Document:

EX-10.4

 Exhibit 10.4 

Covidien Ltd. 
 2007
Stock and Incentive Plan 
 TERMS AND CONDITIONS 

OF 

OPTION AWARD 

OPTION AWARD granted on July 2, 2007 (the “Grant Date”). 

1. Grant of Option. Covidien Ltd. (the “Company”) has granted to you an Option to purchase the number of Shares of Common
Stock set forth in the Grant Letter that issued this Option to you, subject to the provisions of these Terms and Conditions and the Plan. This Option is a Nonqualified Stock Option. 

2. Exercise Price. The Exercise Price required to purchase the Shares covered by this Option is set forth in the Grant Letter. 

3. Vesting. Except as provided below, Shares subject to this Option will vest according to the following schedule: 

 

			
	 Date
	  	 Vested Percentage

	 1st Anniversary of Grant Date
	  	25%  
	 2nd Anniversary of Grant Date
	  	50%  
	 3rd Anniversary of Grant Date
	  	75%  
	 4th Anniversary of Grant Date
	  	100%

 If you terminate employment before full (100%) vesting, you will forfeit the unvested portion of this
Option and may exercise the vested portion until the earlier of (i) the date described in Section 4 below or (ii) 90 days after you terminate employment. However, if you terminate employment due to Normal Retirement (you terminate
employment on or after age 60 and the sum of your age and years of service equals at least 70), Retirement (you terminate employment on or after age 55 and the sum of your age and years of service equals at least 60), death, Disability, a Change in
Control or Divestiture or Outsourcing Agreement, this Option will become vested and exercisable in accordance with the provisions of Section 7, 8 or 9, as applicable. 

4. Term of Option. Unless this Option has been terminated or cancelled, it must be exercised before the close of the New York Stock
Exchange (“NYSE”) on the day prior to the 10th anniversary of the Grant Date. If the NYSE is not open for business on such date, this Option will expire at the close of the NYSE’s
first business day that immediately precedes the day prior to the 10th anniversary of the Grant Date. 

5. Payment of Exercise Price. To exercise all or a portion of this Option, you must pay the Exercise Price for each Share as set forth
in the Grant Letter. You may pay the Exercise Price in cash or by certified check, bank draft, wire transfer or postal or express money order. You may also pay the Exercise Price by using one or more of the following methods: (i) delivering to
the Company a properly executed exercise notice, together with irrevocable 

  
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instructions to a broker to deliver promptly (within the typical settlement cycle for the sale of equity securities on the relevant trading market, or otherwise in accordance with Regulation T
issued by the Federal Reserve Board) to the Company sale or loan proceeds adequate to satisfy the portion of the Exercise Price being so paid; (ii) if expressly approved by the Committee, tendering to the Company (by physical delivery or
attestation) certificates of Common Stock that you have held for 6 months or longer (unless the Committee, in its discretion, waives this 6-month period) and that have an aggregate Fair Market Value as of the day prior to the date of exercise equal
to the portion of the Exercise Price being so paid; or (iii) if such form of payment is expressly authorized by the Board or the Committee, instructing the Company to withhold Shares that would otherwise be issued were the Exercise Price to be
paid in cash and that have an aggregate Fair Market Value as of the date of exercise equal to the portion of the Exercise Price being so paid. Notwithstanding the foregoing, you may not tender any form of payment that the Company determines, in its
sole discretion, could violate any law or regulation. You are not required to purchase all Shares subject to this Option at one time, but you must pay the full Exercise Price for all Shares that you elect to purchase before they will be delivered.
The date of exercise of an Option shall be the date on which the Company receives the Exercise Price for such Option. 
 6. Exercise of
Option. If you are entitled to exercise this Option, you may exercise it by contacting UBS Financial Services through its web site at www.ubs.com/onesource/cov or by calling its toll free number. If you are calling from the U.S., the
number is 1-877-461-7805. If you are calling from outside the U.S., the number is 001-201-272-7685. If someone other than you attempts to exercise this Option (for example, because the Option is being exercised after your death), the Company will
deliver the Shares only after determining that the person attempting to exercise this Option is the duly appointed executor or administrator of your estate or an individual to whom this Option has been transferred in accordance with these Terms and
Conditions and the terms of the Plan. 
 7. Retirement, Normal Retirement, Disability or Death. Notwithstanding the vesting and
exercise provisions described in Section 3, this Option will vest and remain exercisable if your Termination of Employment is a result of your Retirement, Normal Retirement, Disability or death as follows: 

(i) Retirement. If you terminate employment as a result of your Retirement (as defined in Section 3) and your
Retirement occurs less than 12 months after the Grant Date, you will forfeit all Shares subject to this Option. If, however, your Retirement occurs at least 12 months after the Grant Date, then you will be entitled to pro rata vesting of this Option
based on (A) the number of whole months completed from Grant Date through your employment termination date divided by 48 times (B) the total number of shares awarded under the Option minus (C) the number of shares that previously
vested. You will be entitled to exercise this Option until the earlier of (1) the date described in Section 4 or (2) the third anniversary of your Retirement date. 

(ii) Normal Retirement, Disability or Death. If you terminate employment as a result of your Normal Retirement (as
defined in Section 3) and your Normal Retirement occurs less than 12 months after the Grant Date of this Option, you will forfeit all Shares subject to this Option. If, however, your Normal Retirement occurs at least 12 months after the Grant
Date of this Option or you terminate employment because 

  
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of your death or a Disability, then you will become fully vested in this Option on the date of your Normal Retirement, death or Termination of Employment due to Disability and be entitled to
exercise this Option until the earlier of (A) the date described in Section 4 or (B) the third anniversary of the date of your Normal Retirement, death or Termination of Employment due to Disability, as applicable. 

8. Termination of Employment Following a Change in Control. Notwithstanding the vesting and exercise provisions described in
Section 3, you will become fully vested in this Option on the date you terminate employment after a Change in Control and be entitled to exercise this Option until the earlier of (A) the date described in Section 4 or (B) the
third anniversary of your employment termination date, if you satisfy one of the following requirements: 
 (i) Within 24
months after a Change in Control, the Company terminates your employment for any reason other than Cause, Disability or death; or 

(ii) Within 24 months after a Change in Control and within 60 days after one of the events listed in this Section 8(ii),
you terminate your employment because (A) the Company (1) assigns or causes to be assigned to you duties inconsistent in any material respect with your position as in effect immediately prior to the Change in Control; (2) makes or
causes to be made any material adverse change in your position (including titles and reporting relationships and level), authority, duties or responsibilities; or (3) takes or causes to be taken any other action which, in your reasonable
judgment, would cause you to violate your ethical or professional obligations (after written notice of such judgment has been provided by you to the Company and the Company has been given a 15-day period within which to cure such action), or which
results in a significant diminution in your position, authority, duties or responsibilities; or (B) the Company, without your consent, (1) requires you to relocate to a principal place of employment more than 50 miles from your existing
place of employment; or (2) reduces your base salary, annual bonus, or retirement, welfare, stock incentive, perquisite (if any) and other benefits when taken as a whole. 

