Exhibit 10.26
THISNOTEAND THE SECURITIES ISSUABLE HEREOF HAVE NOT BEEN REGISTEREDUNDERTHE SECURITIESACTOF 1933(THE "ACT"),AS AMENDED, ORUNDER THESECURITIESLAWSOF ANY STATE. THESE SECURITIES MAYNOTBE OFFERED, SOLD OROTHERWISETRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTEDUNDER THEACT AND APPLICABLE STATE SECURITIES LAWS PURSUANTTO ANEFFECTIVE REGISTRATION STATEMENT OR ANEXEMPTIONTHEREFROM.THEISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OFCOUNSEL REASONABLYSATISFACTORYTOTHE ISSUER THAT SUCH OFFER, SALE OR TRANSFER,PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACTAND ANY APPLICABLESTATE SECURITIES LAWS.
EDISON NATION INC. SENIOR SECURED NOTE
$250,000 | December 4th, 2019 |
FORVALUE RECEIVED,EdisonNationInc., a Nevadacorporation (the"Company"),promises to payto32 EntertainmentLLC (the"Holder") inlawful moneyoftheUnitedStates of America theCompany the principalsumof$250,000,together with interest from the date ofthisissuanceSenior Secured Note (this "Note")by lender on the unpaid principal balance ata rateequal to 10%per annumcomputed onthe basis of360 days ayear,assimpleinterest. All unpaid principal,together withany then unpaid and accrued interest and other amounts payable hereunder,shall bedueandpayableonDecember 4th,2020(the"Maturity Date")or such earlierdate as thisNoteis permittedto be repaid as provided hereunder.
The followingisastatementofthe rightsofHolder and the conditions towhichthisNoteissubject,and towhich Holder,by theacceptanceof this Note, agrees:
1. | Payments |
a. Interest. Holder shallbeentitledto receive,andCompany shallpaysimpleinterestonthe outstandingprincipalamount of thisNote at anannual rate often percent(10%) fromthe Original Issuance Date through the Maturity Date. Interestshallbe payable on March 4th,June\September 4thand onthe Maturity Datewhen allamountsoutstandingin connectionwith this Note shall be due andpayable(each an"Interest Payment Date") in cash.Ifany Interest PaymentDateisnot aTrading Day, theapplicablepaymentshallbe due onthenextsucceedingTrading Day.Payment ofprincipalandinterest andshallbe made inUnitedStates dollars.
Theoutstandingprincipalamountallaccruedunpaid interestthereon andanyotheramountsowedundereachNote,ifnotsooner paid,shall bedue and payableonthe Maturity Date.
b. Prepayment. The Company, atitssole discretion,reservestheright to prepay,priortotheMaturity Date, all or anypart of the principaloftheNotes withoutpenalty.UponaPrepayment,Holderwillkeep all commonstockandwarrants, asnoted in thisagreement.
Allpaymentsshouldbe madeto:
Account holder: 32 Entertainment LLC
Bank: JPMorgan ChaseBank,N.A.
270 Park Avenue
NewYork,NY10017
ABA routingnumber:021000021
Account number: 559668590
2. | Ranking.TheCompanyand Holderacknowledgeandagree that this Note rank senior toallothersecuritiesoftheCompany.Payment of all or any portionoftheoutstandingprincipal amountofthis Noteandall interest hereonshallbeseniorin rightofpaymentandinall other respects totheall other securitiesofthe Company.Paymentof all oranyportion ofthe outstandingprincipal amount ofthisNote and allinterest hereonshallbeseniorinright ofpaymentand in all other respects to otherindebtednessoftheCompany except for EdisonNationInc.existing credit facility withHeritage Bank. |
SecurityInterest.ThisNoteis securedbyalloftheCompany'sunencumbered unsecuredassets.Inthe event thatanyor all oftheCompany's assets are already subjectto liens,thisNoteshallbe junior to the rights ofother lenders,creditors and other securedparties. During theterm ofthisNote,the Company shall onlybe permittedto enterinto loans juniorto theNote, withtheconsentofLender.
