EXHIBIT 10.2
COVAD COMMUNICATIONS, INC.
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NOTE SECURED BY DEED OF TRUST
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$500,000 August 14, 1998
Santa Clara, California
FOR VALUE RECEIVED, Xxxxxx X. Xxxxxxxx Xx. ("Maker") promises to pay
to the order of Covad Communications, Inc. (the "Company"), at its corporate
offices at 0000 Xxxxxxx Xxxxxxxxxx, Xxxxxxxx X, Xxxxx Xxxxx, Xxxxxxxxxx 00000,
the principal sum of Five Hundred Thousand Dollars ($500,000.00), together with
any accrued interest thereon, upon the terms and conditions specified below.
1. PRINCIPAL. The entire principal balance of this Note shall become
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due and payable in one lump sum on August 14, 2002.
2. INTEREST. No interest shall accrue under the Note while the Maker
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continues in employment with the Company.
3. PAYMENT. Payment shall be made in lawful tender of the United
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States and shall be applied first to the payment of all accrued and unpaid
interest and then to the payment of principal. Prepayment of the principal
balance of this Note may be made in whole or in part at any time without
penalty.
4. SECURITY; FULL RECOURSE. The proceeds of the loan evidenced by
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this Note shall be applied solely to the purchase of the Maker's principal
residence in the City of [_], County of [_], State of California. Payment of
this Note shall be secured by a Deed of Trust on such principal residence, as
such property is more particularly described in Exhibit "A" to the Deed of
Trust, a copy of which Deed is attached hereto as Exhibit A. However, Maker
shall remain personally liable for payment of this Note, and assets of the
Maker, in addition to the collateral under the Deed of Trust, may be applied to
the satisfaction of the Maker's obligations hereunder.
5. EVENTS OF ACCELERATION. The entire unpaid principal balance of
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this Note shall become immediately due and payable upon:
A. the earlier of: (i) the date Maker voluntary resigns from the
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Company's employ or (ii) the date Maker is terminated by the
Company for cause; or
B. the sale, transfer, mortgage, assignment, encumbrance or lease,
whether voluntarily or involuntarily or by operation of law or
otherwise, of the property covered by the Deed of Trust, or any
portion thereof or interest therein, without the prior written
consent of the Company; or
C. the insolvency of the Maker, the commission of any act of
bankruptcy by the Maker, the execution by the Maker of a general
assignment for the benefit of creditors, the filing by or against
the Maker of any petition in
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bankruptcy or any petition for relief under the provisions of the
federal bankruptcy act or any other state or federal law for the
relief of debtors and the continuation of such petition without
dismissal for a period of thirty (30) days or more, the
appointment of a receiver or trustee to take possession of any
property or assets of the Maker, or the attachment of or execution
against any property or assets of the Maker; or
D. the occurrence of any event of default under the Deed of Trust
securing this Note or any obligation secured thereby.
For purposes of applying the provisions of this Note, "cause" shall
mean (i) the repeated failure of Maker to perform the duties of the President
and Chief Executive Officer in any substantial respect following thirty (30)
days prior notification in writing, (ii) Maker's conviction of a felony (other
than a traffic violation) or other criminal conduct involving fraud or theft, or
(iii) breach of any duty of loyalty to the Company that has a material adverse
effect on the Company.
6. EMPLOYMENT REQUIREMENT. The benefits of the interest arrangements
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under this Note are not transferable by Maker and are conditioned on the future
performance of substantial services by the Maker.
Upon Maker's cessation of employment with the Company, interest shall
accrue on the unpaid balance of this Note at the minimum per annum rate,
compounded semi-annually, required to avoid the imputation of compensation
income to Maker under the Federal tax laws.
For purposes of applying the provisions of this Note, the Maker shall
be considered to remain in the Company's employ for so long as the Maker renders
services as a full-time employee of the Company, any successor entity of the
Company or one or more subsidiaries of the Company in which the Company has at
least a fifty percent (50%) direct or indirect ownership interest.
7. CERTIFICATION. The Maker certifies that Maker reasonably expects
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to be entitled to and will itemize deductions for Federal income tax purposes
for each year the Note is outstanding.
8. SPECIAL FORGIVENESS. The principal amount of this Note shall be
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forgiven by the Company in accordance with the terms of the offer letter from
the Corporation to the Maker dated August 3, 1998.
9. COLLECTION. If action is instituted to collect this Note, the
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Maker promises to pay all costs and expenses (including reasonable attorney
fees) incurred in connection with such action.