9. Termination of Employment Resulting From Divestiture or Outsourcing Agreement. Notwithstanding the vesting and exercise provisions
described in Section 3, and subject to the provisions of subsection (i) below, if you terminate employment as a result of a Disposition of Assets, Disposition of a Subsidiary or Outsourcing Agreement, then this Option will vest on a
pro-rata basis based on (A) the number of whole months completed from Grant Date through the closing date of the applicable transaction divided by 48 times (B) the total number of shares awarded under the Option minus (C) the number
of shares that previously vested. If you are entitled to pro rata vesting under this Section 9, then the vested portion of this Option will expire on the earlier of (1) the date described in Section 4 or (2) the third anniversary
of your employment termination date. 
 (i) Notwithstanding the foregoing provisions of this Section 9, you shall not be
eligible for pro-rata vesting and an extended Option expiration date if (A) your Termination of Employment occurs on or prior to the closing date of a Disposition of Assets or Disposition of a Subsidiary or such later date as is provided
specifically in the applicable transaction agreement or related agreements, or on the effective date of an 

  
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Outsourcing Agreement (the “Applicable Employment Date”), and (B) you are offered Comparable Employment with the buyer, successor company or outsourcing agent, as applicable, but
do not commence such employment on the Applicable Employment Date. 
 (ii) For purposes of Section 9(i),
(A) “Comparable Employment” means employment at a location that is no more than 50 miles from your job location at the time of your Termination of Employment that has a base salary and bonus target that is at least equal to your base
salary and bonus target in effect immediately prior to your Termination of Employment; (B) “Disposition of Assets” means the disposition by the Company or a Subsidiary of all or a portion of the assets used by the Company or
Subsidiary in a trade or business to an unrelated corporation or entity; (C) “Disposition of a Subsidiary” means the disposition by the Company or Subsidiary of its interest in a subsidiary or controlled entity to an unrelated
individual or entity, provided that such subsidiary or entity ceases to be a member of the Company’s controlled group as a result of such disposition; and (D) “Outsourcing Agreement” means a written agreement between the Company
or Subsidiary and an unrelated third party (“Outsourcing Agent”) pursuant to which (1) the Company or Subsidiary transfers the performance of services previously performed by Company or Subsidiary employees to the Outsourcing Agent,
and (2) the Outsourcing Agreement includes an obligation of the Outsourcing Agent to offer employment to any employee whose employment is being terminated as a result of or in connection with said Outsourcing Agreement. 

10. Withholdings. The Company has the right, prior to the issuance or delivery of any Shares in connection with the exercise of this
Option, to withhold or require from you the amount necessary to satisfy applicable tax requirements, as determined by the Committee. The methods described in Section 5 may also be used to pay your withholding tax obligation. 

11. Transfer of Option. You generally may not transfer this Option or any interest in this Option except by will or the laws of descent
and distribution. However, you may transfer this Option to members of your immediate family or to one or more trusts for the benefit of family members or to one or more partnerships in which the family members are the only partners, provided that
(i) you do not receive any consideration for the transfer, (ii) you furnish the Committee or its designee with detailed written notice of the transfer at least 3 business days in advance, and (iii) the Committee or its designee
consents in writing to the transfer. For this purpose, “family member” means any spouse, children, grandchildren, parents, grandparents, siblings, nieces, nephews, grandnieces and grandnephews, including adopted, in-laws and step family
members. If this Option is transferred pursuant to this provision, it will continue to be subject to the same terms and conditions that applied immediately prior to the transfer. This Option may be exercised by the transferee only to the same extent
that you could have exercised this Option had no transfer occurred. 
 12. Forfeiture of Option. You will forfeit all or a portion of
this Option if your employment terminates under the circumstances described below: 
 (i) If the Company or Subsidiary
terminates your employment for Cause, including without limitation a termination as a result of your violation of the Company’s Code of Ethical Conduct, then the Company will immediately rescind the unvested portion of this Option and any
vested but unexercised portion of this Option and you will 

  
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immediately forfeit any and all rights you have remaining at such time with respect to this Option. Also, you hereby agree and promise to deliver to the Company immediately upon your Termination
of Employment for Cause, Shares (or, in the discretion of the Committee, cash) equal in value to the amount of any profit you realized upon the exercise of any portion of this Option during the 12-month period that occurs immediately prior to your
Termination of Employment for Cause. 
 (ii) If, after your Termination of Employment, the Committee determines in its sole
discretion that while you were a Company or Subsidiary employee you engaged in activity that would have constituted grounds for the Company or Subsidiary to terminate your employment for Cause, then the Company will immediately rescind the unvested
portion of this Option and any vested but unexercised portion of this Option and you will immediately forfeit any and all rights you have remaining on the date that the Committee makes such determination with respect to this Option. Also, you hereby
agree and promise to deliver to the Company immediately upon the date the Committee determines that you could have been terminated for Cause, Shares (or, in the discretion of the Committee, cash) equal in value to the amount of any profit you
realized upon the exercise of any portion of this Option during the period that begins 12 months immediately prior to your Termination of Employment and ends on the date the Committee determines that you could have been terminated for Cause. 

(iii) If the Committee determines in its sole discretion that at anytime after your Termination of Employment and prior to the
second anniversary of your Termination of Employment you (A) disclosed confidential or proprietary information related to any business of the Company or Subsidiary or (B) entered into an employment or consultation arrangement (including
any arrangement for employment or service as an agent, partner, stockholder, consultant, officer or director) with any entity or person engaged in a business and (1) such employment or consultation arrangement would likely (in the
Committee’s sole discretion) result in the disclosure of confidential or proprietary information related to any business of the Company or a Subsidiary to a business that is competitive with any Company or Subsidiary business as to which you
had access to strategic or confidential information and (2) the Committee has not approved the arrangement in writing, then any portion of this Option that you have not exercised (whether vested or unvested) will immediately be rescinded and
you will forfeit any rights you have with respect to this Option as of the date of the Committee’s determination. Also, you hereby agree and promise to deliver to the Company, immediately upon the Committee’s determination date, Shares
(or, in the discretion of the Committee, cash) equal in value to the amount of any profit you realized upon the exercise of any portion of this Option during the period that begins 12 months immediately prior to your Termination of Employment and
ends on the date of the Committee’s determination. 
 13. Adjustments. In the event of any stock split, reverse stock split,
dividend or other distribution (whether in the form of cash, Shares, other securities or other property), extraordinary cash dividend, recapitalization, merger, consolidation, split-up, spin-off, reorganization, combination, repurchase or exchange
of Shares or other securities, the issuance of warrants or other rights to purchase Shares or other securities, or other similar corporate transaction or event, the Committee may in its sole discretion adjust the number and kind of

