Document:

Exhibit 10.1

 

CRYSTAL INTERNATIONAL TRAVEL GROUP, INC.

SECURED NOTE AND WARRANT PURCHASE AGREEMENT

THIS SECURED NOTE AND WARRANT PURCHASE AGREEMENT
is made as of the     day of November, 2006 (the “Effective Date”) by and among CRYSTAL INTERNATIONAL TRAVEL GROUP, INC., a Delaware
corporation (the “Company”), and the persons
and entities named on the Schedule of Purchasers attached hereto (individually,
a “Purchaser” and collectively, the “Purchasers”).

The parties hereby agree
as follows:

1.                                      AMOUNT
AND TERMS OF THE SECURED LOAN; ISSUANCE OF WARRANTS.

1.1          The Loan.  Subject to the terms of this Agreement, at
the Closing, each Purchaser agrees to purchase and the Company agrees to sell
and issue to each Purchaser a Secured Promissory Note, in substantially the
form attached hereto as Exhibit A
(each a “Note” and collectively, the “Notes”), in a principal amount equal
to such Purchaser’s Pro Rata Share of the total amount to be funded at each
such closing.  For purposes of this
Agreement, the term “Pro Rata Share”
means, as to each Purchaser, the percentage equivalent of such Purchaser’s
commitment to purchase Notes from the Company (the “Commitment
Amount”), divided by the combined Commitment Amounts of all
Purchasers to purchase Notes from the Company, which combined aggregate amount
is set forth on the Schedule of Purchasers attached hereto, as the same may be
amended from time to time (the “Total Commitment”).

1.2          Issuance of Warrants.   Subject to the terms of this Agreement, and
in consideration for the purchase by the Purchasers of the Notes and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Company agrees to issue to each Purchaser, at the Closing, a warrants in
substantially the form attached hereto as Exhibit B
(each, a “Warrant” and collectively the
“Warrants”), for shares of Common
Stock of the Company (the “Common Stock”).

2.                                      THE
CLOSING.

2.1          Closing.  The closing of the purchase and sale of Notes
in the aggregate principal amount of $400,000 (the “Loan
Amount”), the issuance of the Restricted Shares (as defined
below) and the issuance of Warrants shall be held on the Effective Date at the
offices of the Company (the “Closing”),
or at such other place and time as the Company and the Purchasers shall
mutually agree upon (the “Closing Date”).

2.2          Delivery.  At the Closing:

 (i) Purchaser will deliver to the Company
a certified check or wire transfer funds equal to the Loan Amount;

(ii) the Company shall issue and deliver to
Purchaser a Note payable to such Purchaser in the principal amount of $400,000;

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(iii) the Company shall issue and deliver to Purchaser
a Warrant for an aggregate of 400,000 shares of the Company’s Common Stock at an exercise price of $0.10 per
share and in return the Purchaser shall return to the Company for cancellation
any and all warrants issued to it on or about May 2, 2006;

(iv) the Company
shall instruct its transfer agent to issue and deliver to each Purchaser within
5 business days of the date hereof 1,000,000 “restricted shares” (as such term
is defined in the Securities Act of 1933) of the Company’s Common Stock with
the registration rights set forth in Section 5(d) of this Agreement (the “Restricted Shares”);

(vi) the Company shall execute and deliver a
security agreement substantially in the form attached hereto as Exhibit C (the “Security Agreement”), pursuant to
which the Company shall grant the Agent (as defined in Section 7 below) a
security interest in the “Collateral”
described therein, for the ratable benefit of the Purchasers; and

(vi) the Company shall authorize the filing of a UCC-1
financing statement and shall provide such other documents as may be necessary
or desirable to perfect the Agent’s security interest in the Collateral, in
form reasonably satisfactory to Purchasers, including a Grant of Security
Interest for filing with the United States Patent and Trademark Office.

3.            PURCHASER’S
REPRESENTATIONS AND WARRANTIES.  Each Purchaser hereby
represents and warrants to and agrees with the Company only as to such
Purchaser that:

3.1          Organization and
Standing of the Purchasers.  If the Purchaser is an entity,
such Purchaser is a corporation, partnership or other entity duly incorporated
or organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.

