THIS
SENIOR SECURED PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT FOR DISTRIBUTION AND MAY BE TRANSFERRED OR
OTHERWISE DISPOSED OF ONLY IN COMPLIANCE WITH THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), AND APPLICABLE STATE
SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED UPON ANY PROMISSORY
NOTE ISSUED IN EXCHANGE FOR THIS SECURED PROMISSORY
NOTE.
THIS
NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT
(“OID”). PURSUANT TO TREASURY REGULATION
§1.1275-3(b)(1), VINCENT COLANGELO, A REPRESENTATIVE OF THE
BORROWERS HEREOF WILL, BEGINNING TEN (10) DAYS AFTER THE ISSUE DATE
OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST
THE INFORMATION DESCRIBED IN TREASURY REGULATION
§1.1275-3(b)(1)(i). VINCENT COLANGELO MAY BE REACHED AT
TELEPHONE NUMBER (954) 389-8300.
SENIOR SECURED PROMISSORY
NOTE
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Original
Issuance Date: November 14, 2008
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Original Principal Amount:
$10,300,000
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FOR VALUE RECEIVED, upon the terms and subject
to the conditions set forth in this senior secured promissory note
(this “Note”), MDWERKS, INC., a Delaware corporation
with its principal place of business at 1020 NW 6th Street, Suite
I, Deerfield Beach, FL 33442, and XENI FINANCIAL SERVICES, CORP., a
Florida corporation with its principal place of business at 1020 NW
6th Street, Suite I, Deerfield Beach, FL 33442 (each a
“Borrower” and collectively the
“Borrowers”), jointly and severally, absolutely and
unconditionally promise to pay to the order of DEBT OPPORTUNITY
FUND, LLLP or registered assigns (the “Payee” or
“Holder”), when due, whether upon the Maturity Date (as
defined below), acceleration or otherwise (in each case in
accordance with the terms hereof), the amount set out above as the
Original Principal Amount or so much thereof as may from time to
time be advanced hereunder (without deduction for the original
issue discount taken by the Holder pursuant to Article I of the
Loan and Securities Purchase Agreement of even date herewith
between the Borrowers and the Holder (the “Loan
Agreement”), each an “Advance” and collectively
the “Advances”) and accrued interest thereon as
hereinafter provided. All Advances made to the Borrowers shall be
recorded by the holder hereof on Schedule A attached to this
Note, which schedule is incorporated herein by reference and made a
part hereof. This Note is issued in connection with the Loan
Agreement, all terms of which are incorporated herein by this
reference and hereby made a part of this Note. Capitalized terms
not defined herein shall have the meanings ascribed to them in the
Loan Agreement.
ARTICLE
I
PAYMENT OF PRINCIPAL AND
INTEREST; METHOD OF PAYMENT; MATURITY DATE
1.1 Payment of Principal . Commencing on June 1, 2009, the Borrowers
shall pay to the Holder monthly payments of principal in the amount
of One Hundred Fifty Thousand Dollars ($150,000). All oustanding
principal, interest and fees and charges of any kind under the Note
shall become due and payable on November 14, 2010 (the
“Maturity Date”). Payment of the principal of this Note
(and any interest accrued thereon) shall be made in U.S. dollars in
immediately available funds.
1.2 Payment of Interest . Interest on the principal under this Note
shall accrue at the rate of thirteen percent (13%) per annum (the
“Stated Interest Rate”) commencing on the date that the
Funded Amount, or any portion thereof, is released to the Borrowers
under that certain Escrow Agreement dated November 14, 2008 (the
“Escrow Agreement”) by and among the Borrowers, the
Lender and Escrow Agent (as defined in the Escrow Agreement),
except that interest shall begin accruing with respect to any
amounts advanced to the Borrowers outside the Escrow Agreement upon
the Borrowers’ actual receipt thereof (inclusive of the Cash
Payment), and shall be computed on the basis of a 360-day year
comprised of twelve (12) thirty (30) day months and shall be
payable monthly in cash on the first (1st) day of each month, in
arrears, commencing December 1, 2008. Interest shall be paid in
U.S. dollars in immediately available funds.
1.3 Payment on Non-Business Days
. If the outstanding principal or
accrued but unpaid interest under this Note becomes due and payable
on a Saturday, Sunday or public holiday under the laws of the State
of New York, the due date hereof shall be extended to the next
succeeding full business day and interest shall be payable at the
rate of thirteen (13%) percent per annum during such extension. All
payments received by the Holder shall be applied first to the
payment of all accrued interest payable hereunder.
1.4 Late Fee . In the event any payment of principal or
interest or both shall remain unpaid for a period of ten (10) days
or more after the due date thereof, a one-time late charge
equivalent to five percent (5%) of each unpaid amount shall be
charged.
1.5 Adjustment of Stated Interest
Rate .
(a) After an Event of Default and acceleration of
the Maturity Date by the Holder the Stated Interest Rate shall be
adjusted to a rate of eighteen percent (18%) per annum,
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