  
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Shares covered by this Option, the Exercise Price and other relevant provisions to the extent necessary to prevent dilution or enlargement of the benefits or potential benefits intended to be
provided by this Option. Any such determinations and adjustments made by the Committee will be binding on all persons. 
 14.
Restrictions on Exercise. Exercise of this Option is subject to the conditions that, to the extent required at the time of exercise: 

(i) The Shares covered by this Option will be duly listed, upon official notice of issuance, on the NYSE; and 

(ii) A Registration Statement under the Securities Act of 1933 with respect to the Shares will be effective or an exemption
from registration will apply. 
 The Company will not be required to deliver any Shares until all applicable federal and state laws and
regulations have been complied with and all legal matters in connection with the issuance and delivery of the Shares have been approved by the Company’s legal counsel. Notwithstanding the foregoing, you may only exercise this Option in cash or
by certified check, bank draft, wire transfer or postal or express money order if local law permits such exercise method at the time of exercise. 

15. Disposition of Securities. By accepting this Option, you acknowledge that you have read and understand the Company’s Insider
Trading Policy and are aware of and understand your obligations under federal securities laws with respect to trading in the Company’s securities. You also hereby agree not to use the Company’s “cashless exercise” program (or any
successor program) at any time when you possess material nonpublic information with respect to the Company (including Subsidiaries) or when using the program would otherwise result in a violation of applicable securities law. The Company has the
right to recover, or receive reimbursement for, any compensation or profit realized on the exercise of this Option or by the disposition of Shares received upon exercise of this Option to the extent that the Company has a right of recovery or
reimbursement under applicable securities laws. 
 16. Plan Terms Govern. The vesting and exercise of this Option, the disposition of
any Shares received upon exercise of this Option, and the treatment of any gain on the disposition of such Shares are subject to the terms of the Plan and any rules that the Committee prescribes. The Plan document, as amended from time to time, is
incorporated into this Terms and Conditions document. Capitalized terms used herein are defined in the Plan. If there is any conflict between the terms of the Plan and these Terms and Conditions, the Plan’s terms govern. By accepting this
Option Award, you hereby acknowledge receipt of the Plan, as in effect on the Grant Date. 
 17. Personal Data. To comply with
applicable law and to administer this Option appropriately, the Company and its agents may hold and process your personal data and/or sensitive personal data. Such data includes, but is not limited to, the information provided to you as part of the
grant package and any changes thereto, other appropriate personal and financial data about you, and information about your participation in the Plan and Shares obtained under the Plan from time to time. By accepting this Option, you hereby give your
explicit consent to the Company’s processing personal data and/or sensitive personal data as is necessary or 

  
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appropriate for Plan administration. You also hereby give your explicit consent to the Company’s transfer of personal data and/or sensitive personal data outside the country in which you
work or reside and to the United States. The legal persons for whom your personal data are intended include the Company, its Subsidiaries (or former Subsidiaries as are deemed necessary), the outside Plan administrator, and any other person that the
Company retains or utilizes for Plan administration purposes. You have the right to review and correct your personal data by contacting your local Human Resources Representative. You hereby acknowledge your understanding that the transfer of the
information outlined here is important to Plan administration and that failure to consent to the transmission of such information may limit or prohibit your participation in the Plan. 

18. No Contract of Employment or Promise of Future Grants. By accepting this Option, you agree that you are bound by the terms of the
Plan and these Terms and Conditions and acknowledge that this Option is granted in the Company’s sole discretion and is not considered part of any employment contract or your ordinary or expected salary or other compensation. This Option and
any gains received hereunder are not considered part of your salary or compensation for purposes of any pension benefits or for purposes of severance, redundancy or resignation. If the Company or Subsidiary terminates your employment for any reason,
you agree that you will not be entitled to damages for breach of contract, dismissal or compensation for loss of office or otherwise to any sum, Shares, Options or other benefits to compensate you for the loss or diminution in value of any actual or
prospective rights, benefits or expectation under or in relation to the Plan. 
 19. Limitations. Nothing in these Terms and
Conditions or the Plan grants to you any right to continued employment with the Company or any Subsidiary or to interfere in any way with the Company or Subsidiary’s right to terminate your employment at any time and for any reason. Payment of
Shares is not secured by a trust, insurance contract or other funding medium, and you do not have any interest in any fund or specific Company asset by reason of this Option. You have no rights as a stockholder of the Company pursuant to this Option
until Shares are actually delivered to you. 
 20. Entire Agreement and Amendment. These Terms and Conditions and the Plan constitute
the entire understanding between you and the Company regarding this Option. These Terms and Conditions supersede any prior agreements, commitments or negotiations concerning this Option. These Terms and Conditions may not be modified, altered or
changed except by the Committee (or its delegate) in writing and pursuant to the terms of the Plan. 
 21. Severability. The
invalidity or unenforceability of any provision of these Terms and Conditions will not affect the validity or enforceability of the other provisions of these Terms and Conditions, which will remain in full force and effect. Moreover, if any
provision is found to be excessively broad in duration, scope or covered activity, the provision will be construed so as to be enforceable to the maximum extent compatible with applicable law. 

22. Acceptance. By accepting this Option, you agree to the following: 

(i) You have carefully read, fully understand and agree to all of the terms and conditions contained in the Plan and these
Terms and Conditions; and 

  
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 (ii) You understand and agree that the Plan and these Terms and Conditions
constitute the entire understanding between you and the Company regarding this Option, and that any prior agreements, commitments or negotiations concerning this Option are replaced and superseded. 

You will be deemed to consent to the application of the terms and conditions set forth in the Plan and these Terms and Conditions unless you
contact Covidien Ltd., c/o Equity Plan Administration, 15 Hampshire Street, Mansfield, MA 02048 in writing within 30 days of receiving the grant package. Receipt by the Company of your non-consent will nullify this Option unless otherwise agreed to
in writing by you and the Company. 

