EXHIBIT 10.3
THIS NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR (B) AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
THIS NOTE IS REGISTERED WITH THE AGENT
PURSUANT TO SECTION 24(B) OF THE SECURITY AGREEMENT (AS DEFINED
BELOW). TRANSFER OF ALL OR ANY PORTION OF THIS NOTE IS
PERMITTED SUBJECT TO THE PROVISIONS SET FORTH IN SUCH SECTION 24(B)
WHICH REQUIRE, AMONG OTHER THINGS, THAT NO TRANSFER IS EFFECTIVE
UNTIL THE TRANSFEREE IS REFLECTED AS SUCH ON THE REGISTRY
MAINTAINED WITH THE AGENT PURSUANT TO SUCH SECTION
24(B).
SECURED TERM
NOTE
FOR VALUE RECEIVED, each of STEN
CORPORATION, a Minnesota corporation (the “ Parent
”), and the other companies listed on Exhibit A
attached hereto (such other companies together with the Parent,
each a “Company” and collectively, the “
Companies ”), hereby, jointly and severally, promises
to pay to VALENS U.S. SPV I, LLC (the “ Holder
”) or its registered assigns or successors in interest, the
sum of One Million Five Hundred Thousand Dollars ($1,500,000),
together with any accrued and unpaid interest hereon, on August 22,
2013 (the “ Maturity Date ”) if not sooner
indefeasibly paid in full.
Capitalized terms used herein without
definition shall have the meanings ascribed to such terms in that
certain Security Agreement dated as of the date hereof (as amended,
restated, modified and/or supplemented from time to time, the
“ Security Agreement ”) among the Companies, the
Holder, each other Lender and LV Administrative Services, Inc., as
administrative and collateral agent for the Lenders (the “
Agent ” together with the Lenders, collectively, the
“ Creditor Parties ”).
The following terms shall apply to this
Secured Term Note (this “ Note ”):
ARTICLE
I
AMORTIZATION
1.1
Principal Payments
. Subject to Article III below, two
(2) amortizing payments of the Principal Amount shall be made,
jointly and severally, by the Companies on (i) August 22, 2012, in
the amount of $600,000, and (ii) August 22, 2013, in the amount of
$900,000. Any outstanding Principal Amount together with any
and all other unpaid amounts which are then owing by the Companies
to the Holder under this Note, the Security Agreement and/or any
other Ancillary Agreement shall be due and payable on the Maturity
Date.
1.2
Optional Redemption in Cash
. The Companies may prepay this
Note at any time, in whole or in part, without penalty or premium.
If within thirty six (36) months of the date of issue of this
Note, the Companies prepay in full the Principal Amount outstanding
at such time together with any and all other sums due, accrued or
payable to the Holder arising under this Note, the Security
Agreement or any other Ancillary Agreement (collectively, the
“ Redemption Amount ”), upon receipt in full of
the Redemption Amount in good funds, the Holder will rebate to
Companies $500,000. The Companies shall deliver to the Holder
a written notice of redemption (the “ Notice of
Redemption ”) specifying the date for such Optional
Redemption (the “ Redemption Payment Date ”),
which date shall be ten (10) business days after the date of the
Notice of Redemption (the “ Redemption Period
”). On the Redemption Payment Date, the Redemption
Amount must be paid in good funds to the Holder. In the event
the Companies fail to pay the Redemption Amount on the Redemption
Payment Date as set forth herein, then such Redemption Notice will
be null and void. In the event that the Redemption Amount is
paid to the Holder within six (6) months of the date of issue of
this Note, upon receipt in full of the Redemption Amount in good
funds, the Holder will rebate to Companies fifty percent (50%) of
any fees it received from the Companies on the date of issue of
this Note.
ARTICLE
II
EVENTS OF
DEFAULT
2.1
Events of Default
. The occurrence of any Event of
Default under the Security Agreement shall constitute an event of
default (“ Event of Default ”)
hereunder.
2.2
Default Interest
. Following the occurrence and
during the continuance of an Event of Default, each Company shall,
jointly and severally, pay additional interest on the outstanding
principal balance of this Note in an amount equal to two percent
(2%) per month, and all outstanding obligations under this Note,
the Security Agreement and each other Ancillary Agreement,
including unpaid interest, shall continue to accrue interest at
such additional interest rate from the date of such Event of
Default until the date such Event of Default is cured or
waived.
2.3
Default Payment
. Following the occurrence and
during the continuance of an Event of Default, the Agent may demand
repayment in full of all obligations and liabilities owing by the
Companies to the Holder under this Note, the Security Agreement
and/or any other Ancillary Agreement and/or may elect, in addition
to all rights and remedies of the Agent under the Security
Agreement and the other Ancillary Agreements and all obligations
and liabilities of each Company under the Security Agreement and
the other Ancillary Agreements, to require the Companies, jointly
and severally, to make a Default Payment (“ Default
Payment ”). The Default Payment shall be one
hundred thirty percent (130%) of the outstanding principal amount
of this Note, plus accrued but unpaid interest, all other fees then
remaining unpaid, and all other amounts payable hereunder.
Subject to the last sentence of Section 18 of the Security
Agreement, the Default Payment shall be due and payable immediately
on the date that the Agent has demanded payment of the Default
Payment pursuant to this Section 2.3.
ARTICLE
III
MISCELLANEOUS
3.1
Cumu
