Exhibit 10.2
PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY OTHER APPLICABLE SECURITIES LAWS. IT
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNDER CIRCUMSTANCES THAT
WOULD RESULT IN A VIOLATION OF THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OF 1933 OR SUCH OTHER LAWS.
SECURED PROMISSORY NOTE
U.S. $ 300,000 Dated: June 11, 1999
FOR VALUE RECEIVED, the undersigned, THE PANDA PROJECT, INC., a
Florida corporation (the "Borrower"), HEREBY UNCONDITIONALLY
PROMISES TO PAY to the order of SILICON BANDWIDTH, INC., a
Delaware corporation (the "Lender"), the principal sum of THREE
HUNDRED THOUSAND UNITED STATES DOLLARS (U.S. $300,000), on
September 30, 1999 (the "Maturity Date").
The Borrower further promises to pay interest on the
outstanding principal amount of this Promissory Note (this
"Note") from the date hereof until maturity, at a rate per annum
equal at all times to six per cent (6%) per annum. Accrued
interest shall be payable on the Maturity Date. In the event
that any amount of principal or interest, or any other amount
payable hereunder, is not paid in full when due (whether at
stated maturity, by acceleration or otherwise), the Borrower
shall pay interest on such unpaid principal, interest or other
amount, from the date such amount becomes due until the date such
amount is paid in full, payable on demand, at a rate per annum
equal at all times to ten per cent (10%) per annum. All
computations of interest shall be made on the basis of a year of
365 or 366 days, as the case may be, for the actual number of
days (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
This Note is secured by certain collateral more
specifically described in the Security Agreement dated of even
date herewith between Borrower and Lender (the "Security
Agreement"). Capitalized terms not otherwise defined in this
Note shall have the meanings ascribed to them in the Security
Agreement.
All payments hereunder shall be made in lawful money of
the United States of America and in same day or immediately
available funds, to the Lender, at 0000 Xxxxxxx Xxxxx, Xxxxx 000,
Xxx Xxxxx, Xxxxxxxxxx 00000, or to such other office and account
of the Lender as it from time to time shall designate in a
written notice to the Borrower.
Whenever any payment hereunder shall be stated to be
due, or whenever any interest payment date or any other date
specified hereunder would otherwise occur, on a day other than a
Business Day (as defined below), then, except as otherwise
provided herein, such payment shall be made, and such interest
payment date or other date shall occur, on the next succeeding
Business Day, and such extension of time shall in such case be
included in the computation of payment of interest hereunder. As
used herein, "Business Day" means a day (i) other than Saturday
or Sunday, and (ii) on which commercial banks are open for
business in New York, New York.
All payments shall be made hereunder unconditionally in
full without deduction, setoff, counterclaim or other defense,
including, without limitation, any deduction or setoff arising
out of or in connection with the Letter of Intent dated as of May
14, 1999 by and between Xxxxxx and Borrower (the "Letter of
Intent"), and the Asset Purchase Agreement by and between Lender
and Borrower to be executed pursuant to the Letter of Intent (the
"Asset Purchase Agreement"); provided, however, that no payment
hereunder shall be deemed to be a waiver of any right or claim
that the Borrower may have under such agreements. The Borrower
represents and warrants to the Lender that, to the best of
Xxxxxxxx's knowledge, there is no claim, defense, counterclaim or
set-off which could be asserted by or is available to the
Borrower against the Lender.
Xxxxxx further agrees with Xxxxxx that notwithstanding
the Exclusivity Period set forth in Section 16 of the Letter of
Intent, the Exclusivity Period defined therein shall terminate on
September 30, 1999.
The Borrower shall pay all amounts due under this Note
free and clear of, and without reduction for or on account of,
any present and future taxes, levies, imposts, duties, fees,
assessments, charges, deductions or withholdings and all
liabilities with respect thereto (collectively "Taxes"). If any
Taxes shall be required by law to be deducted or withheld from
any payment, the Borrower shall increase the amount paid so that
the Lender receives when due (and is entitled to retain), after
deduction or withholding for or on account of such Taxes
(including deductions or withholdings applicable to additional
sums payable under this paragraph), the full amount of the
payment provided for in this Note.