3.2          Authorization and
Power.  Each Purchaser has the requisite power and
authority to enter into and perform this Agreement and to purchase the Notes
and Warrants being sold to it hereunder. 
The execution, delivery and performance of this Agreement by such
Purchaser and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate or partnership
action, and no further consent or authorization of such Purchaser or its Board
of Directors, stockholders, partners, members, as the case may be, is
required.  This Agreement has been duly
authorized, executed and delivered by such Purchaser and constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with the terms
thereof.

3.3          No Conflicts.  The
execution, delivery and performance of this Agreement and the consummation by
such Purchaser of the transactions contemplated hereby or relating hereto do
not and will not (i) result in a violation of such Purchaser’s charter
documents or bylaws or other organizational documents or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument or obligation to which such Purchaser is a party or by which its
properties or assets are bound, or result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental
agency applicable to such Purchaser or its properties (except for such
conflicts, defaults and violations as would not, individually or in the
aggregate, have a

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material adverse effect on
such Purchaser).  Such Purchaser is not
required to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or to
purchase the Notes or acquire the Warrants in accordance with the terms hereof,
provided that for purposes of the representation made in this sentence, such
Purchaser is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.

3.4          Information on
Company.   The Purchaser has been furnished with or has
had access at the EDGAR Website of the Commission to the Company’s Form 10-KSB
for the year ended July 31, 2006 and all periodic reports filed with the
Commission thereafter not later than five days before the Closing Date
(hereinafter referred to as the “Reports”).  In addition, the Purchaser has received in
writing from the Company such other information concerning its operations,
financial condition and other matters as the Purchaser has requested in writing
(such other information is collectively, the “Other
Written Information”), and considered all factors the Purchaser
deems material in deciding on the advisability of investing in the Securities.

3.5          Information on Purchaser.  The Purchaser is, and will be at the time of
the exercise of the Warrants, an “accredited investor”, as such term is defined
in Rule 501 of Regulation D and is experienced in investments and business
matters, has made investments of a speculative nature and has purchased
securities of United States publicly-owned companies in private placements in
the past and, with its representatives, has such knowledge and experience in
financial, tax and other business matters as to enable the Purchaser to utilize
the information made available by the Company to evaluate the merits and risks
of and to make an informed investment decision with respect to the proposed
purchase, which represents a speculative investment.  The Purchaser has the authority and is duly
and legally qualified to purchase and own the Securities.  The Purchaser is able to bear the risk of
such investment for an indefinite period and to afford a complete loss
thereof.  The information set forth on
the signature page hereto regarding the Purchaser is accurate.

3.6          Purchase of Notes and Warrants.  On the Closing Date, the Purchaser will
purchase the Notes and Warrants as principal for its own account for investment
only and not with a view toward, or for resale in connection with, the public
sale or any distribution thereof, but Purchaser does not agree to hold the
Notes and Warrants for any minimum amount of time.

3.7          Compliance with
Securities Act.  The Purchaser understands and agrees that the
Securities have not been registered under the 1933 Act or any applicable state
securities laws, by reason of their issuance in a transaction that does not
require registration under the 1933 Act (based in part on the accuracy of the
representations and warranties of Purchaser contained herein), and that such
Securities must be held indefinitely unless a subsequent disposition is
registered under the 1933 Act or any applicable state securities laws or is
exempt from such registration. 
Notwithstanding anything to the contrary contained in this Agreement,
such Purchaser may transfer (without restriction and without the need for an
opinion of counsel) the Securities to its Affiliates (as defined below)
provided that each such Affiliate is an “accredited investor” under Regulation
D and such Affiliate agrees to be bound by the terms and conditions of this
Agreement. For the purposes of this Agreement, an “Affiliate” of any person or entity means any other person or
entity directly or indirectly controlling, controlled by or under direct or
indirect common control with such person or entity.  Affiliate when employed in connection

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with the Company includes
each Subsidiary [as defined in Section 5(a)] of the Company.  For purposes of this definition, “control” means the power to direct the
management and policies of such person or firm, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise.

