EXHIBIT 10.2
SECURED PROMISSORY NOTE
$1,200,000.00 December 6, 2004
Orem, Utah
FOR VALUE RECEIVED, HomeNet Corporation, a Delaware Corporation, whose
address is ▇▇▇ ▇. ▇▇▇▇ ▇▇., #▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and HomeNet
Communications, Inc., a Washington Corporation, whose address is ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and Home Marketing Group, a Utah
corporation (collectively "Borrower"), hereby promises and agrees to pay to the
order of The Horn Irrevocable Trust dated July 1 2002, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Trustee, whose address is ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, and Vescovo Finance, L.L.C., whose address is ▇▇▇ ▇. ▇▇▇ ▇., ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ (collectively "Lender" or "Holder" in accordance with the terms of a Loan
Participation Agreement of even date herewith), in lawful money of the United
States of America, without offset or adjustment for any reason, the principal
sum of One-Million Two-Hundred Thousand and 00/100 Dollars ($1,200,000.00),
together with interest from the date hereof until paid, minus the $204,000
origination fee which will be paid to the Lender upon the funding of this Note.
The annual interest rate on the principal balance of this Note is zero percent
0% per annum (the "Base Rate") for 120 days and other fees in connection
therewith, all in accordance with the terms and conditions set forth below.
1. Except pursuant to Paragraph 5 below, interest shall accrue on the
outstanding principal balance hereof at the Base Rate.
2. (a) Borrower shall pay the entire outstanding balance of this
Secured Promissory Note (this "Note"), including principal, accrued and unpaid
interest and all other fees and charges accrued and unpaid hereunder, no later
than 5:00 p.m., Utah time, on the 121st calendar day following the date hereof
(as such payment date may be adjusted hereunder pursuant to the following
subsections, the "Maturity Date").
(b) If any due date for a payment under this Note falls on a
day which is not a Business Day (as defined below), then such due date shall be
automatically adjusted so that it falls instead on the first Business Day
following such scheduled due date. For purposes of the Note, "Business Day'
means any day other than Saturday or Sunday or a day on which commercial banks
are required or authorized to close in any of (1) New York, New York, or (2)
Salt Lake City, Utah.
3. Borrower may prepay any amount due hereunder, in whole or in part,
at any time without penalty or premium for such early payment.
4. (a) The occurrence or existence of any of the following events or
circumstances shall constitute an "Event of Default' hereunder:
(1) Any payment or delivery required by this Note is
not made when due hereunder, or any obligation or covenant undertaken by
Borrower hereunder is not performed or observed as and when required hereby,
(2) Any representation or warranty made by Borrower
in this Note or any other instrument, agreement, or document delivered by any
Borrower or any other party for a Borrower's benefit in connection herewith
proves to have been materially false or inaccurate when made; or
(3) Any event of default occurs under any instrument
or agreement evidencing, securing or guaranteeing the obligations evidenced by
this Note; or
(4) Any event of default occurs under any security
agreement, trust deed, or similar document relating to a lien prior to the lien
of any instrument described in Paragraph 4(a)(3) above; or
(5) Any event of default occurs under any other
indebtedness owing by Borrower to Lender or any of its subsidiaries or
affiliates; or
(6) Borrower or any guarantor of this Note files a
general assignment for the benefit of creditors, or files for relief under any
provision of the Bankruptcy Code, or suffers an involuntary petition in
bankruptcy or receivership to be filed and not vacated within 30 days.
(b) Upon the occurrence and during the continuance of any
Event of Default, the entire unpaid principal balance and accrued but unpaid
interest hereunder shall, at the option of Lender exercised by written notice to
▇▇▇▇▇▇▇▇, at once become due and payable. Failure to exercise such option shall
not constitute a waiver of the right to exercise the same in the event of any
subsequent Event of Default.
5. In the event Borrower fails to make a payment under this Note on the
due date therefor, (a) Borrower agrees to pay Holder a one-time late charge
equal to Fifteen Percent (15%) of the amount so unpaid (such late charge
constituting liquidated damages in lieu of actual damages and not a penalty),
and (b) all amounts owing and past due hereunder, including without limitation
principal (whether by acceleration or in due course), interest, late fees, and
other charges, shall, if permitted by applicable law, bear interest at the rate
of Eighteen Percent (18%) per annum both before and after judgment.
6. This Note shall be secured by first-position Deeds of Trust with
Assignment of Rents encumbering the following properties:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ of ▇▇▇▇▇▇, County of Salt Lake, State of Utah
420 West 4500 South, City of ▇▇▇▇▇▇, County of Salt Lake, State of Utah
997 East 3900 South, City of Salt Lake City, County of Salt Lake, State
of Utah
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ of Summit, State of Utah
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ of Pima, State of
Arizona
7. Borrower shall pay all legal, closing and other costs and fees
incurred by Lender in connection with the negotiation, preparation, execution,
delivery, filing, and recording, as applicable, of this Note, the security and
guaranty documents referred to in Paragraph 6 above, and all other documents or
instruments delivered in connection with or relating to the loan evidenced by
this Note (the "Loan"). In addition, in the event that any payment under this
Note is not made at the time and in the manner required (whether before or after
maturity), ▇▇▇▇▇▇▇▇ agrees to pay any and all costs and expenses (regardless of
the particular nature thereof and whether incurred before or after the
initiation of suit or before or after judgment) which may be incurred by Holder
in connection with the enforcement of any of its rights under this Note,
including, but not limited to, attorneys' fees and all costs and expenses of
collection. Any amount owing by Borrower under this Paragraph and not paid
directly or reimbursed by ▇▇▇▇▇▇▇▇ shall (until so paid or reimbursed)
constitute an additional principal obligation hereunder as of the date such
obligation arises.