a. | As collateral security for the Company's obligations pursuant tothisNote, theCompanyherebypledges,assignsandtransfers to theHolder afirst prioritysecurity interest in and collateral assignment oftheCompany'sright,titleandinterest inand toall of theCompany'stangibleandintangible property,including thefollowing, whether now owned ornow due,orinwhichtheCompanyhas an interest,orhereafter,atanytimeinthefuture, acquired,arisingorto become due,orinwhichtheCompany obtains an interest, and allproducts,proceeds,replacements,substitutionsandaccessions of ortoanyofthe following (collectively,the"Collateral"): |
1.allequipment and all warranties,expressorimplied, related thereto;
11. all accountsandaccountsreceivable;
m. all inventory;
1v. all contract rights;
v. alllicenses,permitsand approvals byany governmental authority;
2
vi. all generalintangibles(including payment intangibles,software,trademarks, patents, copyrights or otherintellectual property rightsoftheCompany);
v11. all equipment (including all machinery, furniture, and fixtures);
v111. all goods;
ix. all chattelpaper(whether tangible or electronic);
x. all fixtures;
xi. allinvestment property(including allfinancialassets, certificated and uncertificatedsecurities,securities accounts and security entitlements);
x11. allletter-of-credit rights;
xm. all rights underjudgmentsand all commercial tort claims;
xiv. all books,recordsandinformationrelating to the Collateral and/or tothe operationoftheCompany'sbusinessand all rights of accesstosuchbooks, recordsand informationand allproperty inwhichsuchbooks,recordsandinformationarestored,recorded andmaintained;
xv. all insuranceproceeds,refunds and premiumrebates,including proceedsoffire and creditinsurance,whether any ofsuchproceeds,refundsand premium rebatesariseout of any of the foregoing or otherwise;
xv1. all liens, guaranties, rights, remedies and privileges pertaining to any of theforegoing;and
xvii. all proceeds and products of each oftheforegoing and all accessions to,substitutions andreplacements for, and rents, profits and products of, each of the foregoing,and any and all proceeds of any insurance, indemnity, warranty or guaranty payabletotheCompanyfromtimeto time withrespectto any of the foregoing.
b. | TheCompany authorizesthe Holder tofile or cause to be filed one or more financingstatements,amendmentstofinancingstatements,continuations to financing statements, in lieu financingstatements,and othersimilarfilings with any filing or recording officefor the purposeof perfecting or continuingthe perfectionof or otherwise establishingHolder's securityinterest in the Collateral. |
c. | So longasthisNoteremains outstanding, the Company agrees to (i) do, observe and performorcause to be done, observed and performedallof its obligations and all matters and thingsnecessaryto be done, observed and performed for the purpose of maintainingtheCollateral in good condition,includingcomplyingwithandmaintaining ineffectalllicenses,approvals and permits and all contracts and contract rights relatedtothe Collateral and (ii) upon the reasonable request of Holder, execute anddeliver suchfurther instruments and do or cause tobedone such further actsas maybenecessaryor advisableto carry out the intent and purposes of thisNotewith respecttotheCollateral. |
3
4. | Covenants. Aslong as anyportion of thisNoteremains outstanding, unless the Holdershallhaveotherwise given prior writtenconsent, theCompany shallnot,directly or indirectly: |
a. | otherthanPermitted Indebtedness,enterinto, create, incur, assume,guarantee or suffer to exist anyindebtedness for borrowed money of anykind,including,but not limitedto,aguarantee,onorwithrespect to anyof itsproperty or assets nowownedor hereafteracquired orany interest therein or any income or profits therefrom; |
b. | otherthan PermittedLiens,enter into,create,incur,assumeorsuffertoexistanyLiens of anykind,on orwith respect to anyofits propertyor assetsnowownedor hereafteracquiredoranyinterest therein or anyincomeorprofits therefrom; |
MaturityDatemeansDecember 4,2020.
6. | Mannerof Paymentupon Maturity.On the Maturity Date,paymentofprincipal and accruedand unpaid interest on this Notewillbemade bydelivery ofa checkto Payee at Payee'saddress setoutin theNoteAgreement orbywiretransfer pursuant to instructio ns from Payee. If the date upon whichthe payment ofprincipaland interest is required to be made pursuanttothis Noteoccursother thanona BusinessDay,thensuch paymentofprincipal and interestshallbe madeonthe next occurring Business Day followingsaidpayment dateand shallinclude interestthroughthenext occurringBusiness Day. |
7. | Default.The occurrence ofany of the followingshallconstitutean" EventofDefault" underthisNote: |
a. | FailuretoPay.TheCompanyshallfailto pay(i) whendue any principal paymentonthe due datehereunderor(ii) anyinterest payment orotherpayment requiredunderthe termsofthisNote on the date dueandsuchpaymentshall not havebeen madewithinfive(5)Business Days of theCompany' s receipt of writtennotice by the RequiredHoldersofsuch failure topay; or |
b. | Breaches of Covenants. TheCompanyshall fail toobserveorperformany other covenant, obligation,conditionor agreementcontained in thisNote (otherthan thosespecifiedinSection9 hereof)thefailureof which wouldhaveamaterialadverseeffect ontheCompany andsuchfailure shallcontinue for thirty (30)daysaftertheCompany'sreceiptof writtennotice by the Holderto the Company ofsuch failure;or |
