EXHIBIT 10.1
PURCHASE PROMISSORY
NOTE
THIS NOTE
AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH
TIME, IF ANY, AS SUCH COMMON STOCK IS REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER
THE SECURITIES LAWS OF ANY STATE OR JURISDICTION AND MAY NOT BE
SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED
OR QUALIFIED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR
UNLESS THE COMPANY RECEIVES AN OPINION, IN REASONABLY ACCEPTABLE
FORM AND SCOPE, OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY,
THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT
REQUIRED UNDER ANY SUCH LAWS.
CONVERTIBLE PROMISSORY
NOTE
FOR VALUE
RECEIVED, KIT digital, Inc., a Delaware corporation (the
“Company”), hereby promises to pay to the order of
International Management Group GmbH, a company organized under the
laws of Germany, or registered assigns (the “Holder”),
the sum of One Million Six Hundred and Sixty Two
Thousand Five Hundred Euros (EUR 1,662,500) (the
“Principal”), with interest thereon, on the terms and
subject to the conditions set forth herein and in the Share
Purchase Agreement, dated as of the date hereof, between the
Company and the Holder (the “Purchase Agreement”)
. Capitalized terms used but not defined herein have
the meanings ascribed to such terms in the Purchase Agreement
.
The Company is
permitted to deduct from the Principal under this Note
certain amounts that may be owed by the Holder to the Company
pursuant to the Waiver and Agreement dated on the date hereof
between the Company and the Holder. In the event the Company
elects to make any such deduction in accordance with said Waiver
and Agreement, the Company shall issue and deliver a new promissory
note to the Holder reflecting, as appropriate (i) a reduced
Principal amount, (ii) reduced Principal payment amounts under
Section 1(b) and (iii) a reduced Prepayment Amount under
Section 2. Simultaneously with the delivery by the Company to
the Holder of a new convertible promissory note substantially in
the form of this Note and reflecting the foregoing, this Note shall
automatically, without any action by the Company or the Holder, be
cancelled and replaced by such new convertible promissory note, and
all obligations hereunder shall be extinguished.
Payments of
principal of, interest on and any other amounts with respect to
this Convertible Promissory Note (this “Note”) are to
be made in Euros.
Notwithstanding
any provision of this Note, the Purchase Agreement or any other
agreement to the contrary, the Company shall not be required to
pay, and the Holder shall not be permitted to contract for, take,
reserve, charge or receive, any compensation that constitutes
interest under applicable law in excess of the maximum amount of
interest permitted by applicable law.
The original
Holder of this Note will be deemed, by its acceptance hereof, to
have agreed to the provisions and to have made the representations
and warranties set forth in clause 5 of the Purchase
Agreement.
1. Interest;
Payments
(a) This
Note shall bear interest on Principal amounts outstanding from time
to time commencing on April 1, 2010 until the Maturity Date at the
rate of six and one-half percent (6.5%) per annum
(“Interest”). All Interest shall be
calculated on the basis of a 360-day year counting the actual days
elapsed and shall be calculated quarterly with an intra-period pro
rata calculation.
(b) On
each of the following dates (or if such date is not a business day,
the business day immediately following such date) (each, a
“Payment Date”) there shall become due and payable an
aggregate Principal amount of EUR 277,083.33:
Each such
payment shall be without premium, but together with accrued
Interest on such Principal amount to the date of such payment,
unless the Company shall elect to add such accrued Interest to the
Principal of the Note pursuant to Section 1(c). On March
31, 2011 (the “Maturity Date”), there shall become due
and payable and the Company shall pay the entire unpaid Principal
amount of the Notes (including all Additional Principal (defined
below)), together with all Interest accrued thereon and all other
amounts, if any, due and remaining unpaid thereon.
(c) Accrued
Interest on the Principal balance of this Note shall be payable on
each Payment Date and the Maturity Date, but, upon the election of
the Company, may instead be added to the Principal balance of this
Note (such amount “Additional Principal”) on each
Payment Date (but not the Maturity Date).
2. Prepayment
The unpaid
Principal balance of this Note, may, at the Company’s option,
be prepaid in whole, whether through a conversion in accordance
with Section 6 or a payment in cash, at any time or
from time to time on or before January 8, 2010, upon five (5)
days’ prior written notice to the Holder; provided, however,
that if the Company elects to so prepay or convert
the unpaid Principal balance of this Note, for the purposes of this
Section 2, the unpaid Principal balance of this Note shall be
discounted by 18% and the total amount of unpaid Principal the
Company shall be required to pay to the Holder
hereunder shall equal EUR 1,363,250 minus any amounts paid by
the Company to the Holder under Section 1 (the
“Prepayment Amount”). Payment by the Company
of the Prepayment Amount in accordance with this Section 2 shall
constitute full satisfaction of the Company’s obligations
hereunder.
It is
agreed that time is of the essence on this Note.
Each
of the following shall be deemed an “Event of
Default”:
(a) The
Company shall default in the payment when due of any Principal of
or Interest on this Note, whether at maturity, by acceleration or
otherwise; or
(b) The
Company (i) shall admit in writing its inability to pay its debts
as they mature, or (ii) shall make a general assignment for the
benefit of creditors, or (iii) shall be adjudicated bankrupt or
insolvent, or (iv) shall commence a voluntary proceeding seeking
liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect; or
(c) An
involuntary proceeding shall be commenced against the Company
seeking liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect, or a receiver, liquidator, trustee,
custodian, conservator or other such person shall be appointed by
any court to take charge of the Company’s affairs, assets or
business, and (i) the Company shall admit to the material
allegations of the petition or complaint in such proceeding, or
(ii) such involuntary proceeding or appointment shall remain
undismissed and unstayed for a period of sixty (60) days;
or
(d) If
any representation or warranty made by the Company in the Purchase
Agreement shall be determined to have been false or misleading in
any material respect as of the date made; or
(e) Any
failure by the Company to perform or observe any of its covenants
contained in the Purchase Agreement; provided, however, that with
respect to any such non-compliance which is capable of being cured,
such non-compliance shall not constitute an Event of Default unless
and until such non-compliance remains uncured for a period of
thirty (30) days after the occurrence of such non-compliance;
or
(f) If
a final judgment or judgments in an aggregate uninsured amount in
excess of EUR 1,000,000 shall be rendered against the
Company which is not, within thirty (30) days after the entry
thereof, discharged or the execution thereof stayed pending appeal,
or within
