Document:

robk_ex102.htm

EXHIBIT 10.2

 

 

	 	PROMISSORY NOTE	 
	 	 (Secured by First Priority Preferred Ship Mortgage)	 
	 	 	 
	 $2,975,000.00	 	Petoskey, Michigan
	 	 	June 10, 2010
	 	 	 

  

     For value received, Rotate Black, Inc, of 932 Spring Street Suite #201  Petoskey, Michigan 49770 (hereinafter “Borrower”) promises to pay to the order of Cruise Holding II, LLC, (“Lender”), c/o Bilzin Sumberg  Baena Price & Axelrod, LLP 200 S. Biscayne Blvd., Suite 2500, Miami, Florida 33131 or at such other place as may be designated in writing by Lender, the principal sum of TWO MILLION NINE HUNDRED SEVENTY FIVE THOUSAND DOLLARS AND 00/ CENTS  ($2,975,000.00) U.S. with interest thereon at the rate of FOURTEEN AND ONE-HALF percent per annum (14.5%) (the "Interest Rate") (based on a 360 day year and charged on the basis of actual days elapsed) (the "Loan").  All sums owing hereunder are payable in lawful money of the United States of America.

REPAYMENT SHALL BE MADE UPON THE FOLLOWING

TERMS AND CONDITIONS:

	
1.)  

	
Commencing JUNE 10, 2010, Borrower shall pay the sum of THIRTY FIVE THOUSAND  DOLLARS AND 00/ CENTS ($35,000.00) interest only on the Tenth (10th) day of each month for the next 12 months. On June 10, 2011 (the "Maturity Date"), the outstanding principal balance of $2,975,000.00 shall be due and payable in full, along with any accrued and unpaid interest or any other amounts due to Lender hereunder.

	
2.)  

	
From and after the occurrence of a default hereunder or under any other obligation of Borrower to Lender (whether or not such default is subsequently cured) including, without limitation, (a) the Preferred Ship Mortgage granted by Borrower in favor of Lender of even date herewith (the "Preferred Ship Mortgage"), or (b) that certain Promissory Note in the amount of $600,000 by Borrower in favor of Lender of even date herewith (the "$600,000 Note"), the Interest Rate shall be increased to Twenty Percent (20%).

	
3.)  

	
Each payment received by Lender from Borrower shall be applied first to accrued interest and then to reduce the principal balance of this promissory note. Payment shall be by WIRE TRANSFER, to (or such other account as may be designated by Lender):

MARK CALVERT, Chapter 11 Trustee for Cruise Holding II, LLC

c/o Bilzin Sumberg  Baena Price & Axelrod, LLP,

Bank Account at: ________________________

Located at: ______________________________________

Account number: _________________,  routing number:___________________ .

 

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DEFAULT

Each of the following shall constitute a Default hereunder:

	
A.  

	
At the Lender's option, failure to pay when due any sums payable hereunder; or

	
B.  

	
The occurrence of:

i)  Borrower filing of a petition for relief under the Bankruptcy Reform Act of 1978, as amended or modified ("Bankruptcy Code"), or under any other insolvency statutes under federal or state law ("Debtor Relief Law"); or ii) the entry or issuance of an order for relief in a case brought against the Borrower under the Bankruptcy Code or other Debtor Relief Law; or iii) the Borrower filing any pleading in any involuntary proceeding under the Bankruptcy Act or other Debtor Relief Law which admits the jurisdiction of the court or the petitioner's material allegations regarding the Borrower's insolvency; or iv) the Borrower making a general assignment for the benefit of creditors; or v) the Borrower or any creditor of the Borrower applying for, or the appointment of, a receiver, trustee, custodian or liquidator of the Borrower or any of its property; or vi) the dissolution of the Borrower; or

 

	
C.  

	
The Borrower's failure to effect a full dismissal of any involuntary petition under the Bankruptcy Code or any other Debtor Relief Law, that is filed against either the Borrower or in any way restrains or limits the Lender regarding the Loan prior to the earlier of the entry of an order granting relief sought in the involuntary petition, or thirty (30) days after the filing of the petition; or

	
D.  

	
The occurrence of a default under the Preferred Ship Mortgage or the $600,000 Note or other security instrument securing this note; or

	
E.  

	
At the Lender's option, default by the Borrower under the terms of any agreement(s) or instrument(s) pursuant to which the Borrower has borrowed money from any person or entity; or

	
F.  

