SENIOR SECURED PROMISSORY NOTE
$1,000,000.00 October 6, 2005
For value received, SYBR.com Inc., a New Jersey corporation (the
"Company"), hereby promises to pay to Lloyd I. Miller, III (the "Holder"), or
registered assigns, the principal sum of ONE MILLION DOLLARS AND NO CENTS
($1,000,000.00), on the date specified herein, with interest as specified
herein.
This Note is subject to the following additional provisions, terms and
conditions:
ARTICLE 1. DEFINITIONS.
Section 1.1. Certain Definitions.
"Applicable Rate" means 8% per annum.
"Bankruptcy Law" means Title 11, United States Code or any similar federal
or state law for the relief of debtors.
"Business Day" means any day that is not a Saturday or Sunday or a day on
which banks are required or permitted to be closed in New York, New York.
"Default Rate" means 14% per annum.
"Distribution Event" means any insolvency, bankruptcy, receivership,
liquidation, reorganization or similar proceeding (whether voluntary or
involuntary) relating to the Company or its property, or any proceeding for
voluntary liquidation, dissolution or other winding up of the Company, whether
or not involving insolvency or bankruptcy.
"Dollars" means lawful currency of the United States of America.
"Guaranty" means that certain Guaranty, dated October 6, 2005, granted by
Synergy Brands Inc., a Delaware corporation and the holder of all the issued and
outstanding capital stock of the Company, in favor of the Holder.
"Holder" has the meaning given to such term in the first paragraph of this
Note.
"Interest Payment Date" means March 31 and September 30 of each calendar
year or the dates established pursuant to the proviso set forth in Section
2.2(b) hereof.
"ITT" means Interline Travel and Tour, Inc., a Texas corporation.
"ITT Note" means that certain Senior Secured Promissory Note, to be made by
Interline Travel and Tour, Inc., a Texas corporation payable to the Company,
together with all amendments and supplements thereto, all substitutions and
replacements therefor, and all renewals, extensions, increases, restatements,
modifications, rearrangements and waivers thereof from time to time.
"Maturity Date" means October 6, 2010 or the date established in accordance
with the proviso set forth in Section 2.1(a) hereof.
"Maximum Rate" means the maximum nonusurious interest rate permitted under
applicable law.
"Note" means this Senior Secured Promissory Note made by the Company
payable to the Holder, together with all amendments and supplements hereto, all
substitutions and replacements herefor, and all renewals, extensions, increases,
restatements, modifications, rearrangements and waivers hereof from time to
time.
"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pledge and Security Agreement" means that certain Pledge and Security
Agreement, to be executed by and between the Company, as debtor, and Holder, as
secured party.
"Purchase Agreement" means that certain Purchase Agreement, dated as of
October 6, 2005, by and between, the Company and the Holder.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Synergy Brands" means Synergy Brands Inc., a Delaware corporation.
"Warrant" means that certain Warrant agreement to be issued by ITT to the
Company to purchase 200,000 shares of ITT common stock at an initial exercise
price of $5.00.
ARTICLE 2. BASIC TERMS.
Section 2.1. Principal.
(a) Scheduled Repayment. The principal of this Note shall be due and
payable on the Maturity Date; provided, however, that the Maturity Date shall be
automatically adjusted to correspond to the maturity date set forth in the ITT
Note if and only if the ITT Note is issued by ITT to the Company on or before
October 28, 2005.
(b) Mandatory Prepayment.
(i) In the event that at any time or from time to time there shall be made
any prepayment of principal, in whole or in part, of the ITT Note by ITT to the
Company, the Company shall, not later than one Business Day after such
prepayment is made by ITT, pay to the Holder as a prepayment of principal under
this Note the same amount received by the Company from ITT. Each such prepayment
of principal by the Company under this Section 2.1(b)(i) shall be accompanied by
all accrued interest on the principal amount being prepaid to the date of
prepayment.