3.8          Shares Legend.  The
shares underlying the Warrants shall bear the following or similar legend:

“THE SHARES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  THESE SHARES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO CRYSTAL
INTERNATIONAL TRAVEL GROUP, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”

3.9          Warrants
Legend.  The Warrants shall
bear the following or similar legend:

“THIS WARRANT AND THE COMMON
SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. 
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID
ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO CRYSTAL INTERNATIONAL TRAVEL GROUP, INC. THAT SUCH REGISTRATION
IS NOT REQUIRED.”

3.10        Communication of Offer.  The
offer to sell the Securities was directly communicated to the Purchaser by the
Company.  At no time was the Purchaser
presented with or solicited by any leaflet, newspaper or magazine article,
radio or television advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such communicated offer.

3.11        Authority;
Enforceability.  This Agreement and other agreements delivered
together with this Agreement or in connection herewith have been duly
authorized, executed and delivered by the Purchaser and are valid and binding
agreements enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights generally and
to general principles of equity; and Purchaser has full corporate power and
authority necessary to enter into this Agreement and such other agreements and
to perform its obligations hereunder and under all other agreements entered
into by the Purchaser relating hereto.

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3.12        No Governmental Review. 
Purchaser understands that no United States federal or state agency or
any other governmental or state agency has passed on or made recommendations or
endorsement of the Securities or the suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Securities.

3.13        Correctness of
Representations.  Each Purchaser represents as to such
Purchaser that the foregoing representations and warranties are true and
correct as of the date hereof and, unless a Purchaser otherwise notifies the
Company prior to the Closing Date shall be true and correct as of the Closing
Date.

3.14        Survival.  The
foregoing representations and warranties shall survive the Closing Date until
three years after the Closing Date.

4.            Company
Representations and Warranties.  The Company represents and
warrants to and agrees with each Purchaser that except as set forth in the
Reports and as otherwise qualified in the Transaction Documents:

4.1          Due
Incorporation.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power to own its properties and
to carry on its business is disclosed in the Reports.  The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a Material Adverse Effect.  For purpose of this Agreement, a “Material Adverse Effect” shall mean a
material adverse effect on the financial condition, results of operations,
properties or business of the Company taken individually, or in the aggregate,
as a whole.  For
purposes of this Agreement, “Subsidiary”
means, with respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity) of which more than 50% of (i) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (ii) in the case of a partnership or limited
liability company, the interest in the capital or profits of such partnership
or limited liability company or (iii) in the case of a trust, estate,
association, joint venture or other entity, the beneficial interest in such
trust, estate, association or other entity business is, at the time of
determination, owned or controlled directly or indirectly through one or more
intermediaries, by such entity.

4.2          Outstanding Stock.  All
issued and outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable.

4.3          Authority; Enforceability.  This Agreement, the Note, the Warrants, and
any other agreements delivered together with this Agreement or in connection
herewith (collectively “Transaction Documents”)
have been duly authorized, executed and delivered by the Company and are valid
and binding agreements enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’
rights generally and to general principles

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of equity.  The
Company has full corporate power and authority necessary to enter into and
deliver the Transaction Documents and to perform its obligations thereunder.

4.4          No Violation or
Conflict.  Assuming the representations and warranties
of the Purchasers in Section 4 are true and correct, neither the issuance and
sale of the Securities nor the performance of the Company’s obligations under
this Agreement and all other agreements entered into by the Company relating
thereto by the Company will:

(i)            violate, conflict
with, result in a breach of, or constitute a default (or an event which with
the giving of notice or the lapse of time or both would be reasonably likely to
constitute a default in any  material
respect) under (A) the articles or certificate of incorporation, charter or
bylaws of the Company, (B) to the Company’s knowledge, any decree, judgment,
order, law, treaty, rule, regulation or determination applicable to the Company
of any court, governmental agency or body, or arbitrator having jurisdiction
over the Company or over the properties or assets of the Company or any of its
Affiliates, (C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, indenture,
lease, mortgage, deed of trust or other instrument to which the Company or any
of its Affiliates is a party, by which the Company or any of its Affiliates is
bound, or to which any of the properties of the Company or any of its
Affiliates is subject, or (D) the terms of any “lock-up” or similar provision
of any underwriting or similar agreement to which the Company, or any of its
Affiliates is a party except the violation, conflict, breach, or default of
which would not have a Material Adverse Effect; or