	
The occurrence of an act or event causing or that may cause a preferred maritime lien senior to Lender's Preferred Ship Mortgage to attach to the Vessel (as hereinafter defined) pursuant to the Commercial Instruments and Maritime Liens Act (46 U.S.C. §§ 31301, et seq.), the general maritime law of the United States, or any other theory of recovery, and the failure of Borrower to discharge such lien or otherwise obtain a release from any potential lienor within ten (10) days.

	
G.  

	
The occurrence of any of the events specified in paragraphs B, C, D, E or F hereof with respect to any person or entity in any manner obligated to the Lender under this note, including, but not limited to, any guarantor.

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OCCURRENCES IN CASE OF DEFAULT

If any default occurs, the Lender may, at its sole option, declare all sums owing under this note immediately due and payable: provided, however that if any documents related to this note provides for automatic acceleration of sums owing hereunder, all sums owing hereunder shall be automatically due and payable in accordance with the terms of that document, and further provided that if a Default defined in paragraph B or C occurs, all sums owing hereunder shall be automatically due and payable as of the date of such occurrence.

If any attorney is engaged by the Lender to enforce, construe or defend any provision of this note, the Preferred Ship Mortgage, the $600,000 Note, or other security instrument securing this note or the $600,000 Note, or as a consequence of any Default, with or without the filing of any legal action or proceedings, the Borrower shall immediately pay on demand all attorney's fees and other costs incurred by the Lender, together with interest thereon from the date of such demand until paid at the rate applicable to the principal owing hereunder as if such unpaid attorneys' fees and costs had been added to the principal.

No previous waiver and no failure or delay by the Lender in acting with respect to the terms of this note, the Preferred Ship Mortgage, the $600,000 Note or any security agreement or other security instrument securing this note or the $600,000 Note shall constitute a waiver or any breach, default or failure of condition under this note, or any such security instrument.  A waiver of any terms of this note must be made in writing and shall be limited to the express written terms of such waiver.  In the event of any inconsistencies between the terms of this note and the terms of any other document related to the loan evidenced by this note, the terms of this note shall prevail.

If this note is executed by more than one person or entity as the borrower, the obligations of each person or entity shall be joint and several.  No person or entity shall be a mere accommodation maker, but each shall be primarily and directly liable hereunder. Each Borrower waives presentment; demand; notice of dishonor; notice of default or delinquency; notice of costs, expenses or losses and interest thereon; notice of interest on interest and late charges; and diligence in taking any action to collect any sums owing under this note or in proceeding against any of the rights or interests in or to properties securing payment of this note. Time is of the essence with respect to every provision hereof.

 

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This note shall be construed and enforced in accordance with the laws of the State of Florida, except to the extent that Federal laws preempt the laws of the State of Florida, and all persons and entities in any manner obligated under this note consent to the jurisdiction of any Federal or State Court within the State of Florida on having proper venue and also consent to service of process by any means authorized by Florida or Federal law.

The Borrower acknowledges that this Promissory Note is made in connection with the

sale by Lender of the Vessel (the "Vessel") known as:

“BIG EASY”, a Year: 193, LOA: 226’ 5”, Builder: CUSTOM

Type: 1200 PASSENGER, Official Number: USCG DOC # 998517.

THERE IS NO PENALTY FOR EARLY PARTIAL PAYMENT, OR FULL PAYMENT, OF THE INDEBTEDNESS EVIDENCED BY THIS PROMISSORY NOTE.

Borrower will add Lender to their insurance policy as LOSS PAYEE and further acknowledge there will be no major modifications to the vessel without prior written permission from Lender. Vessel will be insured for no less than $5,000,000.

Borrower will provide lender with additional security: Personal Guarantee from John Paulsen and a warrant for 51% of Borrower with a strike price of $1.00. Warrant can be exercised if in default for more than 30 days.

Borrower will allow routine inspection of the vessel by the Lender and/or Lenders  agent with 24 hours notice.

Borrower:__________________________________________________________

                              ROTATE BLACK, INC.

                              By:  John Paulsen, Vice President

    DL # __________________________  SS#__________________________________

    Address: 932 Spring Street Suite #201  City: Petoskey, Michigan  

        State: Michigan     Zip: 49770

 

ALL PURPOSE ACKNOWLEDGEMENT

STATE OF: __________COUNTY OF: ___________________   On_____________, 2010 before me the undersigned notary personally appeared  John Paulsen, VP  personally known to me-or-proved to me on the basis satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity (ies), and that by his/her/their signatures on the instrument the person (s), or the entity upon behalf of which the person (s) acted, executed the instruments.

