed to
be in excess of such maximum rate of interest under a final judicial
interpretation of applicable law shall be deemed to have been a mistake and
automatically canceled, and, if received by the Holder, shall be refunded to the
Maker, it being the intention of the Holders and the Maker that such interest
not be payable at a rate in excess of such maximum rate.
4. PAYMENTS
OF PRINCIPAL AMOUNT; PREPAYMENTS AND CONVERSIONS.
4.1 Payment of Principal Amount.
The original Five Million ($5,000,000) Dollar original Principal Amount of this
Note), or such greater or lesser amount of the Holders Aggregate Percentage
Interests in the Fair Market Value of the Company as at each Reset Date, shall
be payable as follows:
(a) at
any time on or before, but in no event later than, 5:00 p.m. (New York City
time) on May 31, 2010, time being of the essence (the “Installment Payment Date”),
the Maker shall pay or cause to be paid to the Holders (in such pro-rata amounts
as among the Holders shall be specified by the Holders Representative) the sum
of Two Million Four Hundred and Fifty Thousand ($2,450,000) Dollars (the “Installment Payment”); which
Installment Payment shall reduce the Outstanding Principal Amount, dollar for
dollar, for purposes of this Article 4;
and
(b) the
then entire outstanding balance of this Note shall be due and payable in full at
the Maturity Date, or sooner in the event of any one or more Mandatory
Prepayment and Conversion(s) provided in Section 4.2 or any Optional Prepayment
and Conversion provided in Section 4.3 below.
4
4.2 Mandatory Prepayment and
Conversion.
(a) Commencing
on the First Reset Date and, and at any time on each subsequent Reset Date, the
Holders of the majority of the Holders Aggregate Percentage Interest in this
Note (the “Majority-in-Interest”) shall
have the right (but not the obligation) by delivery of a Prepayment and
Conversion Notice to FNDM, to have all or any portion of the then applicable
Outstanding Principal Amount of this Note, as calculated pursuant to Section
4.2(b) below, prepaid (each a “Mandatory Prepayment and
Conversion”).
(b) The
Outstanding Principal Amount of this Note subject to such Mandatory Prepayment
and Conversion shall be reset and calculated based upon the product of
multiplying (i) the then applicable Holders Aggregate Percentage Interest then
being prepaid and converted pursuant to such Prepayment and Conversion Notice,
by (ii) the Fair Market Value of all Percentage Interests in the Company as at
the applicable Reset Date (the “Prepayment and Conversion
Amount”).
(c) In
the event of any such Mandatory Prepayment and Conversion, the Prepayment and
Conversion Amount shall be paid by FNDM shall be not later than twenty (20)
Business days following the date of calculation of the applicable Prepayment and
Conversion Amount (each a “Mandatory Prepayment and Conversion
Date”), as follows:
(i) an
amount equal to Twenty-Five Percent (25%) of the then applicable Prepayment and
Conversion Amount shall be paid in cash by wire transfer of immediately
available funds to a bank account determined by the Holders Representative;
and
(ii) an
amount equal to Seventy-Five Percent (75%) balance of the then applicable
Prepayment and Conversion Amount (the “Prepayment Balance”) shall be
represented and paid by FNDM in the form of shares of freely tradable FNDM Class
A Common Stock (each a “FNDM
Conversion Share” and collectively, the “FNDM Conversion Shares”), with
the aggregate number of FNDM Conversion Shares to be equal to the quotient
resulting from dividing (A) the Prepayment Balance, by (B) a price per share of
FNDM Class A Common Stock equal to Ninety Percent (90%) of the VWAP as at the
applicable Reset Date (the “Reset Date Per Share
Price”).
4.3 Permitted Optional Prepayment and
Conversion.In the event (and only in the event) that at any time through
and including the Maturity Date, A. Hallac is no longer employed by the Company
due to his death, resignation or termination for “Cause” or “Permanent Disability,” as
those terms are defined in his employment agreement with the Company (each a
“Termination Event”),
then and in such event, FNDM shall have the right (but not the obligation)
within ninety (90) days thereafter to repay and convert all and not less than
all of this Reset Note, upon the same terms and conditions and in accordance
with the provisions set forth in Section 4.2 above;
provided,
that solely for purposes of its exercise of its optional prepayment and
conversion right set forth in this Section 4.3, the
Reset Date for determining the Fair Market Value and the Reset Date Per Share
Price shall be deemed to be the last day of the month in which such Termination
Event shall have occurred.