  
 8/8EXHIBIT 10.1

Execution Copy

SECURED PROMISSORY NOTE

(“Note”)

 

	$1,000,000.00	September 23, 2014

 

 

FOR VALUE RECEIVED, VAPOR CORP., a Delaware corporation (“Vapor”) and SMOKE ANYWHERE USA, INC., a Florida corporation (“Smoke Anywhere” and together with Vapor, individually and collectively referred to herein as “Borrower”), each having its chief operating office located at 3001 Griffin Road, Dania Beach, FL 33312, promises to pay to the order of ENTREPRENEUR GROWTH CAPITAL, LLC, a Delaware limited liability company (“EGC”), at its offices located at 505 Park Avenue, 6th Floor, New York, NY 10022, or at such other place or places as EGC may from time to time designate in writing, the principal amount of one million dollars ($1,000,000.00) (the “Principal Amount”), plus interest in the manner and upon the terms and conditions set forth below.

 

	
1.0

	
Defined Terms

 

1.1.           All capitalized terms used in this Note are defined either in this Note or the other Loan Documents.  All terms used herein which are defined in Article 1 or Article 9 of the Uniform Commercial Code (the “UCC”) as in effect in the State of New York shall have the same meaning as presently or as may hereafter be given therein unless otherwise defined in this Note or the other Loan Documents.  All references to the plural shall also mean the singular.

 

1.2.           “Loan Documents” means, collectively, this Note, the Invoice Purchase and Sale Agreement (the “Factoring Agreement”), and any other present or future note or agreement entered into between EGC and Borrower, together with all alterations, amendments, changes, extensions, modifications, refinancings, refundings, renewals, replacements, restatements, or supplements, of or to any of the foregoing.  This Note supplements and is in addition to the Factoring Agreement, which remains in full force and effect and the terms of which is incorporated herein by reference. To the extent there is any conflict between the terms of this Note and the terms of the Factoring Agreement, the terms of this Note shall prevail and govern.

1.3.           “Loan Party” means each Borrower, each guarantor and each other party (other than EGC) to any Loan Document.

 

1.4.           “Obligations” shall mean any and all loans, advances, accommodations, indebtedness, liabilities, Reimbursable Expenses and all obligations of every kind and nature owing by Borrower to EGC however evidenced, whether as principal, guarantor or otherwise, whether arising under this Note, the other Loan Documents or any supplement hereto or thereto, whether now existing or hereafter arising, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, original, renewed, modified or extended and including, without limitation, all sums chargeable to Borrower hereunder or under any of the other Loan Documents, of whatever nature, including commissions, interest, expenses, costs and attorneys’ fees.  Notwithstanding the foregoing, Obligations shall not include special, consequential, incidental or punitive damages.  Each Borrower shall be jointly and severally liable for all of the Obligations hereunder and under the other Loan Documents.

 

    	  

    	 

    
 

 

1.5.           “Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, government, or any agency or political division thereof, or any other entity.

 

1.6           “Processor” means any Person who processes Borrower’s credit card receivables, together with all subsequent successors or assigns.

1.7.           “Processor Agreement” means the card processing agreement or similar agreement between Borrower and Processor governing the terms by which Processor will process Borrower’s credit card receivables.

 

1.8.           Reimbursable Expenses.  The Borrower agrees to reimburse EGC on demand for the following (collectively, “Reimbursable Expenses”):  (a) all reasonable out-of-pocket costs and expenses incurred at any time by EGC in connection with any due diligence and/or credit investigation of the Borrower; (b) reasonable external attorney’s fees, costs and expenses arising out of or relating to the negotiations, preparation, consummation, administration and enforcement of this Note and/or the other Loan Documents and EGC’s rights hereunder and thereunder, or the collection of any payments owing from, Borrower under this Note and/or the other Loan Documents or the protection, preservation or defense of the rights of EGC hereunder and under the other Loan Documents, and  any refinancing or restructuring of the credit arrangements provided under this Note and other Loan Documents in the nature of a “work-out” or of any insolvency or bankruptcy proceedings; (c) any review or verification of the Borrower’s credit card receivables, any public records searches and the filing or other recordation of any Uniform Commercial Code financing statements or other documents necessary or, in EGC’s reasonable judgment, desirable to perfect or preserve the security interest and other rights or remedies granted or available to EGC under this Note and the other Loan Documents; (d) a service charge of $50.00 for each federal wire transfer initiated by or on behalf of EGC to or for the benefit of the Borrower or at Borrower’s option, $10.00 for each Automated Clearing House (“ACH”) transfer initiated by or on behalf of EGC to or for the benefit of the Borrower; (e) a service charge for disbursements made to third parties in an amount equal to 15% of the amount for each check issued by EGC to the Borrower or to a third party for or on behalf of the Borrower’s account; and (f) so long as any Event of Default is in effect, all reasonable costs and expenses incurred by the EGC to enforce any of its rights and remedies under this Note and the other Loan Documents, including, without limitation, all reasonable attorneys’ fees and expenses and all experts’ and advisors’ fees and expenses incurred by EGC in connection therewith.  In furtherance thereof, Borrower hereby authorizes EGC to retain monies from the Lender Account for the payment of any and all Reimbursable Expenses.

 

2.0.         Establishment of a Blocked Account or Dominion Account.

2.1           Borrower has established (and will establish at EGC’s request) a bank deposit account in a bank acceptable to EGC (the “Blocked Account Bank”), which will be opened in Borrower’s name but controlled by EGC (the “Blocked Account”).  All proceeds from credit card receivables would be required to be irrevocably deposited by the Borrower’s Processor(s) directly into the Blocked Account.

 

    	  

    	 

    
 

 

2.2           The Borrower has executed and delivered (and will execute and deliver at EGC’s request) a control agreement or similar agreement among the Borrower, EGC and the Blocked Account Bank (the “Control Agreement”) whereby, among other things, EGC shall be deemed to have “control” of the Blocked Account and all funds at any time deposited therein for purposes of UCC § 9-104(a)(2) or (3), as EGC so elects.  The Control Agreement also is to provide that the Blocked Account Bank is to periodically remit, via electronic funds transfer, all funds on deposit in the Blocked Account to a bank account designated by EGC (the “Lender Account”).