WITNESS MY HAND AND OFFICIAL SEAL          COMMISSION EXPIRES: ___________________

______________________________________

Signature of Notary:                                      CAPACITY CLAIMED BY SIGNER

(  )     Individual’s                   (   )     Subscribing Witness                 (   )   Partner                               SIGNER IS REPRESENTING:

                                                                                                                                                                         ROTATE BLACK, INC.   (X )    Corporation  VP          (   )  Guardian/Conservator                    (   )   Attorney-In –Fact             Name of person (s) or entity (ies)

Officer(s)     ________  (   )     Other                                                      (   )   Trustee (s)                       __________

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EXHIBIT 10.3

 

 

	
 

	
 

 

	Vessel Name:  “BIG EASY” 

Hull Number:

Official Number:     USCG 998517

Amount:      $2,975,000.00

 

PREFERRED MORTGAGE

THIS PREFERRED SHIP MORTGAGE (the "Mortgage"), made this 10th day of JUNE 2010 by and between,

ROTATE BLACK, INC

932 Spring Street Suite 201

Petoskey, Michigan 49770

hereinafter designated as Mortgagors, and

Cruise Holdings II, LLC

c/o Bilzin Sumberg Baena Price & Axelrod, LLP

200 South Biscayne Blvd. Suite 2500

Miami, Florida 33131

hereinafter designated as Mortgagee.

WITNESSETH:

WHEREAS, Mortgagors are the sole owner(s) of the vessel known as: “BIG EASY” Official No. USCG Documentation 998517  Hull No. n/a which vessel is more fully described in its official document, a copy of which is on file in the office of the U.S. Coast Guard; and WHEREAS, Mortgagors are justly indebted to Mortgagee in the sum of  Two Million Nine Hundred Seventy Five Thousand And 00/100 ($2,975,000.00) Dollars.

NOW, THEREFORE, in consideration of the premises and the payment of the sum of One Dollar ($1.00) and other good and valuable consideration, receipt of which is hereby acknowledged, and for the purpose of securing the payment of said indebtedness, together with interest thereon, and any advancements hereafter made and the performance of all the covenants herein contained, Mortgagors have granted, bargained, sold, conveyed, transferred, assigned and set over and by these presents do grant, bargain, sell, convey, transfer, assign and set over unto Mortgagee the whole of said vessel, together with her engines, motors, machinery, masts, boats, dories, anchors, cables, rigging, tackle, apparel, furniture, nets, diving equipment and fishing gear, and all other appurtenances thereunto belonging, and any and all additions, improvements and replacements hereafter made in or to the same or any part thereof.

TO HAVE AND TO HOLD, all the said mortgaged property unto the mortgage, it’s successors and assign, forever;

PROVIDED, HOWEVER and these presents are made upon the express conditions that if Mortgagors shall pay or cause to be paid to Mortgagee the said aforementioned principal sum, together with interest thereon, in accordance with the terms and conditions of that certain promissory note of even date herewith (the "Note"), and shall pay any and all advances hereafter made by the mortgage, and shall keep, perform and observe all and singular the covenants and promises in attached note and in this Mortgage to be kept, performed and observed by Mortgagors, then this Mortgage and the estate hereby granted shall cease, determine and be void, otherwise to remain in full force and effect.  Mortgagors hereby agree to pay the principal sum of the Note, together with interest thereon and advances hereafter made, and to perform, fulfill and observe all and singular the covenants, agreements and conditions in this Mortgage and in attached note contained.

Mortgagors hereby covenants and agree with Mortgagee as follows, to wit:

ARTICLE I

Mortgagors lawfully own and lawfully possess the mortgaged property and covenants and promises to warrant and defend the title and possession thereto and every part thereof for the benefit of Mortgagee against the claims and demands of all person’s whomsoever; and further warrant that there are no liens, mortgages or other encumbrances on said vessel, except in favor of Cruise Holdings II, LLC

ARTICLE II

Mortgagors at their own cost and expense shall keep said vessel insured at its full insurable value, but in no event for less than Five Million Dollars ($5,000,000.00).  Said insurance shall be placed with responsible underwriters satisfactory to Mortgagee and on such policy forms as Mortgagee may approve.  Said policies shall be delivered to and held by Mortgagee.

 

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Losses under said policies shall be payable to Mortgagee for distribution to Mortgagors and Mortgagee as their respective interests may appear.  In the event of partial loss, if Mortgagors be not in default hereunder, Mortgagee shall consent that the underwriters pay directly for repairs, salvage or other charges or reimburse Mortgagors therefore.  In the event of total loss, the proceeds from such insurance shall first be applied to the payment of the indebtedness secured hereby and the remaining balance shall be paid to Mortgagors.