4.4 No Other Prepayments or
Conversions. Except for (a) Restricted Payments, to the extent
permitted and paid in accordance with Section 7.14 below,
(b) as otherwise provided in Section 4.2 and Section 4.3 above, or
(c) at the request of FNDM and with the consent of the Holders Representative,
this Reset Note may not be prepaid or converted prior to the Maturity
Date.
5
4.5 Payment on Maturity Date. On
the Maturity Date, the Maker shall pay the entire then Outstanding Principal
Amount of this Note in full in the same manner as is set forth in Section 4.2 of this
Note, in which case, the Reset Date shall be the March 31, 2015 Maturity Date
and the Reset Share Per Share Price shall be calculated based on such Reset
Date.
4.6 Extension of Maturity
Date. If on the March 31, 2015 Maturity Date of this Note (a)
A. Hallac shall then continue to be employed on a full-time basis as the senior
executive officer and managing member of the Company, and (b) no portion of the
Principal Amount has been subject to mandatory prepayment, as provided in
Section 4.2 above, then and in such event, at the option of A. Hallac, he may
elect by written notice to FNDM given not later than March 15, 2015 to extend
the Maturity Date of up to Twenty Percent (20%) of the Principal Amount (as
calculated based on the Fair Market Value of the Company as at the Maturity
Date) to a date which shall be not later than the earlier to occur of (x) March
31, 2017, or (y) the occurrence of any Termination Event.
4.7 Authority of Holders’
Representative.Unless otherwise determined by the Majority-in-Interest,
the method and timing of all payments and prepayments of this Note pursuant to
this Section 4 shall be determined by the Holder’s Representative.
5. LIQUIDITY RIGHTS.
5.1 Notwithstanding
anything to the contrary contained in this Article 5 or
elsewhere in this Note, each Holder of FNDM Conversion Shares acquired pursuant
to the provisions of Article 4 above
shall have the absolute right to effect any public or private sale of such
Conversion Shares at any time or from time to time following the receipt
thereof; provided that any such sale(s) shall be in compliance with applicable
federal and state securities laws.
5.2 To
the extent that any FNDM Conversion Shares have not been previously sold by any
Holder in accordance with Section 5.1 above,
subject at all times to the provisions of Section 5.5 of this
Note, any one or more Holder(s) shall have the right, but not the obligation
(the “Liquidity Right”),
upon written notice to FNDM (the “Liquidity Notice”), given not
later than thirty (30) days prior to the applicable “Liquidity Date” (defined
below), to cause FNDM to either (a) repurchase and redeem such FNDM Conversion
Shares, or (b) to arrange for a third party to purchase such FNDM Conversion
Shares; in either event only to the extent of that percentage and number of FNDM
Conversion Shares previously issued to such Holder(s) that are reflected in
Section 5.3
below (each, the “Liquidity
Shares”). On each occasion that such Liquidity Right is
exercised, such Liquidity Shares shall be purchased or resold, at a price per
share which shall be equal to either (i) the Reset Date Per Share Price, or (ii)
if more than one conversions of this Note were made by the Holder, the weighted
average of the Reset Date Per Share upon which the FNDM Conversion Shares were
originally issuable (the “Liquidity Per Share
Price”).
6
5.3 The
foregoing Liquidity Right shall be available to each Holder(s):
(a)
on a date that shall be six (6) months after each applicable Reset Date (the
“First Liquidity Date”),
in an aggregate amount of Liquidity Shares as shall represent up to (but not in
excess of) Thirty-Three and one-third Percent (33-1/3%) of the number of FNDM
Conversion Shares held by to each Holder;
(b)
on a date that shall be twelve (12) months after each applicable Reset Date (the
“Second Liquidity
Date”), in an aggregate amount of Liquidity Shares as shall represent up
to (but not in excess of) Thirty-Three and one-third Percent (33-1/3%) of the
number of FNDM Conversion Shares held by each Holder; and
(c) on
a date that shall be eighteen (18) months after each applicable Reset Date (the
“Third Liquidity Date”),
in an aggregate amount of Liquidity Shares as shall represent up to (but not in
excess of) Thirty-Three and one-third Percent (33-1/3%) of the number of shares
of FNDM Conversion Shares held by each Holder.