(ii)          result in the creation or imposition
of any lien, charge or encumbrance upon the Securities or any of the assets of
the Company or any of its Affiliates; or

(iii)         result in the
activation of any anti-dilution rights or a reset or repricing of any debt or
security instrument of any other creditor or equity holder of the Company, nor
result in the acceleration of the due date of any obligation of the Company; or

(iv)         result in the activation of any
piggy-back registration rights of any person or entity holding securities or
debt of the Company or having the right to receive securities of the Company.

4.5          Reporting Company.  The
Company is a publicly-held company subject to reporting obligations pursuant to
Section 13 of the Securities Exchange Act of 1934 (the “1934 Act”)
and has a class of common shares registered pursuant to Section 12(g) of the
1934 Act.  Pursuant to the provisions of
the 1934 Act, the Company has timely filed all reports and other materials
required to be filed thereunder with the Commission during the preceding twelve
months.

4.6          Information
Concerning Company.  The Reports contain all material information
relating to the Company and its operations and financial condition as of their
respective dates and all the information required to be disclosed therein.   Since the last day of the fiscal year of the
most recent audited financial statements included in the Reports (“Latest Financial Date”), and except as modified in the Other
Written Information or in the Schedules hereto, there has been no Material
Adverse Event relating to the Company’s business, financial

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condition or affairs not
disclosed in the Reports. The Reports do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances when made.  The Company has
not provided to the Purchasers any material non-public information.

4.7          Stop Transfer.  The
Company will not issue any stop transfer order or other order impeding the
sale, resale or delivery of any of the Securities, except as may be required by
any applicable federal or state securities laws and unless contemporaneous
notice of such instruction is given to the Purchaser.

4.8           Not an Integrated
Offering.  Provided the
representations and warranties of the Purchasers are true and accurate, neither
the Company, nor any of its Affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would cause
the offer of the Securities pursuant to this Agreement to be integrated with
prior offerings by the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of the OTC Bulletin Board (“Bulletin Board”)
which would impair the exemptions relied upon in this Offering or the Company’s
ability to timely comply with its obligations hereunder.  Nor will the Company or any of its Affiliates
take any action or steps that would cause the offer or issuance of the
Securities to be integrated with other offerings which would impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder. 
The Company will not conduct any offering other than the transactions
contemplated hereby that will be integrated with the offer or issuance of the
Securities which would impair the exemptions relied upon in this Offering or
the Company’s ability to timely comply with its obligations hereunder.

4.9          Dilution.   The
Company’s executive officers and directors understand the nature of the
Securities being sold hereby and recognize that the issuance of the Securities
will have a potential dilutive effect on the equity holdings of other holders
of the Company’s equity or rights to receive equity of the Company.  The board of directors of the Company has
concluded, in its good faith business judgment that the issuance of the
Securities is in the best interests of the Company.  The Company specifically acknowledges that
its obligation to issue the Shares upon conversion of the Notes, and the
Warrant upon exercise of the Warrants is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company or parties entitled to receive equity of the
Company.

4.10        Correctness of Representations.  The foregoing
representations and warranties shall survive until three years after the
Closing Date.

5.                                      COVENANTS.

Until the termination of this Agreement and the
payment and satisfaction of all Secured Obligations (as defined in the Security
Agreement):

(a)           Corporate Existence.  The Company shall maintain its corporate
existence and good standing in its jurisdiction of incorporation and maintain
qualification in each jurisdiction in which the failure to so qualify could
have a material and adverse effect on the business, properties, financial
condition or operations of the Company.

