EXHIBIT 10.2
PROMISSORY NOTE
THE PAYMENT OF THE DEBT EVIDENCED HEREBY IS SUBORDINATED TO ALL DEBTS
OF THE OBLIGOR TO HARBINGER MEZZANINE PARTNERS, L.P. AS SET FORTH IN A
SUBORDINATION AGREEMENT DATED AUGUST 9, 2001.
$3,600,000.00 Nashville, Tennessee
August 9, 2001
FOR VALUE RECEIVED, First Acquisition Company, a Nevada
corporation (the "Obligor"), hereby promises to pay to 1st National Processing,
Inc., a Nevada corporation (the "Holder"), the principal sum of Three Million
Six Hundred Thousand and No/100 Dollars ($3,600,000.00) without interest. The
principal sum of Three Million Six Hundred Thousand and No/100 Dollars
($3,600,000.00) shall be repaid as follows: on the first Business Day of each of
the twelve (12) consecutive months commencing September 1, 2001, the Obligor
shall pay Holder an amount equal to Fifty Thousand Dollars and No/100 Dollars
($50,000.00); and on the first Business Day of each of the twelve (12)
consecutive months commencing September 1, 2002, the Obligor shall pay Holder an
amount equal to Eighty Three Thousand Three Hundred and Thirty Three and No/100
Dollars ($83,333.33); and on September 1, 2003, the Obligor shall pay Holder an
amount equal to the remaining principal balance due hereunder. Payment of
principal shall be made to Holder and delivered to X. X. Xxxxxx, as agent for
Xxxxxx, at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxx 00000, or such other address
as Holder may designate from time to time. Principal shall be payable in lawful
money of the United States of America, which shall be legal tender in payment of
all debts and dues, public and private, at the time of payment.
1. Definitions. The following words and terms when used in this Note
shall have the meanings set forth below, unless the context or use indicates
another or different meaning or intent, and such definitions and the other words
and terms in this Note shall be equally applicable to the singular and plural as
well as the masculine, feminine, and neuter, as the context requires.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in the city
of Nashville, Tennessee are authorized or obligated by law or executive
order to close.
"Event of Default" means the occurrence of any of the
following events:
(a) the failure of Obligor to make any scheduled payment of
principal due in connection with this Note within ten (10) days of the
date on which such payment is due;
(b) Xxxxxxx's assignment for the benefit of its creditors or
Obligor's admission in writing of its inability to pay its debts
generally as they become due or Xxxxxxx's consent to the appointment of
a receiver, conservator, custodian, liquidator, or trustee of Obligor
or of all or any part of its property;
(c) Xxxxxxx's filing of a petition in voluntary bankruptcy or
Xxxxxxx's seeking relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution, or liquidation law of any jurisdiction, whether now or
hereafter in effect or Xxxxxxx's consent to the filing of any petition
against it under any such law;
(d) the appointment of a receiver, conservator, custodian,
liquidator, or trustee of Obligor's or of all or any of the property of
Obligor, and such appointment remains in effect for more than sixty
(60) days;
(e) an order for relief is entered under the federal
bankruptcy laws with respect to Obligor or any of the material property
of Obligor is sequestered by court order and such order remains in
effect for more than sixty (60) days; or
(f) a petition is filed against Obligor under the bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution, or liquidation law of any jurisdiction, whether now or
hereafter in effect, and is not dismissed within sixty (60) days after
such filing.
"Note" means this Promissory Note.
"Person" means, whether or not capitalized, a natural person,
a partnership, a corporation, an association, a limited liability
company, a trust, a joint venture, a joint stock company, an
unincorporated organization, or a governmental entity, or any
department, agency, or political subdivision thereof.
"Purchase Agreement" means that certain Asset Purchase
Agreement, dated August 9, 2001, among Obligor, iPayment Holdings,
Inc., a Tennessee corporation, the Company, X. X. Xxxxxx, Xxxx X. Xxxx
and Xxxxx X. Xxxxxx.
2. Prepayment. Obligor, at its option, may prepay this Note, in whole
or in part, at any time and without prior notice, by paying Holder the principal
amount to be repaid, without penalty or premium.
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3. Remedies for Event of Default.
(a) If any Event of Default shall occur and be continuing, Holder
may, by notice to Obligor, declare this Note and all liabilities of Obligor
hereunder, to be immediately due and payable, and the same shall become and be
immediately due and payable without presentment, demand, protest, notice of
intent to accelerate, or other notice of any kind to Obligor, all of which are
hereby waived.
(b) In the event this Note is placed in the hands of an attorney
for collection or enforcement, or in the event that Holder incurs any costs
incident to the collection of any indebtedness evidenced hereby, Xxxxxxx agrees
to pay all reasonable costs, including without limitation reasonable attorneys'
fees, court costs and collection efforts, actually incurred by Obligor.
