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Exhibit 10.9
PROMISSORY NOTE AND
SECURITY AGREEMENT
DATE: FEBRUARY 28, 2007
MAKER: SIBLING THEATRICALS, INC.
511 West 25th Street, Unit 503
New York, New York 10001
PAYEE: MOTIVATED MINDS LLC
c/o Ira J. Gaines
1819 East Morten Ave.
Suite 180
Phoenix, AZ 85028
PRINCIPAL
AMOUNT SEVEN HUNDRED TWENTY-FIVE THOUSAND DOLLARS & 00/100
DOLLARS
OF NOTE: ($725,000)
FOR VALUE RECEIVED, Makers promise and agree to pay to Payee, or
order, at
the mailing address of Payee, or at such other place as Payee or
any other
holder hereof ("Holder") may from time-to-time designate, the
principal sum of
Seven Hundred Twenty-Five Thousand Dollars and No/100 Dollars
($725,000) with
Interest, as follows:
1. INTEREST RATE PAYMENTS.
a. Commencing on the date of this Note, and so long as no Event of
Default
(as defined herein) exists, the unpaid balance of this Note shall
accrue
interest ("Interest) at the nominal rate of fifteen percent (15%)
per
annum.
b. During any Event of Default under this Note, the unpaid balance
of this
Note shall accrue Interest at the rate of twenty-five percent (25%)
per
annum ("Default Rate"). Interest shall accrue at the Default Rate
from the
date of an Event of Default, without notice to Maker.
c. The interest provided herein shall be calculated on the basis of
a
360-day year/30 day month.
d.The minimum amount of interest to be paid under the terms of this
Note
is Twenty-one Thousand Seven Hundred Fifty Dollar and Zero
cents
($21,750), regardless of the timing of the payments. To the extent
that
the payments are made under this Note prior to the maturity date of
this
Note, then to that extent, the actual interest rate may actually
exceed
the rate stated above, and such amount shall be treated as
additional or
minimum interest. Makers have agreed to pay a minimum of $21,750
in
interest regardless of when payments on this Note are made.
e.All payments under this Note shall first be credited against
costs and
expenses provided for in this Note, second to the payment of any
late
charges, third to the payment of accrued and unpaid Interest, if
any, and
the remainder shall be credited against principal. All payments
due
hereunder shall be payable in legal tender of the United States
of
America, and in same day funds delivered to Holder by cashier's
check,
certified check, bank wire transfer or any other means of
guaranteed funds
to the mailing address provided below, or at such other place as
Holder
shall designate in writing for such purpose from time to time. If
a
payment under this Note otherwise would become
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due and payable on a Saturday, Sunday or legal holiday (any other
day
being a "Business Day"), the due date of the payment shall be
extended to
the next succeeding Business Day, and Interest, if any, shall be
payable
thereon during such extension.
2. MATURITY DATE. If not sooner paid, all unpaid principal and
accrued Interest
shall be due and payable in full on MAY 28, 2007 ("Maturity Date),
or on the
date Maker shall receive gross financing proceeds (before deduction
of any costs
or expenses of the financing, including commissions or similar
expenses) of One
Million Five Hundred Thousand Dollars and 00/100 Dollars
($1,500,000).
3. LATE CHARGE. Makers shall pay to Holder a late charge ("Late
Charge") equal
to five percent (5%) of any payment not received by the Holder
within ten (10)
days after said payment is due.
4. REASONABLENESS OF CHARGES. Makers acknowledge that upon the
occurrence of an
Event of Default, the damages to the Holder would be extremely
difficult to
ascertain, including the Holder's lost profit and loss of use of
the funds
evidenced hereby and expenses incurred in connection with such
default, and that
the accrual of Interest at the Default Rate and the Late Charge are
reasonable
estimates of the loss to the Holder incurred by virtue of an Event
of Default.