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(b)           Compliance with Law.  The Company shall comply with all laws,  ordinances and regulations to which the
Company and its property is subject, the noncompliance with which could have a
material adverse effect on the business, properties, financial condition or operations
of the Company.

(c)           Notification.  The Company shall give written notice to the
Purchasers of (i) any event which, with notice or passage of time or both would
constitute an Event of Default (as defined below), or the occurrence of an
Event of Default within five business days of becoming aware of the same, or
(ii) any event which has had or would reasonably be expected to have a material
or adverse effect on the business, properties, financial condition or
operations of the Company.

(d)           Registration Rights.  The Company shall notify each Purchaser in
writing at least fifteen days
prior to the filing of any registration statement under the Securities Act for
purposes of a public offering of securities of the Company (including, but not
limited to, registration statements relating to secondary offerings of
securities of the Company) and will afford each such Purchaser an opportunity
to include in such registration statement all or part of such Restricted
Securities held by such Purchaser.  Each
Purchaser desiring to include in any such registration statement all or any
part of the Restricted Securities held by it shall, within five days after the
above-described notice from the Company, so notify the Company in writing.  Such notice shall state the intended method
of disposition of the Restricted Securities by such Purchaser.  If a Purchaser decides not to include all of
its Restricted Securities in any registration statement thereafter filed by the
Company, such Purchaser shall nevertheless continue to have the right to
include any Restricted Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to
offerings of its securities, all upon the terms and conditions set forth
herein.  The Company shall have the right
in its good faith and sole discretion to remove any Restricted Securities from
any registration statement when it deems it necessary in order to meet
contractual commitments existing as of the date hereof to other selling stockholders.

6.                                      EVENTS
OF DEFAULT; REMEDIES.

6.1          Events of Default.  Each of the following shall
constitute an event of default (each, an “Event of Default”)
under this Agreement and the other Loan Documents:

(a)           the Company fails
to pay any and all unpaid principal, accrued interest and all other amounts
owing under any Note within five (5) days of the date such payment is due;

(b)           the Company engages
in any liquidation, dissolution or winding up of the Company (as contemplated
by the Restated Certificate);

(c)           the Company files
any petition or action for relief under any bankruptcy, reorganization,
insolvency or moratorium law or any other law for the relief of, or relating
to, debtors, now or hereafter in effect, or makes any assignment for the
benefit of creditors or takes any corporate action in furtherance of any of the
foregoing;

(d)           an involuntary
petition is filed against the Company under any bankruptcy statute now or
hereafter in effect, unless such petition is dismissed or discharged within
(60) days

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of the date such petition is filed, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) is appointed to take possession, custody or control of any property
of the Company;

(e)           the Company
executes an assignment with respect to a majority of its assets;

(f)            the Company
breaches any warranty or covenant in any material respect made by Company in
the Notes (except as set forth in (a) above), or any other Loan Document, and,
as to any breach that is capable of cure, the Company fails to cure such breach
within fifteen (15) days of the date on which notice thereof has been given to
the Company by the Required Purchasers, unless within that time period the
Company has commenced and continues diligent efforts to remedy the default, in
which event the Company shall have such additional time as is necessary, but
not more than thirty (30) days after the date on which notice thereof has been
given to the Company by the Required Purchasers to remedy the default before an
Event of Default occurs;

(g)           the occurrence of
an “Event of Default” under the Security Agreement;

(h)           the occurrence of a
“Liquidation” event as defined in the Company’s Restated Certificate.

6.2          Remedies.  Upon the occurrence of any Event of Default,
all unpaid principal on the Notes, accrued and unpaid interest thereon and all
other amounts owing under any of the Loan Documents shall, at the option of the
Required Purchasers, and, upon the occurrence of any Event of a Default
pursuant to Section 6.1(c) or (d) above, automatically, be immediately due,
payable and collectible by the holder of a Note, with the consent of the
Required Purchasers, pursuant to applicable law.   In the event of any Event of Default, the Company
shall pay all reasonable attorneys’ fees and costs incurred by the holders of
the Notes in enforcing and collecting the Notes and the other Loan
Documents.  Notwithstanding the
foregoing, upon the occurrence of an Event of Default pursuant to Section 6.1,
the Required Purchasers may elect, on behalf of all Purchasers, to convert, in
whole, the outstanding principal amount of the Notes, plus accrued and unpaid
interest thereon, into shares of Common Stock (as defined in the Notes),
pursuant to the provisions of the Notes.