2.3           Borrower shall cause all proceeds of credit card receivables to be remitted directly into the Blocked Account by irrevocably instructing its Processor(s) to remit all monies due to Borrower under one or more Processor Agreements (or otherwise) by federal funds wire transfer or electronic depository transfer to the following Blocked Account, which has been assigned to EGC:

 

	 	

Bank name:

Routing/ABA Number:

Account Name to credit:

Account Number to credit:

 

	
3.0

	
Schedule of Payments; Accelerated Payment; Rate and Payment of Interest and Fees; Prepayment

 

3.1           This Note shall be payable as follows:

 

A.           The earlier of (i) twelve (12) successive monthly installments of principal in the amount of $83,333.33 commencing on the first day of the month after the funding date of this Note and continuing the first day of each successive month thereafter until all obligations under this Note are paid in full*, or (ii) all obligations under this Note shall become immediately due and payable upon the occurrence and continuation of an Event of Default; and

 

B.           Interest shall be payable monthly, in arrears, on the first day of each month*.  Interest shall be computed on the basis of a 360-day year for the actual number of days elapsed, and shall be at a rate equal to 14% per annum (the “Interest Rate”); provided however, that upon the occurrence of an Event of Default (as hereinafter defined), interest shall accrue on the outstanding principal balance of this Note at the default rate of 24% per annum (the “Default Rate”) or the highest rate permitted under any applicable law or regulation, and shall be payable on demand.

 

*Commencing on the funding date and the first business day of each month thereafter, Borrower authorizes EGC to retain all monies deposited into the Lender Account each day until EGC retains an amount sufficient for Borrower to pay the principal and interest due for the following month, as well as any Reimbursable Expenses.  Thereafter, EGC shall remit to Borrower, via electronic funds transfer, the balance of all such funds in the Lender Account.

 

    	  

    	 

    
 

 

C.           In computing interest on the Obligations, Borrower understands and agrees that all checks, wire transfers and other items of payment received by EGC (including internal transfers of the interest payments as provided above and payment of the Obligations in full) shall be deemed applied by EGC on account of the Obligations on the day such payment is received or, if received after 12 noon New York, NY time, the next business day.  However, EGC shall be entitled to charge Borrower’s account one (1) business day of “clearance” or “float” at the Interest Rate, on all checks, wire transfers and other items received by EGC, including internal transfers, regardless of whether such one (1) business day of clearance or float actually occur, and such charge shall be deemed to be the equivalent of charging one (1) business day of interest on such payments and/or collections.  The one (1) business day clearance or float charge on all payments and collections is acknowledged by the Borrower to constitute an integral aspect of the pricing of EGC financing to Borrower.  EGC may charge Borrower’s loan account for the amount of any item of payment which is returned to EGC unpaid.

 

3.2           Prepayment may be made under this Note in whole or in part, provided, however, in the event Borrower prepays this Note, in whole or in part, prior to or at maturity, Borrower agrees to pay EGC a minimum amount of interest equal to $42,500.00 (meaning that Borrower will pay to EGC, if applicable, the difference between $42,500.00 and the actual interest earned by EGC at the time this Note is paid in full).  Prepayments of this Note shall be applied as set forth in Section4.1 below except that all amounts credited to the Principal Amount shall be credited in the inverse order of maturity of this Note.

 

3.3            Borrower shall pay to EGC the following fees for service:  (i) a closing fee in an amount equal to one percent (1%) of the amount of this Note (i.e., $10,000), fully earned and payable upon the funding of this Note, which fee shall be paid out of the proceeds of this Note or retained from the Blocked Account; (ii) a documentation charge of $5,000 in consideration of EGC documenting this Note and the related agreements, and all other due diligence, document review and drafting associated with this Note, which documentation charge may be deducted from the proceeds of this Note or retained from the Blocked Account; and (iii) all other Reimbursable Expenses related to the transactions contemplated by this Note, all of which may be deducted from the proceeds of this Note or retained from the Blocked Account.

 

3.4           Borrower agrees that EGC may retain monies from the Blocked Account in payment of all Obligations due under this Note (and the other Loan Documents), including but not limited to the: (a) installments and interest specified in Section 2.1 above, and (b) fees specified in Section 2.3.  If monies deposited into the Lender Account are insufficient, Borrower shall pay all amounts due upon demand by EGC.

 

    	  

    	 

    
 

 

4.0          Application of Payments.

 

4.1         The amount of all payments or amounts received by EGC with respect to this Note shall be applied to the extent applicable under this Note: (i) first, to accrued interest through the date of such payment, including any interest at the Default Rate; (ii) then, to any late fees, Reimbursable Expenses and any other fees and expenses due to EGC hereunder; and (iii) last, the remaining balance, if any, to the unpaid Principal Amount; provided, however, while an Event of Default exists under this Note, each payment hereunder shall be  applied to amounts owed to EGC by Borrower as EGC in its sole and absolute discretion may determine.  In calculating interest and applying payments as set forth above:  (a) interest shall be calculated and collected through the date a payment is actually applied by EGC under the terms of this Note; (b) interest on the outstanding balance shall be charged during any grace period permitted hereunder; (c) at the end of each month, all accrued and unpaid interest and other charges provided for hereunder shall be added to the then outstanding Principal Amount; and (d) to the extent that Borrower makes a payment or EGC receives any payment or proceeds of the Collateral for Borrower’s benefit that is subsequently invalidated, set aside or required to be repaid to any other Person, then, to such extent, the Obligations intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by EGC and EGC may adjust the loan balances as EGC, in its reasonable discretion, deems appropriate under the circumstances.

5.0          Security

 

5.1.           As security for the prompt performance, observance and payment in full of all Obligations, Borrower reaffirms its pledge and grant of a first priority security interest in, and continuing lien upon, and right of setoff against, and further pledges, assigns transfers and grants to EGC, of a first priority security interest in, and continuing lien upon, and right of setoff against all of the assets of every kind and nature of Borrower, in each case, whether now owned or existing or hereafter created, acquired or arising and wherever located, including but not limited to, (a) all Accounts, including, without limitation, all credit card receivables; (b) all other payment rights arising out of the provision of goods or services by the Borrower; (c) the Blocked Account; (d) all rights to receive payments from the Processor and all other rights arising out of or otherwise relating to the Processor Agreement(s); (e) Chattel Paper, including Electronic Chattel Paper and tangible Chattel Paper; (f) Commercial Tort Claims; (g) Documents; (h) Equipment, machinery, furniture, furnishings and fixtures and all parts, tools, accessories and Accessions; (i) Fixtures; (j) General Intangibles, including but not limited to patents, trademarks and tradenames and the goodwill and inherent value associated therewith, tax refunds, customer lists, insurance claims and goodwill of Borrower; (k) Goods; (l) Instruments; (m) Inventory, merchandise, materials, whether raw, work in progress or finished goods, packaging and shipping materials and all other tangible property held for sale or lease; (n) Investment Property; (o) Payment Intangibles; (p) Proceeds, including Cash Proceeds and Non-Cash Proceeds, and proceeds of any insurance policies covering any of the Collateral; (q) Promissory Notes; (r) Records, including all books, records and other property at any time evidencing or relating to any of the foregoing, and all electronic means of storing such Records; (s) to the extent not otherwise included above, all collateral support and Supporting Obligations relating to any of the foregoing; (t) to the extent not otherwise included above, all Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing; and (u) to the extent not otherwise included above, all of the assets and property of Borrower described in the other Loan Documents (collectively, the “Collateral”).  All capitalized terms in this description that are not otherwise defined shall have the meanings given to them under the UCC.  The Borrower also unconditionally and irrevocably assigns to EGC and grants to EGC a security interest in and to all its present and future right, title and interest to receive monies under all present and future Processor Agreements, all other agreements with Processors, agents, independent sales organizations (ISO’s) and all other persons, all of which shall be deemed to be part of the Collateral.  In addition to the foregoing, the security interest in the Collateral secures the payment and performance of all existing and future obligations of any nature whatsoever of the Borrower to EGC under this Note and/or the other Loan Documents, including, without limitation, the Borrower’s obligation to pay all Obligations and Reimbursable Expenses owing at any time under this Note and/or the other Loan Documents.  The term “Borrower,” as used in this Section 5, and for purposes of identifying the debtor(s) granting the security interest in this Section 5, shall mean the Borrower in its own capacity and as agent for each Borrower Affiliate (as defined below).