To the
extent that a Liquidity Notice shall not be timely given prior to any of the
above three (3) applicable Liquidity Dates, as aforesaid, the applicable Holder
shall forfeit his or its right to exercise his or its Liquidity Rights on such
Liquidity Date; provided, that all such Liquidity Rights shall be cumulative and
may be added to the Liquidity Rights available to such Holder on the next
applicable Liquidity Date.
5.4 Subject
at all times to the provisions of Section 5.5 below,
FNDM shall pay or cause to be paid to each Holder exercising his or its
Liquidity Rights the applicable price for such Liquidity Shares as shall be
equal to the product of multiplying the applicable Liquidity Per Share Price by
the applicable number of Liquidity Shares then subject to the Liquidity Right
(the “Repurchase Price”)
on a date which shall be not later than sixty (60) days following the date of
the Liquidity Notice. All such payments shall be by wire transfer of
immediately available funds to one or more bank accounts designated by the
Holder(s), against delivery of the applicable number of Liquidity Shares duly
endorsed in blank for transfer by the Holder(s).
5.5 Notwithstanding
anything to the contrary contained in this Section 5 or
elsewhere in this Note, unless otherwise agreed or requested by FNDM, as at any
or all of the First Liquidity, Date, Second Liquidity Date or Third Liquidity
Date (each a “Liquidity
Date”), the Holder(s) of the Liquidity Shares shall first sell
or offer to sell on such applicable Liquidity Date all of such Liquidity Shares
on the Stock Exchange through a brokers or directed sale transaction (a “Market Sale”), and FNDM shall
only be liable to pay to such Holder exercising his or its Liquidity Right a
cash amount equal to the difference between (i) the Repurchase Price, less (ii)
the gross proceeds (before customary brokers commissions) that was paid to or
would have been payable to such Holder(s) from such Market Sale.
6. SECURITY.Payment of the
Outstanding Principal Amount of this Note and all interest accrued hereon is
secured by a pledge to the Hallac Members of Members Interests certificates
evidencing all of the Holders Aggregate Percentage Interests in the Company (the
“Pledged Securities”),
subject to release thereof as this Note shall be prepaid in accordance with
Section 4.2 and Section 4.3 above, all as set forth in the pledge agreement,
dated of even date herewith, among FMDM, as pledgor, the Hallac Members as
secured parties, and Zukerman, Gore, Brandeis & Crossman, LLP, as the
collateral agent (the “Pledge
Agreement”).
7
7. MAJOR ACTIONS. For so
long as any Principal Amount of this Note shall remain unpaid and issued and
outstanding, FNDM shall not directly or indirectly take any of the following
actions affecting the Company, without the prior written consent of either (a)
the Majority-In-Interest, or (b) the Holders Representative:
7.1 Any
act to cause the Company to be other than a Delaware (i) limited liability
company, (ii) limited partnership or (iii) partnership;
7.2 Any
changes to the Fifth Amended and Restated Operating Agreement of the Company or
any other the Company organizational documents;
7.3 Any
agreement that would cause any Member, executive officer or Manager of the
Company to become personally liable for or guarantee the debts of the Company or
that is nonrecourse to any Member, executive officer or Manager, except for
liability or recourse that is pursuant to customary carveouts for real estate
financing;
7.4 Any
change in the fundamental nature of the business of the Company;
7.5 Any
material deviation from any permitted fund investments;
7.6 Causing
or permitting the Company to merge or consolidate with another
entity;
7.7 The
sale of control of the Company by way of sale of a majority of the issued and
outstanding equity interests in the Company, or all or substantially all of its
assets (“Sale of
Control”);
7.8 The
dissolution, termination or liquidation of the Company or any Company
Subsidiary;
7.9 Any
deviation by more than 10% of the annual budget as approved by Board of
Managers;
7.10 The
commencement, settlement or other disposition of a material litigation matter or
claim involving amounts in issue of $500,000 or more;