Forbearance to exercise the remedies set forth herein with respect to any
failure or breach of the Obligor shall not constitute a waiver by the Holder of
any such remedies.
4. Miscellaneous.
4.1 Interest Rate. Obligor and Xxxxxx acknowledge and agree that no
interest is payable on or with respect to the principal balance of this Note. In
the event that any law, rule, regulation or order of a court of competent
jurisdiction requires that interest or an imputed rate fees, court costs and
collection efforts, be payable interest under this Note, the principal amount
due under this Note shall be reduced by a like amount such that the maximum
amount payable by Obligor under this Note, however characterized, shall be Three
Million Six Hundred Thousand and No/100 Dollars ($3,600,000.00).
4.2 Notice. Any notice required by the provisions of this Note to
be given to Holder or Obligor shall be (i) delivered personally, or mailed,
certified mail, return receipt requested, postage prepaid, or delivered by
nationally recognized overnight courier service to Holder at its address
appearing on the books of Obligor or to Obligor at its principal executive
offices, or (ii) transmitted by telex or facsimile transmission to the
respective numbers of Holder or Obligor furnished in writing to the other party,
and confirmed by certified mail, return receipt requested. Any such notice shall
be deemed to have been given upon delivery, if delivered personally; three (3)
days after mailing, if mailed; and one Business Day after delivery to the
courier or after transmission, if delivered by overnight courier or transmitted
by telex or facsimile transmission.
4.3 Transfer. Notwithstanding any provision herein to the contrary,
this Note may not be transferred or otherwise assigned, whether by operation of
law or otherwise, by Holder without the written consent of Obligor.
4.4 Descriptive Headings. The descriptive headings of this Note are
inserted for convenience only and do not constitute a part of and shall not be
utilized in interpreting this Note.
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4.5 Choice of Laws. This Note will be governed by and construed in
accordance with the local laws of the State of Tennessee, in which state such
indebtedness is incurred and in which this Note is made a delivered. Obligor and
Holder hereby irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the courts of the State of Tennessee and of the United States of
America located in the State of Tennessee (the "Tennessee Courts") for any
litigation arising out of or relating to this Note (and agrees not to commence
any litigation relating thereto except in such courts), waive any objection to
the laying of venue of any such litigation in the Tennessee Courts and agree not
to plead or claim in any Tennessee Court that such litigation brought therein
has been brought in an inconvenient forum.
4.6 Set-Off. By its acceptance hereof, Xxxxxx specifically
acknowledges and agrees that this Note is subject to Xxxxxxx's right to set-off
against any and all amounts due hereunder any liability or amount owed to
Obligor arising from or in connection with the Purchase Agreement or the
transactions contemplated thereby, provided that if Obligor is asserting such
right of set-off in connection with a claim for indemnification against Holder
pursuant to Article IX of the Purchase Agreement, Obligor shall have complied
with the terms and provisions of Article IX of the Purchase Agreement prior to
any such set-off. Any such amounts shall first be applied to reduce the
interest, if any, and fees due and payable to Holder as of such date and then to
reduce the amount of the principal then due hereunder. Obligor specifically
acknowledges and agrees that any guarantor of Xxxxxxx's obligations under the
Note, or any guarantor of the obligations of such guarantor, is an intended
third party beneficiary of this provision, and may exercise the right of set-off
against any obligations it may have to Holder under any such guaranty in the
same manner and to the same extent the Obligor could exercise such right
directly against Holder.
4.7 Amendment. All amendments to this Note, and any waiver or
consent by the Holder, must be in writing and signed by the Holder and the
Maker. Obligor and any endorser hereof hereby severally waive presentment,
demand, notice of dishonor, protests and all other notices whatever, and agree
that Holder may, without releasing the liability of Obligor, grant extensions or
renewals of this Note, in whole or in part, without limit as to the number of
such extensions, or the period or periods thereof, and without notice to them
and without affecting their liability thereon.
4.8 Extension. Obligor and any endorser hereof hereby severally
waive presentment, demand, notice of dishonor, protests and all other notices
whatever, and agree that Holder may, without releasing the liability of Obligor
, grant extensions or renewals of this Note, in whole or in part, without limit
as to the number of such extensions, or the period or periods thereof, and
without notice to them and without affecting their liability thereon.
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IN WITNESS WHEREOF, the undersigned has executed this Note this 9th day
of August, 2001.
FIRST ACQUISITION COMPANY
By: /s/ Xxxxxxx X. Daily
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Title:
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ATTEST:
/s/ Xxxxxxx X. Daily
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Secretary
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