 

    	  

    	 

    
 

 

5.2.           Borrower hereby authorizes EGC to file UCC financing statements and such other documents as EGC may require to perfect its security interests granted hereunder.

 

5.3           Borrower’s Use of Trade Names; Borrower Affiliates.  If the Borrower’s credit card receivables are payable to the Borrower under one or more trade names, fictitious names, assumed names or other designations (collectively, “Trade Names”), the Borrower authorizes the Processor and, to the extent applicable, the Blocked Account Bank and EGC to receive and retain, to the extent provided herein or in any other Loan Documents, all credit card receivables owing to the Borrower under any Trade Names.  Similarly, if any financial information, historical data or other information provided by the Borrower to EGC relates to any credit card or debit card receivables or the like owing or otherwise payable to any corporate affiliates of the Borrower (each, a “Borrower Affiliate”), (a) the Borrower represents and warrants to EGC that each such Borrower Affiliate has authorized the Borrower, as the Borrower Affiliate’s agent, to take all action described in or contemplated by this Note or any other Loan Document with respect to such Borrower Affiliate’s Accounts, including, without limitation, the granting of the security interest in the Borrower Affiliate’s assets described in Section 5.1 above, and (b) unless the context clearly requires otherwise, all references in this Note or any Loan Documents to “Borrower” shall be deemed to refer to the Borrower on its own behalf and as agent for all Borrower Affiliates.

 

6.0.         No Change in Processor.

 

6.1           Borrower covenants and agrees that from the date of execution of this Note until all obligations have been fully paid and any commitments of EGC to the Borrower have been terminated, the Borrower will not, without EGC’s prior written consent amend or terminate any Processor Agreement, or enter into any contractual relationship with any other Processor for the maintenance, servicing or discounting of the Borrower’s credit card receivables.

 

    	  

    	 

    
 

 

7.0          Representations and Warranties.

7.1           The Borrower represents and warrants to EGC as follows: (a) all of the information provided by the Borrower to EGC pursuant to this Note is true, correct and complete in all material respects; (b) the Borrower has full power and authority to enter into this Note and any related agreements and to perform its obligations hereunder and thereunder; (c) if the Borrower is an entity, (i) the Borrower is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and (ii) the Borrower has full organizational power and authority to enter into this Note and any related agreements and to pay and perform its obligations hereunder and thereunder; (d) the Borrower is duly qualified to do business in each jurisdiction in which it conducts its business, except where the failure to be so qualified would not have a material adverse effect on the Borrower’s business or the Collateral or the enforceability of this Note or the other Loan Documents; (e) this Note is the legal and valid obligation of the Borrower, enforceable against the Borrower in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general application relating to or affecting creditors’ rights; (f) the Borrower is solvent, has not made an assignment for the benefit of creditors or filed in any court, pursuant to any statute of the United States or any state, a petition for bankruptcy or insolvency, or filed for reorganization or for the appointment of a receiver or trustee of all or a material portion of its property, and the Borrower does not have reason to believe any involuntary bankruptcy action or order will be filed with respect to the Borrower; (g) all amounts are due with respect to all credit card receivables are due in United States Dollars; (h) any taxes or fees relating to any credit card receivables or goods or services sold by the Borrower are solely the Borrower’s responsibility; (i) the historical credit card receivable data provided by the Borrower to EGC does not represent sales to any subsidiary, equity holder or other affiliate; (j) EGC has a perfected security interest in the Collateral subject to no other security interest, lien or claim; (k) the Borrower has provided to EGC a copy of all its Processor Agreements or similar agreements with the Processor(s); and (l) the Borrower or any officer of the Borrower nor any guarantor of the Borrower’s obligations hereunder has been or currently is on any Processor’s Terminated Borrower File (“TMF”) or similar file or list, commonly known and referred to as the MATCH list or BLACKLIST.

8.0.         Covenants.

8.1           The Borrower agrees as follows: (a) to conduct its business and use all Principal Amount in the ordinary course of its business and consistent with its past practices; (b) to exclusively use the Processor(s) to process all of its charge card, credit card and debit card transactions which give rise to credit card receivables; (c) not to take any action to discourage the use of charge cards, credit cards or debit cards or to permit any event to occur which could have a material adverse effect on the use, acceptance or authorization of charge cards, credit cards or debit cards for the purchase of the Borrower’s services and products; (d) not to change its arrangements with Processor(s) without obtaining the prior written consent of EGC; (e) not to permit any event to occur that could cause a diversion of any of the Borrower’s charge card, credit card or debit card transactions to another charge, credit or debit card processor or to another charge, credit or debit card network or association; (f) to hold all proceeds of credit card receivables remitted directly to Borrower or to a bank deposit account that is not Blocked Account or to a deposit account over which EGC does not have control, in trust for EGC, and Borrower shall deliver all such proceeds to EGC in kind, with appropriate endorsements or by federal wire transfer if received electronically, on the next business day following receipt by Borrower; (g) to comply in all material respects with all of the terms and conditions imposed by the Processor and/or any applicable charge, credit or debit card network, association or bank; (h) to provide EGC with at least 10 days’ prior written notice of any event which would cause any of the information provided by the Borrower to EGC in this Note or otherwise to be untrue, incorrect or incomplete in any material respect; (i) to provide EGC with at least 30 days’ prior written notice of the partial or full closing of any of Borrower’s locations; (j) not to grant any lien on or security interest in, or sell, assign transfer, pledge or otherwise dispose of, any credit card receivables or other Collateral existing or arising on or after the date of this Note; (k) to comply in all material respects with all material laws, rules and regulations applicable to the Borrower; (l) to immediately inform EGC if Borrower, any officer of the Borrower or any guarantor of the Borrower’s obligations hereunder has knowledge that any such person is put on or is associated in any way to any Processor TMF list or MATCH list or similar file or list; (m) to permit EGC and persons designated by EGC to inspect and copy all books and records (electronic or otherwise) of the Borrower, including, without limitation, all such books and records relating to the Collateral; and (n) not to sell, assign, transfer, pledge or otherwise dispose of a substantial portion of Borrower’s business or assets other than Inventory in the ordinary course of business.  In addition, the Borrower covenants and agrees that each Credit Card Receivable will (x) be based upon a bona fide sale and delivery of inventory or rendition of services made by the Borrower in the ordinary course of its business, and (y) represent a payment obligation for goods or services accepted by the Borrower’s customer and with respect to which such customer is obligated to pay the full amount and without dispute, claim, offset, defense, deduction, rejection, recoupment, counterclaim or otherwise.