If the Lender is required by law to make any payment on
account of Taxes, or any liability in respect of any Tax is
imposed, levied or assessed against the Lender, the Borrower
shall indemnify the Lender for and against such payment or
liability, together with any incremental taxes, interest or
penalties, and all costs and expenses, payable or incurred in
connection therewith, including Taxes imposed on amounts payable
under this paragraph whether or not such payment or liability was
correctly or legally asserted. A certificate of the Lender as to
the amount of any such payment shall, in the absence of manifest
error, be conclusive and binding for all purposes.
Anything herein to the contrary notwithstanding, if
during any period for which interest is computed hereunder, the
amount of interest computed on the basis provided for in this
Note, together with all fees, charges and other payments which
are treated as interest under applicable law, as provided for
herein or in any other document executed in connection herewith,
would exceed the amount of such interest computed on the basis of
the Highest Lawful Rate, the Borrower shall not be obligated to
pay, and the Lender shall not be entitled to charge, collect,
receive, reserve or take, interest in excess of the Highest
Lawful Rate, and during any such period the interest payable
hereunder shall be computed on the basis of the Highest Lawful
Rate. As used herein, "Highest Lawful Rate" means the maximum
non-usurious rate of interest, as in effect from time to time,
which may be charged, contracted for, reserved, received or
collected by the Lender in connection with this Note under
applicable law.
Any of the following events which shall occur shall
constitute an "Event of Default":
(a) The Borrower shall fail to pay when due any amount
of principal or interest on this Note or any other amount payable
under this Note, the Security Agreement or any other Document.
(b) Any representation or warranty by the Borrower under
or in connection with this Note, the Security Agreement or any
other Document shall prove to have been incorrect in any material
respect when made or deemed made.
(c) The Borrower shall fail to perform or observe any
other term, covenant or agreement contained in this Note, the
Security Agreement or any other Document on its part to be
performed or observed and any such failure shall remain
unremedied for a period of 10 days from the occurrence thereof.
(d) The Borrower shall fail to make payment when due on
any other indebtedness for money borrowed with an aggregate
principal amount outstanding of $ 10,000.00 or more, or otherwise
fails to perform any covenant in or otherwise breaches the terms
of any instrument relating to such indebtedness which failure or
breach permits the holder of such indebtedness to accelerate the
maturity of such indebtedness.
(e) Any levy upon, seizure or attachment of the
Collateral or any part thereof, or any material impairment in the
value of the Collateral or the priority of the Lender's lien
thereon.
(f) The Borrower or any other Person shall challenge the
validity of this Note, or the Security Agreement, or the grant of
the security interest thereunder.
(g) The Borrower shall (i) liquidate, wind up or
dissolve (or suffer any liquidation, wind-up or dissolution),
(ii) suspend its operations other than in the ordinary course of
business, or (iii) take any corporate action to authorize any of
the actions or events set forth above in this paragraph (g).
(h) A final judgment or order for the payment of money
in excess of $10,000.00 (excluding the settlement of the lawsuit
between Borrower and Promethean LLC for up to $35,000.00) which
is not fully covered by third-party insurance shall be rendered
against the Borrower; or any non-monetary judgment or order shall
be rendered against the Borrower which has or would reasonably be
expected to have a material adverse effect upon the operations,
properties, business or condition (financial or otherwise) of the
Borrower; and in each case there shall be any period of 20
consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect.
(i) The Borrower shall merge with or consolidate into or
acquire all or a substantial part of the assets of another Person
or sell, lease, transfer or otherwise dispose of all or a
substantial part of its assets.
(j) The Borrower shall form any subsidiaries, alter its
capital structure, declare or pay any dividends or purchase,
redeem or retire or otherwise acquire for value any of its
capital stock now or hereafter outstanding, return capital to its
shareholders or distribute assets to its shareholders; provided,
however, that the Borrower may, pursuant to the terms and
conditions of its existing stock option and stock purchase
agreements between the Borrower and its employees and
consultants, issue stock options and repurchase unvested shares
of common stock of the Borrower.