7.                                      MISCELLANEOUS.

7.1          Binding Agreement.  The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties.  The Company may
not assign this Agreement without the written consent of the Required
Purchasers.  Each of the Purchasers may
assign this Agreement and its respective rights hereunder at any time without
the consent of the Company. Nothing in this Agreement, express or implied, is
intended to confer upon any third party any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

7.2          Indemnity; Costs, Expenses and
Attorneys’ Fees.  The
Company shall indemnify and hold each Purchaser, and each of its respective
general partners, managers, officers or directors, harmless from any loss,
cost, liability and legal or other expense, including, without limitation,
reasonable attorneys’ fees, which a Purchaser may directly or indirectly suffer

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or incur by reason of any exercise of any remedies
with respect to any Collateral at any time securing the Secured Obligations, or
the failure of the Company to perform any of its obligations under this
Agreement or any Loan Document, except for liabilities which a Purchaser
suffers or incurs by reason of such Purchaser’s own gross negligence or willful
misconduct.

7.3          Severability.  If one or more provisions of this Agreement
or of any other Loan Document are held to be unenforceable under applicable
law, such provision shall be excluded from this Agreement or from such other
Loan Document and the balance of the Agreement or of such other Loan Document
shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.

7.4          Governing Law.  This Agreement shall be governed by and
construed under the laws of the State of New York as applied to agreements
among New York residents, made and to be performed entirely within the State of
New York.

7.5          Consent to Jurisdiction and
Venue.   Any legal action or other legal proceeding
relating to this Agreement and the other Loan Documents and the enforcement of
any provision thereof, may be brought or otherwise commenced in any state or
federal court located in the State of New York. 
Each party to this Agreement expressly and irrevocably consents and
submits to the jurisdiction of each state and federal court located in the
State of New York in connection with any such legal proceeding.

7.6          Waiver of Jury Trial.  TO THE EXTENT EACH MAY LEGALLY DO SO, EACH PARTY
HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, OR IN ANY WAY CONNECTED WITH, OR
RELATED TO, OR INCIDENTAL TO, THE DEALING OF THE PARTIES HERETO WITH RESPECT TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE EXTENT
EACH MAY LEGALLY DO SO, EACH PARTY HERETO HEREBY AGREES THAT ANY SUCH CLAIM,
DEMAND, ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY
AND THAT EITHER PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF ANY OTHER PARTY
HERETO TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

7.7          Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

7.8          Titles and Subtitles.  The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

7.9          Notices.  Any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery or upon deposit with the United States Post Office or Federal
Express, postage prepaid, addressed to the Company at 2140 Headquarters Plaza,
10th Floor, Morristown, New Jersey 07960, or to a Purchaser at its
address

 10
 

 

shown on the Schedule of Purchasers, or at such other
address as such party may designate by ten (10) days advance written notice to
the other party.

7.10        Modification; Waiver.  No modification or waiver of any provision of
this Agreement or consent to departure therefrom shall be effective unless in
writing and approved by the Company and the Required Purchasers, and then it
shall be effective only in the specific instance and for the specific purpose
for which it was given.

7.11        Cumulative Remedies.  Each of the Purchasers’ rights and remedies
under this Agreement and the other Loan Documents shall be cumulative.  Each of the Purchasers shall have all other
rights and remedies not inconsistent herewith as provided under by law or in
equity.  No exercise by a Purchaser of
one right or remedy shall be deemed an election, and no waiver of any Event of
Default shall be deemed a continuing waiver.

7.12        Expenses.  Each party shall pay its
own costs and expenses incurred with respect to the negotiation, execution
delivery and performance of this Agreement.