 

    	  

    	 

    
 

 

9.0          Events of Defaults; Remedies.

 

9.1           The occurrence of any one of the following events shall constitute a default by Borrower under this Note (hereinafter an “Event of Default”):

 

(a)            if Borrower fails to pay to EGC an installment of principal or interest or any other Obligation when due and payable or declared due and payable and such payment default continues for five (5) business days after written notice sent to Borrower;

 

(b)           The material breach by the Borrower of any of the material terms, representations, warranties, covenants, conditions or provisions of this Note or of any of the Loan Documents or any supplement or amendment hereto or thereto (other than a payment default which shall be governed by the foregoing clause (a));

(c)           the Borrower becoming insolvent or otherwise fails to meet its debts as they mature; the Borrower suspending or discontinuing its business for any reason; the Borrower commencing a petition for a receivership of its business or property or a bankruptcy or any other legal proceeding or action relating to the relief of debtors or the readjustment of debts; having commenced against Borrower a petition for a receivership of its business or property or a bankruptcy or any other legal proceeding or action relating to the relief of debtors or the readjustment of debts and any such petition, bankruptcy or other legal proceeding or action is not vacated within thirty (30) days of being commenced against Borrower; the Borrower making an assignment for the benefit of creditors, seeking a composition of creditors or calling a meeting of creditors or have a creditors’ committee appointed; or Borrower suffering a material lien against or material judgment or the attachment of any of its material property (which has not been bonded or otherwise secured); having a receiver, custodian or trustee of any kind is appointed with regard to any property of Borrower; the Borrower disposing of any property included in the Collateral other than inventory in the ordinary course of business or otherwise than in accordance with this Note or the other Loan Documents; or  the Borrower committing or suffering, by any of its agents or employees, a fraudulent conversion of any material part of the Collateral;

(d)           Any material adverse change occurs in Borrower’s business, operations or financial condition or the value or priority of EGC’s security interest in the Collateral is materially and impaired;

(e)           Any material default by Borrower shall occur and being continuing (after any applicable notice and cure period) under any material agreement between Borrower and any third party including, without limitation, any default which would result in a right by such third party to accelerate the maturity of any material indebtedness of Borrower to such third party;

(f)           Any guarantor of the Obligations hereunder materially breaches its guaranty, dies or terminates its guaranty or any security therefor or becomes subject to any bankruptcy or other insolvency proceeding that, if involuntarily commenced against him/her or it, is not vacated within thirty (30) days of being initiated; or

 

    	  

    	 

    
 

 

(g)           Any transfer or series of related transfers of more than 50.1% of the issued and outstanding shares of common stock of Borrower.

 

9.2           Upon the occurrence and continuance of any Event of Default hereunder and the expiration of any applicable cure period, in addition to EGC’s right to charge interest on the Obligations at the Default Rate:  (a) at the option of EGC, the entire unpaid amount of all of the Obligations, shall become immediately due and payable without demand, notice or legal process of any kind; (b) EGC may, at its option, without demand, notice or legal process of any kind, exercise any and all rights and remedies granted to it hereunder  or under any of the other Loan Documents, including but not limited to, retaining all of the monies in the Blocked Account and charging interest at the Default Rate until such time as the Event of Default is cured; and (c) EGC may at its option exercise from time to time any other rights and remedies available to it under the UCC or other applicable law.

 

9.3           The remedies of EGC as provided herein shall be cumulative and concurrent, and may be pursued singularly, successively, or together, at the sole discretion of EGC.  No act of omission or commission of EGC, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same, such waiver or release to be effected only through a written document executed by EGC and then only to the extent specifically recited therein.  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.

 

10.0        General Provisions.

 

10.1         Borrower warrants and represents to EGC that Borrower has used and will continue to use the loans and advances represented by this Note solely for proper business purposes, and consistent with all applicable laws and statutes.

 

10.2         Borrower waives presentment, demand and protest, notice of protest, notice of presentment and all other notices and demands in connection with the enforcement of EGC’s rights hereunder, except as specifically provided and called for by this Note, and hereby consents to, and waives notice of, the release, addition, or substitution, with or without consideration, of any collateral or of any Person liable for payment of this Note.  Any failure of EGC to exercise any right available hereunder or otherwise shall not be construed as a waiver of the right to exercise the same or as a waiver of any other right at any other time.

 

10.3         If this Note is not paid when due or upon the occurrence and continuance of an Event of Default, Borrower further promises to pay all reasonable costs of collection, foreclosure fees, attorneys fees and expert witness fees incurred by EGC, whether or not suit is filed hereon.

 

    	  

    	 

    
 

 

10.4         Disbursing Agent.  The Borrowers hereby appoint VAPOR CORP. as the “Disbursing Agent” to the Borrowers as it is in the best interest and convenience of the Borrowers that all loans made by EGC pursuant to this Note be made only to the Disbursing Agent rather than to each of the Borrowers individually.  Accordingly, the Disbursing Agent shall be the sole entity entitled to receive the funds advanced by EGC under this Note and the Disbursing Agent shall make disbursements to the Borrowers as reasonably requested by each Borrower to conduct its respective business.  Moreover, the Disbursing Agent and each Borrower agree that the Obligations shall be collected from the Blocked Account.  All of the proceeds received by EGC will be credited by EGC to the Disbursing Agent’s account and the Disbursing Agent shall have the sole authority to further credit any such collections to each Borrower, individually.  Each Borrower hereby irrevocably waives any claim it may have against EGC and hereby indemnifies and holds EGC harmless from and against all damages, losses, claims, demands, liabilities, obligations, actions and causes of action whatsoever which such Borrower may have against EGC which may arise as a result of loans being made by EGC solely to the Disbursing Agent and/or collections being credited by EGC solely to the Disbursing Agent’s account with EGC.