.£,.Voluntary Bankruptcyor InsolvencyProceedings.The Company shall (i) apply for or consent tothe appointmentofareceiver,trustee,liquidatoror custodian ofitselfor of allorasubstantial partofitsproperty,(ii)admit inwriting itsinability to payitsdebtsgenerally asthey mature,(iii)makea generalassignmentforthe benefitofits orany ofits creditors, (iv)be dissolved or liquidated, (v)commence avoluntarycase or otherproceedingseeking liquidation,reorganizationor otherreliefwithrespect to itself orits debtsunder anybankruptcy, insolvency or other similarlawnow orhereafter ineffect or consent to any such relief or to the appointment of ortaking possessionof itspropertyby any officialinaninvoluntarycase or other proceeding commenced againstit,or (vi) take any action for the purposeof effecting anyof the foregoing; or
4
d. | Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company, or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or any of its subsidiaries, if any, or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within forty-five (45) days of commencement. | |
Rights of Holder upon Default. Upontheoccurrence of any Event of Default,hereofand at any timethereafterduring the continuance of such Event of Default, Holder may,by writtennoticeto theCompany,declare all outstanding obligations payablebythe Companyhereunderto be immediately due and payable, and take possession of and exercise control over,tothefullestextentpermitted bylaw,any Collateral,withoutpresentment, demand, protest or any other noticeofany kind, all of which areherebyexpressly waived.Uponthe occurrence of anyEventof Default withoutnotice,all principal and accrued andunpaid interesthereundershallautomatically become immediately due and payable,and the Holder may takepossessionof and exercise control over, to the fullest extentpermittedbylaw,any Collateral, without presentment,demand,protest or any othernoticeof any kind,all of which are hereby expressly waived.In additionto the foregoingremedies,upon the occurrence and during thecontinuanceof anyEvent ofDefault, Holder may exercise any otherrightpower orremedypermitted to it bylaw,either bysuit inequity or by action atlaw,orboth. | ||
Notwithstanding the immediately precedingsentence,if a Defaultisin respect of a bankruptcy or insolvencyproceedingthe principal ofthisNote,and all accrued and unpaidinterest,shall automatically becomeimmediately due and payable. In addition,Payee mayinstitutejudicial proceedingsforthe collection oftheamounts due and may prosecute such proceedingto judgment or finaldecree,and may enforce the same against Company and collect the amount due(together withreasonable costs of collection, including reasonable attorney's fees and expenses)adjudgedor decreed to be payable inthe mannerprovidedbylaw out of the property of Company. Payee may also exercise the rights of a securedpartyunder the Uniform CommercialCodethen in effect inNevadaand under the terms oftheother transaction documentsandmay exercise any and all other rightsPayeemay have atlaworinequity The defaultrate of interestis15% per annum. | ||
9. | EquityConsideration. |
OriginationShares:10,000sharesof restricted common stock as an incentive for Investor to provide theLoan ("Shares").
a. | Price:Thepricewillbe$1.65,theeffective closing price on December 3rd,2019. |
5
b. | Restriction: Therestrictiononthe resaleof the Stock shall be six (6) months from thedate ofissuance or as otherwise requiredpursuantto Rule144of SEClawsandregulationspertainingto restrictedstock. |
c. | Warrants:42,858 warrantswithan exercise price of $1.75, with afive(5)yearterm asset forthinCommon StockPurchaseWarrant Agreement. |
d. | Registration Rights: The Company willfilea registration statement for the Shares and Warrantswithin30 days of the closing date of theloanand effective within 90daysof the closing date of theloan. |
e. | Share Reservation:The Company will at alltimesreserve sufficient shares foritsauthorized capital for all sharesunderlyingthe Note and Warrants. |
Other terms and conditions of thisNote:
1. MaximumRate:Regardless of any provisioninthis Note or the Note Agreementitis theintentionof Company andPayee that Payee not(a)contract for,charge, take, reserve, receive or apply, as interestonall or any part of theprincipalamount ofthisNote any amountinexcess oftheMaximum Rate or the Maximum Amount or (b)receiveany unearnedinterest inviolation of any applicable law. If any acceleration ofthe maturityof thisNoteproducesa rateinexcess of the Maximum Rateorif the Payee shall for any reason receive any suchunearned interestor if any transactioncontemplatedherebywouldotherwisebeusuriousunderapplicable law,then (i) the aggregateof all interest under applicable usurylawsthatiscontracted for, charged, taken, reserved,received or appliedunder thisNote,or otherwise,shall under no circumstances exceedtheMaximumAmount,(ii) neither Company nor any otherPersonshallbeobligated to pay the amount ofsuchinterest to the extent thatitisinexcess oftheMaximum Amount,(iii) any excess or unearned interestshall be deemed tobeand shall be treated as apartialprepayment or repayment of principaland anyremaining excess or unearned interest willbe refundedto Company, and (iv) the provisionsof this Noteimmediately shallbedeemed reformed,without thenecessityof the executionof anynew document or instrument, so as to comply with all applicableusurylaws.