8. All amounts paid by ▇▇▇▇▇▇▇▇ in respect of amounts due hereunder
shall be applied by ▇▇▇▇▇▇ in the following order of priority: (a) amounts due
and payable, if any, pursuant to Paragraph 7 above, (b) interest and late fees
due and payable hereunder, and (c) the outstanding principal balance hereof.
2
9. Borrower, on behalf of itself and all sureties, guarantors, and
endorsers hereof, hereby waives presentment for payment, demand, and notice of
dishonor and nonpayment of this Note, and consents to any and all extensions of
time, renewals, waivers, or modifications that may be granted by Holder with
respect to the payment or other provisions of this Note, and to the release of
any security, or any part thereof, with or without substitution.
10. Notwithstanding any other provision contained in this Note or in
any instrument given to evidence or secure the obligations evidenced hereby: (a)
the rates of interest and charges provided for herein and therein shall in no
event exceed the rates and charges which result in interest being charged at a
rate equaling the maximum allowed by law; and (b) if, for any reason whatsoever,
Holder ever receives as interest in connection with the transaction of which
this Note is a part an amount which would result in interest being charged at a
rate exceeding the maximum allowed by law, such amount or portion thereof as
would otherwise be excessive interest shall automatically be applied toward
reduction of the unpaid principal balance then outstanding hereunder and not
toward payment of interest.
11. The failure of Holder in any one or more instances to insist upon
strict performance of any of the terms and provisions of this Note, or to
exercise any option conferred herein shall not be construed as a waiver or
relinquishment, to any extent, of the right to assert or rely upon any such
terms, provisions, or options on any future occasion.
12. This Note is delivered in the State of Utah and shall be governed
by and construed in accordance with the laws of said State, without giving
effect to any conflict of laws provisions. This Note shall bind the successors
and assigns of ▇▇▇▇▇▇▇▇ and shall inure to the benefit of the successors and
assigns of ▇▇▇▇▇▇.
13. Borrower acknowledges, represents, and warrants to Lender that (a)
the terms and conditions of this Note, the documents and agreements referred to
in Section 6 above, and any other documents or agreements executed and delivered
by Borrower in connection with the Loan (collectively, including without
limitation the security and guaranty documents referred to in Paragraph 6 about,
the "Loan Documents") are fair and reasonable in light of the risks to Lender in
making the Loan, (b) all funds advanced hereunder by ▇▇▇▇▇▇ are being used by
Borrower for business purposes and not for personal, consumer or household
purposes, and (c) Borrower owes Lender the entire amount set forth in this Note
and that the amount stated as due is correct. Without limiting the generality of
the foregoing, ▇▇▇▇▇▇▇▇ also represents to Lender that the property covered by
the trust deed referenced in Section 6 above does not include any occupied
residence or any residence that will be occupied during the term of the Loan or
such trust deed.
14. Borrower represents and warrants to Lender that (a) Borrower is a
limited liability company duly organized and validly existing in good standing
pursuant to the laws of the State of Utah and shall at all times during such
time as any obligation remains under this Note maintain its limited liability
company existence in good standing and keep current all necessary filings
relating thereto, (b) the execution, delivery and performance by Borrower of
this Note and the other Loan Documents have been duly authorized by all
necessary company action on the part of Borrower and do not and will not
contravene or violate any provision of ▇▇▇▇▇▇▇▇'s charter documents, and the
person executing this Note and the other Loan Documents to be executed by
▇▇▇▇▇▇▇▇ on behalf of the Borrower has been duly authorized to do so, and (c)
none of the written statements furnished to Lender by or on behalf of Borrower
in connection with the negotiation and consummation of the transactions
contemplated by this Note contained, as of the date thereof, any untrue
statement of a material fact or omitted, as of the date thereof, a material fact
necessary to make the statements contained therein or herein not misleading.
3
15. Borrower hereby agrees to release, indemnify and hold harmless
Lender, its affiliates, and the managers, members, officers, employees, counsel,
and agents of any of them, from and against all claims, expenses, or liabilities
of any kind which may be incurred by or asserted against any such person or
entity in connection with or arising out of this Note and the Loan, the
financing of the Loan, the collateral therefor, and any investigation,
litigation or proceeding related to any such matters. Under no circumstances
shall Lender or any of its affiliates be liable for punitive, exemplary,
consequential or indirect damages which may be alleged to result from this Note
or the Loan.
16. Time is of the essence regarding the obligations of Borrower under
this Note.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ has caused this Note to be executed by
its duly authorized representative on or as of the day and year first above
written.
HomeNet Corporation, a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
▇▇▇ ▇. ▇▇▇▇ ▇▇., #▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Federal Tax I. D. No.: ▇▇-▇▇▇▇▇▇▇
HomeNet Communications, Inc.,
a Washington corp.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------------
Name:
Title: CEO
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Federal Tax I.D. No.: ▇▇-▇▇▇▇▇▇▇
Home Marketing Group, a Utah corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name:
Title: President
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Federal Tax I.D. No.:
4