If any Event of Default shall occur, the Lender may (i)
by notice to the Borrower, declare the entire unpaid principal
amount of this Note, all interest accrued and unpaid hereon and
all other amounts payable hereunder to be forthwith due and
payable, whereupon all unpaid principal under this Note, all such
accrued interest and all such other amounts shall become and be
forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly
waived by the Borrower, and (ii) whether or not the actions
referred to in clause (i) have been taken, exercise any or all of
the Lender's rights and remedies under the Security Agreement and
proceed to enforce all other rights and remedies available to the
Lender under applicable law.
No amendment or waiver of any provision of this Note,
nor any consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and
signed by the Lender and then such amendment, waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing
(including by facsimile) and mailed, sent or delivered to the
respective parties hereto at or to the following addresses or
facsimile numbers (or at or to such other address or facsimile
number as shall be designated by any party in a written notice to
the other parties hereto):
If to the Lender: Silicon Bandwidth, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx
Xxx Xxxxx, XX 00000
Attn: Chief Executive Officer
Xxxxxxxxx: (000) 000-0000
If to the Borrower: The Panda Project, Inc.
000 Xxxxxx Xxxxx Xxxxxxx
Xxxx Xxxxx, XX 00000
Attn: Chief Executive Officer
Xxxxxxxxx: (000) 000-0000
All such notices and communications shall be effective (i) if
delivered by hand, upon delivery; (ii) if sent by mail, upon the
earlier of the date of receipt or five Business Days after
deposit in the mail, first class (or air mail, with respect to
communications to be sent to or from the United States), postage
prepaid; and (iii) if sent by facsimile, when sent.
No failure on the part of the Lender to exercise, and
no delay in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights and
remedies under this Note are cumulative and not exclusive of any
rights, remedies, powers and privileges that may otherwise be
available to the Lender.
Whenever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of
this Note shall be prohibited by or invalid under any such law or
regulation in any jurisdiction, it shall, as to such
jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid
only to the extent of such prohibition or invalidity without
affecting the remaining provisions of this Note, or the validity
or effectiveness of such provision in any other jurisdiction.
The Borrower agrees to pay on demand all costs and
expenses of the Lender, and the fees and disbursements of counsel
(including the allocated costs of internal counsel), in
connection with (i) any amendments, modifications or waivers of
the terms hereof, (ii) any Event of Default, (iii) the
enforcement or attempted enforcement of, and preservation of any
rights under, this Note, and (iv) any out-of-court workout or
other refinancing or restructuring or in any bankruptcy case,
including, without limitation, any and all losses, costs and
expenses sustained by the Lender as a result of any failure by
the Borrower to perform or observe its obligations contained
herein. In addition, the Borrower agrees to indemnify the Lender
against and hold it harmless from any and all present and future
stamp, transfer, documentary and other such taxes, levies, fees,
assessments and other charges made by any jurisdiction by reason
of the execution, delivery, performance and enforcement of this
Note.
This Note shall be binding upon, inure to the benefit
of and be enforceable by the Borrower, the Lender and their
respective successors and assigns.
The Borrower shall not have the right to assign its
rights and obligations hereunder or any interest herein without
the prior written consent of the Lender. The Lender may sell,
assign, transfer or grant participations in all or any portion of
the Lender's rights and obligations hereunder. In the event of
any such assignment the assignee shall be deemed the "Lender" for
all purposes of this Note and any other documents and instruments
relating hereto with respect to the rights and obligations
assigned to it. The Borrower agrees that in connection with any
such grant or assignment, the Lender may deliver to the
prospective participant or assignee financial statements and
other relevant information relating to the Borrower and its
Subsidiaries.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
THE BORROWER AND XXXXXX XXXXXX AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS NOTE, THE
SECURITY AGREEMENT OR ANY OTHER DOCUMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY
OTHER PARTIES THERETO. THE BORROWER AND XXXXXX XXXXXX AGREE THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT IN ANY WAY LIMITING THE FOREGOING, THE
BORROWER AND XXXXXX FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS PARAGRAPH AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS NOTE, THE SECURITY AGREEMENT OR ANY OTHER DOCUMENT OR ANY
PROVISION THEREOF.
IN WITNESS WHEREOF, the Borrower has duly executed this
Note, as of the date first above written.
THE PANDA PROJECT, INC.
By /s/ Xxxxxxx X. Xxxxx
Title: Acting Chief
Financial Officer