7.11 The
issuance of any new Members Interests (including any management incentive
equity) or any debt or other instruments convertible into or exercisable for any
the Company equity interests;
7.12 The
admission of any Person as a Member of the Company;
7.13 Except
for the Restricted Payments in compliance with Section 7.14 below, the payment
of any distributions in respect of the Company Members Interests in excess of
$100,000 per annum;
8
7.14 The
making of any Restricted Payment, unless simultaneous therewith an amount equal
to 50.9% of each Restricted Payment shall be paid in cash to the Hallac Members,
as provided in Section 1.5(b)(iii) of the Purchase Agreement;
7.15 The
incurrence of any additional Indebtedness for borrowed money by the Company or
any of its Subsidiaries in excess of $500,000, individually or in the
aggregate;
7.16 The
entry into any material contract defined as a contract under which the Company
or its subsidiaries is obligated to pay annual consideration or incur liability
in excess of $500,000 per annum;
7.17 Except
for the payment of administration and management fees of up to $100,000 in any
one or more Anniversary Years to FNDM, as provided in the Purchase Agreement,
the entry into transactions with FNDM or any Affiliates of FNDM, other than as
expressly permitted in the Operating Agreement;
7.18 The
acquisition of any business in direct competition with the business of the
Company, which in all instances must be effected by, through and for the benefit
of WCM in its capacity as a subsidiary of FNDM;
7.19 The
sale or any other disposition of substantially all of the assets or equity
securities of any Subsidiary of the Company whose revenues and net profits
before taxes equal or exceed 10% of the consolidated revenues and net profits
before taxes of the Company (a “Significant Subsidiary”);
or
7.20. The
termination of the existing Company management and employment agreements with
Jeffrey Hallac, Keith Wellner and Marcel Herbst for any reason other than their
death, permanent disability or for Cause, as defined therein.
8. EVENTS OF
DEFAULT.
8.1 The
occurrence and continuation of any of the following events shall constitute an
“Event of Default” under
this Note.
(a) FNDM
defaults in the payment when due of the Installment Payment, time being of the
essence (an “Installment
Payment Default”); or
(b) FNDM
defaults in any other payment other than the Installment Payment (it being
expressly understood and agreed that a default in the payment when due of the
Installment Payment shall be governed by the provisions of Section 8.1(a)
above, and that there shall be no notice or (absent written notice from A.
Hallac to the contrary) cure with respect to an Installment Payment Default) the
balance of the Outstanding Principal Amount of this Note, or any interest,
Default Interest or other amount payable pursuant to this Note (a “Non-Installment Payment
Default”) and any such Non-Installment Payment Default shall continue for
more than ten (10) Business Days;
(c) FDMN
fails to perform any of its obligations under Article 5 hereof
for so long as any Hallac Member beneficially owns any FNDM Conversion Shares,
which provision shall expressly survive the payment in full of the
Note;
9
(d) FNDM
shall breach any of its material representations and warranties or shall fail to
perform any of its material covenants and agreements under the Purchase
Agreement, the Pledge Agreement or Operating Agreement (including the
distribution provisions thereof), and any such breach (if capable of cure) or
failure to perform is not cured to the reasonable satisfaction of A. Hallac
within ten (10) Business Days following receive of notice of such breach or
failure to perform; or
(e) there
shall occur or exist any Insolvency Event involving FNDM or the
Company;
(f) the
lien and security interest in the Pledged Securities ceases to be validly
perfected, first priority lien and security interest under the Pledge
Agreement;
(g) one
or more judgments involving amounts in excess of $5,000,000 shall be entered
against FNDM which shall not be appealed or bonded within fifteen (15) days of
entry;
(h) the
termination of the existing Company management and employment agreement with A.