10. WAIVER. No previous waiver and no failure or delay by the
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Company in acting with respect to the terms of this Note or the Deed of Trust
shall constitute a waiver of any breach, default, or failure of condition under
this Note, the Deed of Trust or the obligations secured thereby. A waiver of any
term of this Note, the Deed of Trust or of any of the
obligations secured thereby must be made in writing and shall be limited to the
express terms of such waiver.
The Maker waives presentment, demand, notice of dishonor, notice of
default or delinquency, notice of acceleration, notice of protest and
nonpayment, notice of costs, expenses or losses and interest thereon, notice of
interest on interest, 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.
11. CONFLICTING AGREEMENTS. In the event of any inconsistencies
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between the terms of this Note and the terms of any other document related to
the loan evidenced by the Note, the terms of this Note shall prevail.
12. GOVERNING LAW. This Note shall be construed in accordance with
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the laws of the State of California without resort to that State's conflict-of-
laws rules.
13. DUE ON SALE. If the Maker shall sell, convey or alienate the
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property covered by the Deed of Trust, or any part thereof, or any interest
therein, or shall be divested of his title or any interest therein in any manner
or way, whether voluntarily or involuntarily, without the written consent of the
Company being first had and obtained, the Company, shall have the right, at its
option, except as prohibited by law, to declare an indebtedness or obligations
secured hereby, irrespective of the maturity date specified in any note
evidencing the same, immediately due and payable. Consent to one such
transaction shall not be deemed to be a waiver of the right to require such
consent to future successive transactions.
MAKER
/s/ Xxxxxx X. Xxxxxxxx Xx.
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XXXXXX X. XXXXXXXX XX.
EXHIBIT A
LEGAL DESCRIPTION
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[Technical description of property]
RECORDING REQUESTED BY |
Escrow No. 710-756 |
AND WHEN RECORDED MAIL TO |
| SPACE ABOVE THIS LINE FOR RECORDER'S USE
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SHORT FORM DEED OF TRUST AND ASSIGNMENT OF RENTS
(INDIVIDUAL)
(DUE ON SALE CLAUSE) A.P.N._____________
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THIS DEED OF TRUST, made this 14th day of August, 1998, between
Xxxxxx X. Xxxxxxxx Xx. and Xxxxxx Xxxxxx Xxxxxxxx, husband and wife, herein
called TRUSTOR,
whose address is [_] [_] [_] [_]
number and street city state zip
North American Title Company, a California corporation, herein called
TRUSTEE, and
Covad Communications Group, Inc. herein called BENEFICIARY,
WITNESSETH: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE IN
TRUST, WITH POWER OF SALE, that property , described as:
SEE ATTACHED EXHIBIT A
IF THE TRUSTOR SHALL SELL, CONVEY OR ALIENATE SAID PROPERTY, OR ANY PART
THEREOF, OR ANY INTEREST THEREIN, OR SHALL BE DIVESTED OF HIS TITLED OR ANY
INTEREST THEREIN IN ANY MANNER OR WAY, WHETHER VOLUNTARILY OR INVOLUNTARILY,
WITHOUT THE WRITTEN CONSENT OF THE BENEFICIARY BEING FIRST HAD AND OBTAINED,
BENEFICIARY, SHALL HAVE THE RIGHT, AT ITS OPTION, EXCEPT AS PROHIBITED BY LAW,
TO DECLARE AN INDEBTEDNESS OR OBLIGATIONS SECURED HEREBY, IRRESPECTIVE OF THE
MATURITY DATE SPECIFIED IN ANY NOTE EVIDENCING THE SAME, IMMEDIATELY DUE AND
PAYABLE. CONSENT TO ONE SUCH TRANSACTIONS SHALL NOT BE DEEMED TO BE A WAIVER OF
THE RIGHT TO REQUIRE SUCH CONSENT TO FUTURE SUCCESSIVE TRANSACTIONS. TOGETHER
WITH the rents, issues and profits thereof, SUBJECT, HOWEVER, to the right,
power and authority given to and conferred upon Beneficiary by paragraph (10) of
the provisions incorporated herein by reference to collect and apply such rents,
issues and profits.
FOR THE PURPOSE OF SECURING: 1. Performance of each agreement of Trustor
incorporated by reference or contained herein. 2. Payment of the indebtedness
evidenced by one promissory note of even date herewith, and any extension or
renewal thereof in the principal sum of $500,000 executed by Trustor in favor of
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Beneficiary or order. 3. Payment of such further sums as the then record owner
of said property hereafter may borrow from Beneficiary, when evidenced by
another note (or notes) reciting it is so secured.