(ii) Without limiting any restrictions under the Pledge and Security
Agreement relating to the sale or other disposition by the Company of the
Warrant and any securities issuable or proceeds payable thereunder, in the event
that at any time or from time to time the Company shall receive any proceeds
(whether in the form of cash, securities or any other property or consideration
) from or in respect of the Warrant (whether by way of exercise of the Warrant
and a subsequent sale or other disposition of the underlying common stock, by
way of sale or other disposition of the Warrant, by way of receipt of dividends
or other distributions in respect of such underlying common stock or otherwise),
the Company shall, not later than two Business Days after receipt of such
proceeds, pay to the Holder as a prepayment of principal under this Note fifty
percent (50%) of the amount of such proceeds received by the Company. Each such
prepayment of principal by the Company under this Section 2.1(b)(ii) shall be
accompanied by all accrued interest on the principal amount being prepaid to the
date of prepayment.
(c) Optional Prepayment. The Company may at any time and from time to time
prepay all or any part of the unpaid principal balance of this Note without
premium or penalty. All optional prepayments shall be accompanied by all accrued
interest on the principal amount being prepaid to the date of prepayment.
(d) Payment in Dollars. Any and all amounts payable hereunder shall be paid
in cash in Dollars in immediately available funds.
Section 2.2. Interest.
(a) The Company agrees to pay interest in respect of the unpaid principal
amount of this Note at a rate per annum equal to the lesser of the Applicable
Rate or the Maximum Rate. Notwithstanding the preceding sentence, the Company
agrees to pay interest in respect of overdue principal, and, to the extent
permitted by law, overdue interest, at a rate per annum equal to the lesser of
the Default Rate or the Maximum Rate for each day from (and including) the date
when due to (but excluding) the date when actually paid.
(b) Interest on the unpaid principal amount of this Note shall be due and
payable (i) on each Interest Payment Date and the Maturity Date, (ii) upon the
payment or prepayment, in full or in part, of any of the principal of this Note,
(iii) at the maturity of this Note (whether by acceleration or otherwise), and
(iv) after maturity (whether by acceleration or otherwise), on demand; provided,
however, that the Interest Payment Date shall be automatically adjusted to
correspond to the interest payment dates set forth in the ITT Note if and only
if the ITT Note is issued by ITT to the Company on or before October 28, 2005.
(c) All computations of interest, both before and after maturity, shall be
made on the basis of a year of 365 days (or 366 days, as applicable) for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
Section 2.3. Payments in General.
(a) Whenever any payment to be made under this Note shall be stated to be
due on a day that is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the applicable rate during such extension.
Each payment received by the Holder shall be applied first to late charges and
collection expenses, if any, then to the payment of accrued but unpaid interest
hereunder, and then to the reduction of the unpaid principal balance hereof.
(b) By letter dated, October 6, 2005, the Company authorized and directed
ITT to pay to the Holder any and all amounts payable under the ITT Note. Any
payment received directly by Holder from ITT under the aforesaid letter and in
respect of amounts due to the Company under the ITT Note shall, when received by
the Holder, be applied against amounts due in payment under this Note. Any
requirement of any kind whatsoever that the Holder disgorge or otherwise return
any such payment received as aforesaid by the Holder from ITT shall mean that
the amount so disgorged or returned shall no longer be treated as applied
against amounts due in payment under this Note and the obligation of the Company
to make such payment under this Note shall be reinstated as if such payment had
never been received by the Holder from ITT.
Section 2.4. Surrender of Note on Prepayment. Upon any partial prepayment
of this Note, this Note may, at the option of the Holder or if requested by the
Company, and shall, as a condition to transfer, be surrendered to the Company in
exchange for a new Note in a principal amount equal to the principal amount
remaining unpaid on the surrendered Note, or made available to the Company for
notation thereon of the portion of the principal and interest so prepaid. In
case the entire principal amount of this Note is prepaid, this Note shall be
surrendered to the Company for cancellation and shall not be reissued.
Section 2.5. Collateral; Guaranty. Payment of any and all amounts payable
under this Note is (i) to be secured by certain collateral more specifically
described in the Pledge and Security Agreement and (ii) guaranteed by Synergy
Brands pursuant to the Guaranty.