Hallac, for reason other than his death or resignation, his Permanent Disability
or a termination for Cause, as defined therein;
(i) any
injunction or other restraint by any court or governmental authority on any
material portion of FNDM businesses unrelated to the business of the Company;
which injunction or restraint shall not be appealed or bonded within thirty (30)
days of entry; or
(j) a
violation or breach by FNDM of any of the covenants involving Major
Actions set forth in Section 7 of this Note, which violation or
breach is not cured to the reasonable satisfaction of the Majority-in-Interest
within thirty (30) days of its occurrence;
(k) a
default by FNDM in the payment of any indebtedness for money borrowed or related
obligations owed to any one or more third parties (“Third Party Indebtedness”) in
an amount (individually or in the aggregate) that shall be in excess of
$1,000,000, and which default shall result in (A) the acceleration of such Third
Party Indebtedness, and (B) the commencement of legal proceedings or other
collection efforts on the part of the holder(s) to collect the
same;
(l) the
failure of FNDM to cause the shares of its Class A Common Stock to be listed on
the FINRA OTC Bulletin Board, the NYSE:Amex Exchange, the Nasdaq Stock Market or
any other national securities exchange in the United States for so long as any
Hallac Member beneficially owns any FNDM Conversion Shares, which provision
shall expressly survive the payment in full of the Note;
(m) any
action or failure to act by FNDM or its designees on the Board of the Company
that is taken by or on behalf of the Company and which causes the Company or any
of its Subsidiaries to lose any of their respective registrations, licenses,
permits or authorizations to operate their business that are granted by an
federal, state, or local governmental authority or any self regulatory authority
or result in a violation of any rules or regulations promulgated by any such
authority; or
(n) the
consummation of a Sale of Control.
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8.2 Upon
or at any time after the occurrence and during the continuation of any Event of
Default, after any applicable notice and cure periods, if any (it being
expressly understood and agreed that with respect to the Installment Payment
Default, time is of the essence and there shall be no notice and cure period),
the Majority-in-Interest shall have the right to either (a) accelerate payment
of the Outstanding Principal Amount of this Note and all interest accrued
hereon, or, (b) in lieu of such acceleration, to foreclose on the Pledged
Securities under the Pledge Agreement and have returned to the
Holders all of the Pledged Securities that remain held under the Pledge
Agreement. In the event that the Majority In Interest elects to
foreclose on the Pledged Securities under the Pledge Agreement, FNDM’s
representatives on the Board of Managers of the Company shall automatically be
deemed to have resigned and the Majority In Interest shall be entitled to
appoint a majority of the replacement members of the Board of
Managers.
9. COSTS OF
COLLECTION. On demand by the Holder, the Maker shall pay each
reasonable cost and expense (including, but not limited to, the reasonable and
documented fees and disbursements of counsel, whether retained for advice,
litigation or any other purpose) incurred by the Holder in endeavoring to (i)
collect any of the Outstanding Principal Amount or any interest or other amount
payable pursuant to this Note, (ii) preserve or exercise any right or remedy of
the Holder pursuant to this Note or (iii) preserve or exercise any right or
remedy of the Holder relating to, enforce or realize upon any collateral,
subordination, guaranty, endorsement or other security or assurance of payment,
whether now existing or hereafter arising or accruing, that now or hereafter
secures the payment of or is otherwise applicable to any of the Outstanding
Principal Amount or any interest or other amount payable pursuant to this Note
and remaining unpaid (the “Collection Costs”).
10. CHANGES AND
WAIVERS. No course of conduct pursued, accepted or acquiesced
in, and no oral, written or other agreement or representation made, by or on
behalf of the Holder in the future will change this Note or waive any right or
remedy of the Holder under or arising as a result of this Note. Any
change in this Note or waiver of any right or remedy of the Holder under or
arising as a result of this Note must be made in a writing signed by or on
behalf of the Holder.
11. GOVERNING LAW. This
Note shall be governed by and construed, interpreted and enforced in accordance
with the law of the State of New York and, to the extent applicable thereto, the
federal law of the United States, without regard to the law of any other
jurisdiction.
12. WAIVER OF TRIAL BY
JURY. FNDM
AND EACH HOLDER KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES
EACH RIGHT THE BORROWER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION
OR OTHER LEGAL PROCEEDING ARISING OUT OF OR OTHERWISE RELATING TO THIS
NOTE.
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IN WITNESS WHEREOF, the Maker has duly
executed and delivered this Note this 29th day
of March 2010.
| FUND.COM, INC. | |||
|
|
By:
|
/s/ Gregory Webster | |
| Name: Gregory Webster | |||
| Title: Chief Executive Officer | |||
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