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TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES: By the execution and delivery of this Deed of Trust and the note
secured hereby, that provisions (1) to (14), inclusive, of the fictitious deed of trust recorded in Santa Xxxxxxx County and Sonoma
County October 18, 1961, and in all other counties October 23, 1961, in the book and at the page of Official Records in the office
of the county recorder of the county where said property is located, noted below opposite the name of the county, VIZ.:
COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE
ALAMEDA 435 684 KINGS 792 833 PLACER 895 301 SIERRA 29 335
ALPINE 1 250 LAKE 362 39 PLUMAS 151 5 SISKIYOU 468 181
XXXXXX 104 348 LASSEN 171 471 RIVERSIDE 3005 523 XXXXXX 1105 182
BUTTE 1145 1 LOS ANGELES T2055 899 SACRAMENTO 4331 62 SONOMA 1851 689
CALAVERAS 145 152 MADERA 810 170 SAN XXXXXX 271 383 STANISLAUS 1751 456
COLUSA 296 617 MARIN 1508 339 SAN BERNARDINO 5587 61 SUTTER 572 297
CONTRA COSTA 3978 47 MARIPOSA 77 292 SAN FRANCISCO A332 905 TEHAMA 401 289
DEL NORTE 78 414 MENDOCINO 579 530 SAN XXXXXXX 2470 311 TRINITY 93 366
EL DORADO 568 456 MERCED 1547 538 SAN XXXX OBISPO 1151 12 TULARE 2294 275
FRESNO 4626 572 MODOC 184 851 SAN MATEO 4078 420 TUOLUMNE 135 47
XXXXX 422 184 MONO 52 429 SANTA XXXXXXX 1878 860 VENTURA 2062 386
HUMBOLDT 657 527 MONTEREY 2194 538 SANTA XXXXX 5336 341 YOLO 653 245
IMPERIAL 1091 501 NAPA 639 86 SANTA XXXX 1431 494 YUBA 334 486
INYO 147 598 NEVADA 305 320 SHASTA 584 528
XXXX 3427 60 ORANGE 5889 611 SAN DIEGO SERIES 2 BOOK 1961, PAGE 183887
(which provisions, identical in all counties, are printed on attached herewith) hereby are adopted and incorporated herein and made
a part hereof as fully as though set forth herein at length; that he will observe and perform said provisions; and that the
references to property, obligations and parties in said provisions shall be construed to refer to the property, obligations, and
parties set forth in this Deed of Trust.
The undersigned Trustor requests that a copy of any Notice of Default and of any Notices of Sale hereunder be mailed to him
at his address hereinbefore set forth.
STATE OF CALIFORNIA /s/ Xxxxxx X. Xxxxxxxx, Xx.
COUNTY OF SANTA XXXXX} ss. Signature of Trustor
On September 4, 1998 before me,
Xxxxxx X. Xxxxxxx, Notary Public, personally appeared
Xxxxxx X. Xxxxxxxx, Xx. proved to me on the basis of
satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged [NOTARY SEAL]
to me that he executed the same in his authorized
capacity; and that by his signature on the instrument
the person or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
Signature /s/ Xxxxxx X. Xxxxxxx (This area for official notarial seal)
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FOR RECONVEYANCE SEND TO THE NEAREST OFFICE OF NORTH AMERICAN TITLE COMPANY
REQUEST FOR FULL RECONVEYANCE
TO BE USED ONLY WHEN NOTE HAS BEEN PAID.
Dated__________________________
TO NORTH AMERICAN TITLE COMPANY, Trustee:
The undersigned is the legal owner and holder of all indebtedness
secured by the within Deed of Trust. All sums secured by said Deed of Trust
have been fully paid and satisfied; and you are hereby requested and directed on
payment to you of any sums owing to you under the terms of said Deed of Trust to
cancel all evidences of indebtedness, secured by said Deed of Trust, delivered
to you herewith together with said Deed of Trust, and to reconvey, without
warranty, to the parties designated by the terms of said Deed of Trust, the
estate now held by you under the same.
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MAIL RECONVEYANCE TO:
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DO NOT LOSE OR DESTROY THIS DEED OF TRUST OR THE NOTE WHICH IT SECURES.
BOTH MUST BE DELIVERED TO THE TRUSTEE FOR CANCELLATION BEFORE RECONVEYANCE WILL
BE MADE.
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