5. LEGAL LIMITS.
a. Makers agree to an effective rate of interest which is the
rate
stated herein plus any additional rate of interest resulting from
any other
payments in the nature of interest, including without limitation,
any late
charges to the extent that such charges may be deemed includable in
interest for
any purpose, and the existence of a minimum dollar amount of
interest to be
charged regardless of any payments that Makers deliver to Payee
before the
Maturity Date of this Note.
b. All agreements between Makers and Payee are hereby expressly
limited so that in no event whatsoever, whether by reason of
deferment in
accordance with this Note or under any agreement or by virtue of
acceleration or
maturity of the obligation evidenced by this Note, or otherwise,
shall the
amount paid or agreed to be paid to Payee for the advance, use,
forbearance or
detention of the money represented by this Note or to compensate
Payee for
damages to be suffered by reason of a late payment or default under
this Note,
exceed the maximum permissible under applicable law. If, from any
circumstances
whatsoever, fulfillment of any provision of this Note, or of any
provision in
the security for this Note at the time performance of such
provision shall be
due, shall involve exceeding the limit of validity prescribed by
law, from the
date of this Note, the obligations to be fulfilled shall be reduced
to the limit
of such validity. This provision shall never be superseded or
waived and shall
control every other provision of all agreements between Makers and
Payee. Makers
represent that the dollar amount of interest to be paid by Makers
does not
exceed the maximum permissible under applicable law.
6. PREPAYMENT. The unpaid principal balance of this Note may be
prepaid in whole
at any time, provided the minimum amount of interest required is
also paid. .
7. FEES.
a. Commissions, Fees and Expenses Paid in Cash. The Company will
pay
the following fees and expenses in connection with and upon the
issuance of this
Note and funding of the loan represented by the Note: a finder's
fee of
Twenty-Five Thousand Dollars ($25,000) to Source Capital Group,
Inc. ("Source"),
Attn: Richard Kelly, registered representative, 7377 E Doubletree
Ranch Rd.;
Suite 290, Scottsdale AZ 85258.
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b. Fees Paid In Common Stock and Warrants. In addition, Payee
shall
receive, as of the date of execution of this Note, as a loan
origination fee:
(i) 250,000 shares of Sibling Entertainment Group, Inc.'s (the
Maker is a wholly
owned subsidiary of Sibling Entertainment Group, Inc.) common
stock, which
shares have piggyback registration rights; and (ii) 700,000
warrants of Sibling
Entertainment Group, Inc. (in the form attached as Exhibit A) which
convert into
700,000 shares of Sibling Entertainment Group, Inc.'s common stock.
The warrants
shall be exercisable for a period of five (5) years from the date
of issuance
with an exercise price of $1.00 per share. Sibling Entertainment
Group, Inc.
intends to undertake a transaction with Sona Development Corp.
whereby Sona
Development Corp. shall be the surviving entity and the
shareholders of Sibling
Entertainment Group, Inc. shall receive shares and warrants in Sona
Development
Corp. In this case, the shares and warrants set forth herein shall
be converted
into an equal amount of shares and warrants for Sona Development
Corp. and have
the same piggyback registration rights.
8. EVENTS OF DEFAULT AND REMEDIES.
(i). The existence or occurrence of the following events shall
constitute an event of default ("Event of Default") under this
Note:
(a) Failure to make any payment under this Note when due.
(b) Failure to cause issuance of the shares of common stock and
warrants as
required in paragraph 7.b. of this Note;
(c) Failure on the part of the Maker to observe or perform any
other covenants
contained in this Note, but only after written notice of the
failure has been
given to the Maker by the Payee, and only if the failure has
continued
unremedied for a period of thirty (30) days after the date the
Maker receives
the notice of the failure.
(d) The decree or order of a court adjudging the Maker bankrupt or
insolvent, or
approving a petition seeking reorganization of the Maker under the
Bankruptcy
Code, if the decree or order has continued undischarged or unstayed
for a period
of sixty (60) days.
(e) A decree or order of a court for the appointment of a receiver,
liquidator,
trustee, or assignee in bankruptcy or insolvency of the Maker, or
for a sale of
all or substantially all of its property1 or for the winding-up or
liquidation
of its affairs; but only if the decree or order has continued in
force
undischarged or unstayed for a period of sixty (60) days.