7.13        Entire Agreement.  This Agreement, the Exhibits hereto, and the
Loan Documents constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other party in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein or
in the other Loan Documents.

[Remainder of
this Page is Intentionally Omitted]

 11

IN WITNESS WHEREOF, the parties
have executed this SECURED NOTE AND WARRANT
PURCHASE AGREEMENT as of the date first written above.

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CRYSTAL INTERNATIONAL TRAVEL

  GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Fabrizzio Busso-Campana

  
	
   

  	
   

  	
  Name: 
  Fabrizzio Busso-Campana

  
	
   

  	
   

  	
  Chief Executive Officer

  

 

SECURED NOTE AND WARRANT
PURCHASE AGREEMENT

SIGNATURE PAGE

 

 

	
  

  	
  PURCHASERS:

  
	
   

  	
  ARNOLD INCOME FUND LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward H. Arnold

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Edward H. Arnold

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing Member

  
						

 

SECURED NOTE AND WARRANT
PURCHASE AGREEMENT

SIGNATURE PAGE

 

SCHEDULES AND
EXHIBITS

Schedule of Purchasers

Exhibit A:  Form
of Secured Promissory Note

Exhibit B:  Form
of Warrant

Exhibit C:  Form
of Security AgreementExhibit 10.2

SECURED
PROMISSORY NOTE

	
  $400,000

  	
   

  	
  November 27, 2006

  
	
   

  	
   

  	
  New York, New York

  

 

For value received CRYSTAL INTERNATIONAL TRAVEL GROUP, INC., a Delaware corporation (the “Company”), unconditionally promises
to pay to the order of or
its assigns Arnold Income Fund LP (the “Holder”)
the principal sum of $400,000, in lawful currency of the United States of
America, together with interest thereon at the rate of twelve percent (12%) per
annum, computed on the basis of the actual
number of days elapsed in a 365 day year. 
Interest shall accrue commencing on the date hereof and shall continue
to accrue until this Note is paid in full. 
If, at any time, any interest is paid on this Note which is deemed to be
in excess of the then legal maximum rate, then that portion of the interest
payment representing an amount in excess of the then legal maximum rate shall
be deemed a payment of principal and applied against the principal amount of
this Note.  Additionally, the Company
shall pay to the Holder a one percent (1%) loan origination fee on the date
this Note is issued.

1.                                      Payment;
Maturity; Default Interest

(a)                                  This
Secured Promissory Note (the “Note”) is issued as part of a series of similar Secured Promissory
Notes (collectively, the “Notes”) to
be issued pursuant to the terms of that certain Secured Note and Warrant
Purchase Agreement, dated as of November 27, 2006 (as the same may from time to
time be amended, modified, supplemented or restated, the “Purchase
Agreement”), to the persons listed on the Schedule of Purchasers
thereto (the “Purchasers”).  Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings given to them in
the Purchase Agreement and in the Security Agreement (as defined below).

(b)                                  Payment
of the full principal amount of this Note and accrued, but unpaid interest
thereon, and all other fees and expenses due to Holder is secured by the
Collateral identified and described as security therefor in that certain Security
Agreement dated as of even date herewith and executed by the Company in favor
of the Agent for the ratable benefit of Holder and the holders of the other
Notes (as the same may from time to time be amended, modified or supplemented
or restated, the “Security Agreement”).

(c)                                  On
May 31 2007 (the “Demand Date”), the
outstanding principal amount of this Note and all other Notes, together with
any then unpaid and accrued interest thereon, is immediately due and payable,
together with all other amounts payable hereunder.

(d)                                  All
payments of interest and principal shall be in lawful money of the United
States of America and shall be made pro rata among all holders of the
Notes.  All payments shall be applied
first to accrued interest, and thereafter to principal.  If any payments on this Note become due on a
Saturday, Sunday, or a public holiday, such payment shall be made

 1
 

 

 

on the next succeeding business day and such extension
of time shall be included in computing interest in connection with such payment.

2.                                      Default;
Remedies

(a)                                  The
occurrence of any Event of Default in Section 6.1 of the Purchase Agreement
shall be an Event of Default hereunder.