ARTICLE III

Mortgagors shall also at their own cost and expense keep said vessel fully covered by protection and indemnity insurance in a company or companies to be approved by Mortgagee and on such policy forms as shall be satisfactory to Mortgagee.  Also, should Mortgagee so request, in the event of war or national emergency, Mortgagors at their own cost and expense shall keep the vessel fully covered by war risk insurance.

ARTICLE IV

Should Mortgagors fail to procure such insurance or maintain the same in full force and effect, then Mortgagee may do so at the cost and expense of Mortgagors and all sums so expended by Mortgagee shall be deemed secured hereby.

ARTICLE V

Mortgagors shall not do any act or voluntarily suffer or permit any act to be done whereby any insurance upon said vessel may be suspended, impaired or defeated, and shall not suffer or permit the vessel to engage in any voyage, or to carry any cargo not permitted under the policies of insurance then in force and effect.

ARTICLE VI

Mortgagors shall pay and discharge when due and payable from time to time, all taxes, assessments, fines, charges or penalties imposed upon said vessel, her engines, motors, masts, boats, dories, anchors, cables, rigging, tackle apparel, furniture, nets, diving equipment and fishing gear and all other appurtenances thereunto belonging, and any and all additions, improvements and replacements hereafter made in or to the same or any part thereof shall not permit or suffer said vessel to deal or traffic in any contraband goods or engage in any unlawful voyage or undertaking.

ARTICLE VII

Neither Mortgagors nor the Master of said vessel shall have any right, power or authority to create, incur or permit to be placed or imposed upon said vessel any liens whatsoever.  The Master shall carry a properly certified copy of this mortgage with the ship’s papers and shall exhibits the same to any person having business with said vessel which might give rise to any lien.

ARTICLE VIII

Mortgagor shall place and keep prominently posted in the pilothouse or Master’s cabin or said vessel a notice reading substantially as follows:

"This vessel is covered by a First Priority Preferred Ship Mortgage to

Cruise Holdings II, LLC

% Bilzin Sumberg Baena Price & Axelrod, LLP

200 South Biscayne Blvd. Suite 2500

Miami, Florida 33131

Under the terms of said Mortgage neither the Owners nor the Master has any right, power or authority to create, incur or permit to be imposed upon the vessel any liens whatsoever”.

 

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ARTICLE IX

If a libel shall be filed against said vessel or if said vessel shall be seized or taken into custody by virtue of any legal proceedings in any port, Mortgagors shall, within seven (7) days thereafter, cause said vessel to be released and discharged.  If Mortgagors shall fail to do so, Mortgagee may, (but shall not be obligated to), file such bond or undertaking as may be necessary to release said vessel and may defend such legal proceedings through counsel of its own selection, and any and all expenses incurred thereby, including premiums, attorney’s fee, cost and the amount of any judgment rendered in such proceedings against said vessel shall be deemed secured hereby and forthwith paid to Mortgagee by Mortgagors.

ARTICLE X

Mortgagors shall, at their own cost and expense, maintain and preserve said vessel in as good condition, working order and repair as the same now is, so far as may be practical, ordinary wear, tear and depreciation except, and shall afford Mortgagee or its authorized representatives, full and complete access to said vessel for the purpose of inspecting and verifying same.

ARTICLE XI

Mortgagors shall comply with and satisfy all the provisions of the Commercial Instruments and Maritime Liens Act (46 U.S.C. § 31301 et seq.) and all amendments thereto, and shall establish and maintain this Mortgage as a First Preferred Mortgage under said Act.

ARTICLE XII

In case of default, Mortgagee shall be entitled to exercise the right of entry and retaking of said vessel and her appurtenances and equipment without legal process, and with any and all other rights, privileges, and powers herein granted or conferred by law.

ARTICLE XIII

In the event of Mortgagor’s default in the prompt and punctual payment when due of the principal sum of the Note, or interest thereon, and in the event that such default shall continue for a period of seven (7) days, or if Mortgagors are adjudged bankrupt or a receiver of their property or business is appointed by a court of competent jurisdiction and not thereafter discharged within a period of seven (7) days from the date of such appointment, or if Mortgagors shall make a general assignment for the benefit of creditors, or it said vessel shall be libeled or levied upon or taken into custody by virtue of any legal proceedings and not released within seven (7) days after such libel or levy, then, and in any such event, the entire principal sum of the Note, together with interest thereon, shall, at the option of Mortgagee, become immediately due and payable without prior notice to Mortgagors.  If all sums then due and owing are not paid forthwith, Mortgagee may take possession of said vessel, her engines, motors, machinery, masts, boats, dories, anchors, cables, rigging, tackle, apparel, furniture, nets, diving equipment, and fishing gear and all other appurtenances thereunto belonging, and any and all additions, improvements and replacements hereafter made in or to the same or any part thereof, without process of law, wherever the same may be, and Mortgagors shall forthwith, upon demand, surrender possession of said vessel to Mortgagee, who may sell the same at either public or private sale at any time within sixty (60) days after such seizure and not less than ten (10 ) days after depositing in the mails a notice of such sale starting the time and place thereof, addressed to Mortgagors at the address hereinafter set forth.  Mortgagee shall have the right to bid and become the purchaser at such sale and the proceeds thereof shall be applied as follows, to-wit:

FIRST:  To the payment of the expenses and charges of said sale, including the expenses of retaking said vessel and any and all other expenses incurred by Mortgagee in the protection of its rights hereunto, including attorneys’ fees.

SECOND:  To the payment of the unpaid balance of the principal and interest due upon said Note and any unpaid advances hereafter made to Mortgagors.

THIRD:  Any Surplus thereafter remaining to be paid to Mortgagors.  In the event the proceeds of such sale shall be insufficient to fully pay all expenses and charges thereof and the principal and interest then remaining unpaid on said promissory note and subsequent advances, then Mortgagors shall forthwith pay Mortgagee the amount of such deficiency.  In the event Mortgagor does not pay such deficiency upon demand, then, in addition to whatever rights Mortgagee has, Mortgagee may file a suit for such deficiency as allowed by law.  Attorney’s fees and costs for such suit shall be paid by Mortgagors.

 

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ARTICLE XIV

In addition to the remedies hereinabove set forth, Mortgagee in the event of default may institute legal actions either at law, in equity or in admiralty to enforce the payment of said indebtedness or the performance of any obligation secured hereby, including without limiting the generality of the foregoing, the arrest of the vessel, her engines, motors, machinery, masts, boats, dories, anchors, cables, rigging, tackle, apparel, furniture, nets, diving equipment, and fishing gear and all other appurtenances thereunto belonging, and any an all additions, improvements and replacements hereafter made in or to the same or any part thereof.

ARTICLE XV

Nothing contained in this Mortgage shall be construed as a waiver of the preferred status of the Mortgage by Mortgagee.

ARTICLE XVI

No delay or omission of Mortgagee to exercise any right or power accruing upon any default shall be deemed a waiver of such default or acquiescence therein and every power and remedy hereby given to Mortgagee may be exercised from time to time and as often as may be deemed expedient.

ARTICLE XVII

All notices to Mortgagors may be made by registered or certified mail addressed to:

ROTATE BLACK, INC

John Paulsen Vice President

932 Spring Street Suite 201

Petoskey, Michigan 49770

All notices to Mortgagee may be made by registered or certified mail addressed to:

Cruise Holdings II, LLC

c/o Bilzin Sumberg Baena Price & Axelrod, LLP

200 South Biscayne Blvd. Suite 2500

Miami, Florida 33131

ARTICLE XVIII

Mortgagors shall afford Mortgagee or its authorized representatives full access to said vessel for the purpose of inspecting the same at all times.

ARTICLE XIX

All the covenants, stipulations and agreements in this Mortgage contained shall bind and inure to the benefit of Mortgagors and Mortgagee and their respective heirs, executors, administrators, successors and assigns.  WITNESS WHEREOF, each of the parties herein designated as “Mortgagors” has executed this Mortgage as of the day and year first above written

_______________________________________           _________________________________________

ROTATE BLACK, INC.

By:  John Paulsen, Vice President

ALL PURPOSE ACKNOWLEDGEMENT

STATE OF: ____________   COUNTY OF: _______________ On _______________ before me the undersigned notary personally appeared John Paulsen personally known to me-or-proved to me on the basis satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity (ies), and that by his/her/their signatures on the instrument the person (s), or the entity upon behalf of which the person (s) acted, executed the instruments.

WITNESS MY HAND AND OFFICIAL SEAL          COMMISSION EXPIRES__________________

______________________________________

Signature of Notary                                                        CAPACITY CLAIMED BY SIGNER

(   )     Individual                        (   )     Subscribing Witness                 (   )   Partner                               SIGNER IS REPRESENTING:

                                                                                                                                                                   _Rotate Black, Inc._____

X     Corporation LLC               (   )     Guardian/Conservator               (   )   Attorney-In –Fact             Name of person (s) or entity           Officer(s)     _________  (   )     Other                                          (   )   Trustee (s)                         __________________________

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