Section 2.6. Senior Status. This Note shall be senior in status to any and
all indebtedness for borrowed money incurred by the Company.
Section 2.7 Covenants:
(a) Corporate Existence. The Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence,
and all its corporate rights and franchises.
(b) Notice of Default. In the event any executive officer of the Company
knows of any Event of Default which shall have occurred or knows of the
occurrence of any event which, upon notice or lapse of time or both, would
constitute an Event of Default, the Company shall immediately furnish to the
Holder a written statement as to such occurrence, specifying the nature and
extent thereof and the action (if any) which is proposed to be taken with
respect thereto.
(c) Use of Proceeds. The Company shall use the entire proceeds of the loan
evidenced by this Note to purchase and pay for the issuance to the Company of
the ITT Note and the Warrant.
ARTICLE 3. DEFAULT AND REMEDIES.
Section 3.1. Events of Default. An "Event of Default" occurs if:
(a) the Company defaults in the payment of principal on the Note when the
same becomes due and payable;
(b) the Company defaults in the payment of interest on the Note when the
same becomes due and payable and such default continues for three (3) days;
(c) the Company (i) shall commence a voluntary case concerning itself under
any Bankruptcy Law now or hereafter in effect, or any successor thereof; (ii) is
the object of an involuntary case under any Bankruptcy Law; or (iii) commences
any Distribution Event or is the object of an involuntary Distribution Event;
(d) the Company defaults, an event of default or other similar condition or
event occurs in respect of the Company under one or more agreements or
instruments relating to borrowed money where the aggregate principal amount of
such agreements or instruments, is not less than $1,000,000 which has resulted
in such borrowed money becoming, or becoming capable at such time of being
declared, due and payable under such agreements or instruments before it would
otherwise have been due and payable;
(e) Synergy Brands fails to observe or perform any covenant, condition or
agreement contained in the Guaranty or any representation or warrant made by
Synergy Brand in or in connection with the Guaranty shall prove to have been
incorrect in any material respect when made or deemed made;
(f) any representation or warranty made by the Company in or in connection
with the Purchase Agreement or the Pledge and Security Agreement shall prove to
have been incorrect in any material respect when made or deemed made;
(g) the Company fails to observe or perform any covenant, condition or
agreement contained in the Purchase Agreement, the Pledge and Security Agreement
or the Note or if the Company fails to return the Net Purchase Price (as such
term is defined in the Purchase Agreement), plus interest accrued thereon, to
the Holder at the time called for by, and otherwise in accordance with, the
Purchase Agreement;
(h) If at any time any or all provisions of the Guaranty or the Pledge and
Security Agreement are held to be invalid, non-binding or unenforceable in
accordance with their respective terms; and
(i) Any money judgment, lien, writ or warrant of attachment, or similar
process involving an amount equal to or in excess of $100,000 is entered of
filed against the Company or any of the assets of the Company and remains
unvacated, unbonded, unstayed, undismissed or undischarged for a period of 45
days. Section 3.2. Remedies.
(a) If an Event of Default (other than an Event of Default under
Section 3.1(c)) shall occur and be continuing, the Holder may declare by notice
in writing given to the Company, the entire unpaid principal amount of the Note,
together with accrued but unpaid interest thereon, to be immediately due and
payable, in which case the Note shall become immediately due and payable, both
as to principal and interest, without presentment, demand, default, notice of
intent to accelerate and notice of such acceleration, protest or notice of any
kind, all of which are hereby expressly waived, anything herein or elsewhere to
the contrary notwithstanding.
(b) If an Event of Default under Section 3.1(c) shall occur and be
continuing, the entire unpaid principal amount of the Note, together with
accrued but unpaid interest thereon, shall automatically become immediately due
and payable, both as to principal and interest, without presentment, demand,
default, notice of intent to accelerate and notice of such acceleration, protest
or notice of any kind, all of which are hereby expressly waived, anything herein
or elsewhere to the contrary notwithstanding.
(c) If any Event of Default shall have occurred and is continuing, the
Holder may proceed to protect and enforce their rights either by suit in equity
or by action at law, or both.