(f) Any of the following actions by the Maker:
o Institution of voluntary bankruptcy proceedings, consent to
the
filing of bankruptcy proceedings against it, or filing of a
petition
or answer or consent seeking reorganization under the
Bankruptcy
Code.
o Consent to the appointment of a receiver, liquidator, or trustee
in
bankruptcy.
o Making of a general assignment for the benefit of creditors.
o Admission in writing of its inability to pay its debts as
they
become due.
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o The entry or filing of any judgment, writ, or warrant of
attachment
or of any similar process in an amount in excess of $50,000
against
the Maker or against any of its property or assets; but only if
it
remains unpaid, unvacated, unbonded, or unstayed for a period
of
sixty (60) days.
(g) The occurrence of any default under any other loan agreements
or promissory
notes to which Makers are a party, or the filing of bankruptcy or
assignment for
the benefit of creditors by Makers; or
(h) any representation or warranty made by Makers or other
signatories hereunder
to Payee is materially false or misleading.
(ii). Upon the occurrence of any Event of Default: (i) the
entire
unpaid principal balance, any unpaid Interest, and any other
amounts owing under
this Note shall, at the option of the Holder and without further
notice or
demand of any kind to Makers or any other person, immediately
become due and
payable; and, (ii) the Holder shall have and may exercise any and
all rights and
remedies available at law or in equity and also any and all rights
and remedies
provided in any security or guarantee for this Note.
(iii). The remedies of the Holder, as provided in this Note and
in
any security or guarantee for this Note, shall be cumulative and
concurrent, and
may be pursued singularly, successively or together, at the sole
discretion of
the Holder, and may be exercised as often as occasion therefore
shall arise. No
act of omission or commission of the Holder, including specifically
any failure
to exercise any right, remedy or recourse, shall be deemed to be a
waiver or
release of any right, remedy or recourse, such waiver or release to
be effected
only through a written document executed by the Holder. A waiver or
release with
reference to any one event shall not be construed as continuing, as
a bar to, or
as a waiver or release of, any subsequent right, remedy or recourse
as to a
subsequent event.
9. ATTORNEYS' FEES. In the Event of Default under this Note or in
the event the
Holder seeks legal advice in order to enforce the provisions of
this Note or any
guarantee after an Event of Default, Makers agree to pay a
reasonable sum to
Holder for Holder's attorneys' fees. If any action is brought to
enforce or
interpret the provisions of this Note, the prevailing party shall
be entitled to
a reasonable sum for attorneys' fees.
10. CONSTRUCTION. This Note shall be governed as to its
validity,
interpretation, construction, effect and in all other respects by
and in
accordance with the laws and interpretations thereof of the State
of Arizona.
Unless the context otherwise requires, the use of terms in singular
and
masculine form shall include in all instances singular and plural
number and
masculine, feminine and neuter gender.
11. SEVERABILITY. In the event any one or more of the provisions
contained in
this Note or any future amendment hereto shall for any reason be
held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or
unenforceability shall not affect any other provision of this Note
or such other
agreement, and in lieu of each such invalid, illegal or
unenforceable provision
there shall be added automatically as a part of this Note a
provision as similar
in terms to such invalid, illegal or unenforceable provision as may
be possible
and be valid, legal and enforceable.
12. ENTIRE AGREEMENT. This Note Agreement represents the entire
agreement and
understanding between the parties concerning the subject matter
hereof and
supersede all prior and contemporaneous agreements,
understandings,
representations and warranties with respect thereto.
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13. GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions
concerning the
construction, validity, enforcement and interpretation of this Note
shall be
governed by the internal laws of the State of Arizona, without
giving effect to
any choice of law or conflict of law provision or rule (whether of
the State of
Arizona or any other jurisdictions) that would cause the
application of the laws
of any jurisdictions other than the State of Arizona. Each party
hereby
irrevocably submits to the exclusive jurisd
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