(b)                                  Upon
the occurrence and during the continuance of any Event of Default, all unpaid
principal on this Note, accrued and unpaid interest thereon, and all other
amounts owing hereunder shall, at the option of the Holder, and, upon the
occurrence of any Event of a Default pursuant to Sections 6.1(c) or (d) of the
Purchase Agreement, automatically, be immediately due, payable and collectible
by Holder pursuant to applicable law, subject to Section 7 of the Purchase
Agreement.

(c)                                  Upon
the occurrence of an Event of Default, the Company shall pay all reasonable
attorneys’ fees and court costs incurred by Holder in enforcing and collecting
this Note.

(d)                                  Upon
the occurrence of an Event of Default the rate of interest payable under the
terms of this note shall be increased to fifteen percent (15%) per annum, computed on the basis of the actual number of days elapsed
in a 365 day year, until such Event of Default has been cured.

3.                                      Prepayment.  This Note may not be prepaid in whole or in
part.

4.                                      Waiver;
Payment of Fees and Expenses.  The
Company waives presentment and demand for payment, notice of dishonor, protest
and notice of protest of this Note, and shall pay all costs of collection when
incurred, including, without limitation, reasonable attorneys’ fees, costs and
other expenses.  The right to plead any
and all statutes of limitations as a defense to any demands hereunder is hereby
waived to the full extent permitted by law. No delay by Holder shall constitute
a waiver, election or acquiescence by it.

5.                                      Cumulative
Remedies.  Holder’s rights and
remedies under this Note and the other Loan Documents shall be cumulative.  Holder shall have all other rights and
remedies not inconsistent herewith as provided under the UCC, by law or in
equity.  No exercise by Holder of one
right or remedy shall be deemed an election, and no waiver of any Event of
Default shall be deemed a continuing waiver.

6.                                      Miscellaneous.

(a)                                  Governing
Law.  The terms of this Note shall be
construed in accordance with the laws of the State of New York, as applied to
contracts entered into by New York residents within the State of New York and
to be performed entirely within the State of New York.

(b)                                  Successors
and Assigns; Assignment.  The terms
and conditions of this Note shall inure to the benefit of and be binding upon
the respective successors and assigns of

 2
 

 

 

the parties. 
The Company may not assign this Note or delegate any of its obligations
hereunder without the written consent of the Holder.  Holder may assign this Note and its rights
hereunder at any time without the consent of the Company subject to the
limitations on disposition contained in Section 4 of the Purchase Agreement.

(c)                                  Transfer
of Notes.  This Note may be
transferred only upon surrender of the original Note for registration of
transfer, duly endorsed, or accompanied by a duly executed written instrument
of transfer in form satisfactory to the Company.  Thereupon, a new Note for like principal
amount will be issued to, and registered in the name of, the transferee, dated
so that there will be no gain or loss of interest on such surrendered Note and
otherwise of like tenor.  Interest and
principal are payable only to the registered holder of the Note.

(d)                                  Titles
and Subtitles.  The titles and
subtitles used in this Note are used for convenience only and are not to be
considered in construing or interpreting this Note.

(e)                                  Notices.  All notices required or permitted hereunder
shall be in writing and shall be given in the manner and to the addresses set
forth in the Purchase Agreement.

(f)                                    Modification;
Waiver.  No modification or waiver of
any provision of this Note or consent to the departure therefrom shall be
effective without the written consent of the Company and the Holder, and then
it shall be effective only in the specific instance and for the specific
purpose for which it was given.

 3
 

 

 

	
   

  	
  CRYSTAL INTERNATIONAL TRAVEL
  GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Fabrizzio
  Busso-Campana

  
	
   

  	
  Name: 
  Fabrizzio Busso-Campana

  
	
   

  	
  Title:  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Acknowledged and Agreed to by Holder:

  
	
   

  	
  Arnold Income Fund LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Edward
  H. Arnold

  
	
   

  	
  Name:  Edward
  H. Arnold

  
	
   

  	
  Title:  Managing
  Member

  

 

 4

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