 

10.5         One General Obligation; Cross Collateral.  All loans and advances by EGC to Borrower under this Note and the other Loan Documents constitute one loan, and all indebtedness and Obligations of Borrower to EGC under this Note and the other Loan Documents, present and future, constitute one general obligation secured by the Collateral and security held and to be held by EGC hereunder and by virtue of all other written agreements between Borrower (and all guarantors) and EGC now and hereafter existing.  It is distinctly understood and agreed that all of the rights of EGC contained in this Note shall likewise apply insofar as applicable to any modification of or supplement to this Note and the other Loan Documents and to any other written agreements, present and future, between EGC and Borrower.

 

10.6        It is the intent of the parties to comply with the usury law of the State of New York (the “Applicable Usury Law”).  Accordingly, it is agreed that notwithstanding any provisions to the contrary in this Note, or in any of the documents securing payment hereof or otherwise relating hereto, in no event shall this Note or such documents require the payment or permit the collection of interest in excess of the maximum interest rate (the “Maximum Interest Rate”) permitted under Applicable Usury Law.  In any such event (1) the provisions of this paragraph shall govern and control, (2) neither Borrower nor any other Person or entity now or hereafter liable for the payment hereof shall be obligated to pay the amount of such interest to the extent that it is in excess of the Maximum Interest Rate, (3) any such excess which may have been collected shall be either applied as a credit against the then unpaid principal amount hereof or refunded to Borrower, at EGC’s option, and (4) the effective rate of interest shall be automatically reduced to the Maximum Interest Rate.  It is further agreed, without limiting the generality of the foregoing, that to the extent permitted by the Applicable Usury Law, all calculations of interest which are made for the purpose of determining whether such rate would exceed the Maximum Interest Rate shall be made by amortizing, prorating, allocating and spreading during the period of the full stated term of the loan evidenced hereby, all interest at any time contracted for, charged or received from Borrower or otherwise in connection with such loan.

 

10.7        EGC may at any time transfer this Note and EGC’s rights in any or all Collateral securing this Note, and EGC thereafter shall be relieved from all liability with respect to such Collateral arising after the date of such transfer.

 

    	  

    	 

    
 

 

10.8        This Note shall be binding upon Borrower and its legal representatives, successors and assigns.  Wherever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of the Note shall be prohibited by or invalid under such law, such provision shall be severable, and be ineffective to the extent of such prohibition or invalidity, without invalidating the remaining provision of this Note.

 

10.9.       All notices, requests, demands and other communications under this Note shall be in writing and will be personally served, telecopied or sent by overnight courier service or United States mail and will be deemed to have been given: (i) if delivered in person, when delivered; (ii) if delivered by telecopy, on the date of transmission if transmitted on a business day before 4:00 p.m. New York time or, if not, on the next succeeding business day (in each case subject to electronic confirmation of delivery); (iii) if delivered by overnight courier, the following business day after depositing with such courier, properly addressed; or (iv) if by U.S. Mail, four (4) business days after depositing in the United States mail, with postage prepaid and properly addressed.  All notices, requests and demands are to be given or made to the respective parties at the addresses set forth herein or at such other addresses as either party may designate in writing by notice in accordance with the provisions of this paragraph. All notices to EGC must be addressed to the attention of:  Portfolio Manager.

 

10.10       Confidentiality.  EGC (including any designee or representative thereof) shall hold all non-public information about the Borrower obtained pursuant to the terms of this Note confidential; provided, however, EGC may disclose such confidential information (a) to its examiners, affiliates, outside auditors, counsel and other professional advisors, (b) as required or requested by any governmental body or agency and (c) in connection with the enforcement of this Note; provided, further that (i) unless specifically prohibited by applicable law, rule or regulation, EGC shall use its reasonable best efforts prior to disclosure thereof, to notify the Borrower of the applicable request for disclosure of such non-public information by a governmental body or agency and (ii) in no event shall EGC be obligated to return any materials furnished by the Borrower other than those documents and instruments in possession of EGC in order to perfect its security interests in the Collateral once the obligations have been paid in full and this Note has been terminated.

 

    	  

    	 

    
 

 

THIS NOTE HAS BEEN DELIVERED FOR ACCEPTANCE BY EGC IN NEW YORK, NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NEW YORK, AS THE SAME MAY FROM TIME TO TIME BE IN EFFECT, INCLUDING, WITHOUT LIMITATION, THE UNIFORM COMMERCIAL CODE AS ADOPTED IN NEW YORK. BORROWER HEREBY (i) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN NEW YORK COUNTY, NEW YORK OVER ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS NOTE; (ii) WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON BORROWER, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL OR REGISTERED MAIL DIRECTED TO BORROWER AT THE ADDRESS SET FORTH BELOW AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO BORROWER’S ADDRESS; (iii) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING; (iv) AGREES THAT A NON-APPEALABLE FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW; (v) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST EGC OR ANY OF EGC’S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS NOTE IN ANY COURT OTHER THAN ONE LOCATED IN NEW YORK COUNTY, NEW YORK; AND (vi) IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS NOTE. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR IMPAIR EGC’S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR EGC’S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR BORROWER’S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

	 	 	 
	VAPOR CORP.	 
	

Borrower

	 
	 	 	 
	 	 	 
	By:	  /s/ Harlan Press	 
	Name: 	Harlan Press	 
	Title:	Chief Financial Officer	 
	 	 	 
	 	 	 
	

SMOKE ANYWHERE USA, INC.

	 
	

Borrower

	 
	 	 	 
	 	 	 
	By:	  /s/ Harlan Press	 
	Name:	Harlan Press	 
	Title:	Chief Financial Officer	 

 

Notary Page Follows

 

    	  

    	 

    
 

 

	 	 
	STATE OF	)
	 	)ss.:
	COUNTY OF	)

 

 

On this _____ day of September, 2014 before me personally appeared Harlan Press, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she is the Chief Financial Officer of VAPOR CORP., the corporation herein described and that he/she executed the same in his/her capacity as an officer of said corporation, and that he/she signed the instrument by order of the board of directors of said corporation.

 

 

	 	 
	 	

Notary Public

 

 

	STATE OF	)
	 	)ss.:
	COUNTY OF	)

 

 

On this _____ day of September, 2014 before me personally appeared Harlan Press, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she is the Chief Financial Officer of SMOKE ANYWHERE USA, INC., the corporation herein described and that he/she executed the same in his/her capacity as an officer of said corporation, and that he/she signed the instrument by order of the board of directors of said corporation.

 

	 	 
	 	

Notary Public

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