2. Consentto Amendments: ThisNote may be amended,and Company maytakeany action prohibitedbythisNoteor theNote Agreement, or omittoperform any actitis required to perform by thisNote orthe Note Agreement, if and only if Company obtains the written consent from 32 Entertainment LLC.
3. Successorsand Assigns: All covenants and agreementsinthis Notebyor on behalf of Maker and thePayeeshallbind andinureto thebenefitof the Maker's and Payee'srespective successorsandassigns.
6
4. Notices:Allnotices,requests,waiversand other communicationsmadepursuant to this Agreement shallbeinwritingand shall bedeemeddelivered,given and received whendelivered(byhand,byregistered mail,by courier or express deliveryservice,bye-mail or by facsimile) to theaddress,e-mail addressor facsimiletelephonenumber set forth beneath the name of such party on its signaturepageto this Agreement(ortosuchother address, e-mail address or facsimile telephone numberassuch partywillhave specifiedina written notice given to the other partieshereto).
5. Severability Clause: In case anyprov1s10nin thisNoteshall be invalid, illegal or unenforceable inanyjurisdiction, thevalidity,legality and enforceability of the remaining provisionsin such jurisdictionshall not in any way be affected or impaired thereby; provided that such constructiondoesnot destroy the essence of the bargain provided for underthis Noteor theNoteAgreement.
6. GoverningLaw:ThisNoteandallactions arising out of orinconnection with thisNote shallbegovernedbyand construed in accordance with the internallawsof the State ofNevada(without regardtoprinciples of choice of law).
7. Waivers: Companyand allsureties,endorsers and guarantors of this Note waive and right to noticeofdefaultor demand, presentment for payment, notice of non-payment, protest,notice of protest, noticeof intentto accelerate, notice of acceleration, and any other notice not specifically required underthisnote.Failure to exercise any remedy under thisNotedoes not constitute a waiver ofsuch remedy.
8. DisputeResolution:All claims,disputes, and controversies arising out of or in relation to the performance, interpretation, application,or enforcement of this Agreement,includingbut not limited to breach thereof,shallbe referred to mediation before, and as a condition precedent to the initiation ofany adjudicativeactionorproceeding, including arbitration.Inthe event the partiesareunableto settle anydispute through mediationwithinthirty (30) days of one party notifying the other partyof thedispute,such disputeshallbesettledby arbitration before the American ArbitrationAssociationunder its then applicable rules. The arbitration proceeding will take place inNew York,NewYork and suchproceeding shall be before asinglearbitratorwhois mutuallyagreeableto the Companyand the Payee.Ifthe Company and the Payee are unable to agree on an arbitratorwithinthirty (30) days after either party first proposes an arbitrator to conduct the proceeding,theneachpartyshall selectan arbitrator and the two arbitratorsshall selecta third arbitrator, whichthird arbitrator shall conductthe proceeding. The decision of the arbitratorshallbe finaland bindingupon the parties. Thearbitrator shallrenderhisaward notlaterthan thirty(30)days aftertheconclusion of the hearing. The decision and award shall be in writing, and counterpart copiesshallbe delivered to each of the parties. In rendering an award,the arbitratorshallhavenopowerto modify anyofthe provisions of this Agreement,and the jurisdiction of the arbitrator isexpresslylimited accordingly. Judgment may be entered ontheawardofthe arbitrator and maybe enforcedin anycompetent court having jurisdiction.
9. Transaction Documents:means thisNoteand other related documents executed in connectionwiththe Note.TheCompany agrees to execute other agreements or documents to effectuatetheterms and conditionsof thisNote.
10. Attorney Fees: The Company shallpay Holder'sattorneys'feesinconnection with reviewof thisNoteandrelateddocuments in connection with theNote.
THIS NOTEANDOTHERRELATED DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEENMAKERAND PAYEE AND MAY NOTBECONSTRUEDBYEVIDENCE OF PRIOR,CONTEMPORANEOUSOR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THEREARENOUNWRITTENORAL AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURE PAGETOFOLLOW]
7
BY SIGNINGBELOW, THEPARTIES AGREE TO THE TERMS AND CONDITIONS OFTHIS NOTE.
THE COMPANY | |
EDISON NATION, INC. | |
/s/ Chris Ferguson | |
By: Chris Ferguson, CEO | |
Address: | |
909 New Brunswick Ave Phillipsburg, NJ 08865 | |
E-Mail: cferguson@edisonnation.com | |
LENDER | |
32 ENTERTAINMENT, LLC | |
/s/ Robert Wolf, Founder | |
Address: | |
9 Westerleigh Road Purchase, NY 10577 | |
E-Mails; Rwolf@32advisors.com | |
Copy to: Nirel Levi nlevi@32advisors.com |
8