ARTICLE 4. MISCELLANEOUS.
Section 4.1. Amendment. This Note may be amended, modified, superseded or
cancelled, and any of the terms, covenants, representations, warranties or
conditions hereof and thereof may be waived, only by a written instrument
executed by both the Holder and the Company.
Section 4.2. Successors and Assigns.
(a) The rights and obligations of the Company and the Holder under this
Note shall be binding upon, and inure to the benefit of, and be enforceable by,
the Company and the Holder, and their respective permitted successors and
assigns.
(b) The Holder may sell, assign (by operation of law or otherwise),
transfer, pledge, grant a security interest in, or otherwise dispose of this
Note or any portion hereof or any rights or obligations hereunder; provided,
that upon such transfer, the Holder will promptly provide notice of such
transfer to the Company.
(c) The registered owner of this Note may be treated as the owner of it for
all purposes.
Section 4.3. Defenses. The obligations of the Company under this Note shall
not be subject to reduction, limitation, impairment, termination, defense,
set-off, counterclaim or recoupment for any reason.
Section 4.4. Replacement of Note. Upon receipt by the Company of evidence,
satisfactory to it, of the loss, theft, destruction, or mutilation of this Note
and (in the cases of loss, theft or destruction) of any indemnity reasonably
satisfactory to it, and upon surrender and cancellation of this Note, if
mutilated, the Company will deliver a new Note of like tenor in lieu of this
Note. Any Note delivered in accordance with the provisions of this Section 4.4
shall be dated as of the date of this Note.
Section 4.5. Attorneys' and Collection Fees. Should the indebtedness
evidenced by this Note or any part hereof be collected at law or in equity or in
bankruptcy, receivership or other court proceedings, the Company agrees to pay,
in addition to principal and interest due and payable hereon, all costs of
collection, including reasonable attorney's fees and expenses, incurred by the
Holder in collecting or enforcing this Note.
Section 4.6. Governing Law. This Note and the validity and enforceability
hereof shall be governed by and construed and interpreted in accordance with the
laws of the State of New York without giving effect to conflict of laws rules or
choice of laws rules thereof.
Section 4.7. Waivers. Except as may be otherwise provided herein, the
makers, signers, sureties, guarantors and endorsers of this Note severally waive
demand, presentment, notice of dishonor, notice of intent to demand or
accelerate payment hereof, notice of acceleration, diligence in collecting,
grace, notice, and protest, and agree to one or more extensions for any period
or periods of time and partial payments, before or after maturity, without
prejudice to the Holder.
Section 4.8. No Waiver by Holder. No failure or delay on the part of the
Holder in exercising any right, power or privilege hereunder and no course of
dealing between the Company and the Holder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
Section 4.9. No Impairment. The Company will not, by amendment of its
articles of incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at times in good faith assist in the carrying out of all the
provisions of this Note.
Section 4.10. Limitation on Interest. Notwithstanding any other provision
of this Note, interest on the indebtedness evidenced by this Note is expressly
limited so that in no contingency or event whatsoever, whether by acceleration
of the maturity of this Note or otherwise, shall the interest contracted for,
charged or received by the Holder exceed the maximum amount permissible under
applicable law. If from any circumstances whatsoever fulfillment of any
provisions of this Note or of any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstances the
Holder shall ever receive anything of value as interest or deemed interest by
applicable law under this Note or any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby or otherwise an amount that
would exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount owing under
this Note or on account of any other indebtedness of the Company to the Holder,
and not to the payment of interest, or if such excessive interest exceeds the
unpaid balance of principal of this Note and such other indebtedness, such
excess shall be refunded to the Company.
Section 4.11. Severability. The illegality, invalidity or unenforceability
of any provision of this Note under the law of any jurisdiction shall not affect
its legality, validity or enforceability under the law of any other jurisdiction
nor the legality, validity or enforceability of any other provision.
[remainder of page intentionally left blank]
EXECUTED as of the date first written above.
SYBR.COM INC.
By:
Name:
Title: