SECURED PROMISSORY NOTE
Exhibit 10.2
SECURED PROMISSORY NOTE
| $2,000,000.00 | May 2, 2008 Fort Lauderdale, Florida |
FOR VALUE RECEIVED, pursuant to that certain Stock Purchase Agreement (the “Agreement”) dated
May 2, 2008, by and between Scorpion Performance, Inc., a Florida corporation (“the Company”)
promises to pay to the order of Xxxx Xxxxx and Xxxxxx Xxxxx, as husband and wife, (each a “Seller”
and together, the “Sellers”) the principal amount of Two Million Dollars and No/100 ($2,000,000.00)
subject to the following terms and conditions:
1) Payment of Principal and Interest. The Company shall pay the principal sum of Two
Million Dollars and No/100 ($2,000,000.00), together with 7% interest per annum on the remaining
balance by making monthly payments to Sellers in an amount that would result in equal monthly
payments being made until final payment of the remaining balance is due on January 1, 2013 (the
“Due Date”). If the Company chooses in a given month (or months) to pay interest only (i.e., no
principal) prior to the Due Date, then the Company may pay interest only for that month (or
months), and the interest rate for each such month shall be at a rate of 10% per annum on the
outstanding balance of the Note until the Due Date, at which time payment in full is due. Interest
shall be computed hereunder based on a three hundred sixty (360) day year and paid for the actual
number of days elapsed for any whole or partial month in which interest is being calculated. In
computing the number of days during which interest accrues, the day on which funds are initially
advanced shall be included regardless of the time of day such advance is made, and the day on which
funds are repaid shall be included unless repayment is credited prior to close of business. All
sums payable to the Sellers shall be payable in lawful dollars of the United States of America.
2) Extension of Due Date. If the Company is not in default of its obligations to
Sellers at the time of the Due Date, then the Company may extend the Due Date of this Note for one
additional five-year period. In the event the Due Date is extended pursuant to this Section 2, the
Company shall begin paying to Sellers principal and interest in the amount of the greater of 10%
per annum or prime plus 4% per annum (but not to exceed the amount permitted by law) on the
remaining balance by making monthly payments to Sellers in an amount that would result in equal
monthly payments being made until final payment of the remaining balance is due on January 1, 2018.
3) Prepayment. The Company may prepay all or any part of the principal or interest
without penalty.
4) Security. As security for the full and timely payment of the amounts payable by
the Company to Sellers under this Note, the Company will convey to Sellers a mortgage and security
agreement in the form in the attached Exhibit “A” on the real property with a street address of
0000 XX 0xx Xxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx, and a legal description of:
C-1
The South 200.78 feet of the North 846.78 feet of the West 1/2 of the East 1/2 of the Southeast
1/4 of the Northwest 1/4 of Section 22, Township 50 South, Range 42 East, Less
the West 40 feet
thereof, lying, situate and being in Broward County, Florida (the “Mortgaged Property”).
5) INTENTIONALLY LEFT BLANK.
6) Related Transaction Documents. This Note and other related documents and
agreements including, but not limited to, an addendum to the Lock Up Agreement; the Stock Purchase
Agreement and the Mortgage and Security Agreement, are collectively, the “Related Transaction
Documents”.
7) Default. Each of the following constitutes a default (“Event of Default”):
a. Failure of the Company to make any payment under the Note within 90 calendar days of the
date such payment is due;
b. Failure of the Company to comply with or to perform any other material obligation, covenant
or condition contained in this Note, the Mortgage and Security Agreement or the Stock Purchase
Agreement; or
c. The dissolution or any other termination of the Company’s business as a going concern, the
appointment of a receiver for any part of the Company’s property, any assignment for the benefit of
the Company’s creditors, or the commencement of any proceeding under any bankruptcy or insolvency
laws by or against the Company and, if instituted against the Company, the Company has not taken
any action to answer, approve of, consent to or acquiesce in any such proceeding or admit the
material allegations of such proceedings and such proceedings shall not be dismissed within thirty
calendar days.
d. Notwithstanding the foregoing in this section 7, the Company’s withholding payment pursuant
to the Stock Purchase Agreement at paragraph 8 shall not constitute an Event of Default.
8) Acceleration; Sellers’ Rights Upon Event of Default.
a. If the Company sells the Mortgaged Property, then the full remaining balance will be
accelerated and become immediately due and payable to Sellers at the time of sale.
b. If foreclosure proceedings of any mortgage or lien of any kind superior or inferior to this
mortgage are instituted against the Mortgaged Property, Sellers may at their option, declare the
mortgage and the indebtedness secured due and payable.
c. If an Event of Default occurs, Sellers shall have all rights and remedies as set forth in
the Mortgage and Security Agreement and, subject to the Mortgage and Security Agreement, may
exercise any and all rights and remedies available at law or in equity.
9) Successors and Assigns. Sellers may only assign this Note and Mortgage and
Security Agreement with the prior written consent of the Company, which consent shall not be
unreasonably withheld, and only if the assignee agrees in writing to the Company, as a condition to
such assignment, to be bound by all of the provisions of the Stock Purchase Agreement, the Mortgage
and Security Agreement and the Related Transaction Documents to the same extent as if such assignee
were a Seller. This Note will be binding in all respects upon each of the Company and Sellers and
their successors and permitted assigns and inure to the benefit of their successors and permitted
assigns.
10) Governing Law. This Note shall be governed by and construed in accordance with
the laws of Florida. Each party agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Note (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in Broward County, Florida.
Each party irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in Broward County, Florida for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated or discussed herein, and irrevocably waives, and
agrees not to assert in any proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such proceeding is improper. Each party to this Note
irrevocably waives personal service of process and consents to process being served in any such
proceeding by mailing a copy via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Note and agrees
that such service shall constitute good and sufficient service of process and notice. Nothing
contained in this Note shall be deemed to limit in any way any right to serve process in any manner
permitted by law. The parties to this Note irrevocably waive, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding arising out of or
relating to this Note or the transactions contemplated.
11) Severability. Whenever possible, each provision of this Note shall be interpreted
in such a manner as to be effective and valid under applicable law, but if any provision of this
Note shall be prohibited by or invalid under applicable law, such provisions shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note.
12) Headings and Captions. The headings and captions contained in this Note are set
forth for the purpose of convenience only and shall be given no effect in the construction or
interpretation of this Note.
13)Notices. All notices and other communications required or permitted hereunder shall
be in writing and shall be deemed to have been duly given as set forth in the Stock Purchase
Agreement.
14) Usury. Nothing contained herein or in the Stock Purchase Agreement or the
Mortgage and Security Agreement or in any instrument securing this Note or any other instrument
executed in connection with the loan evidenced hereby shall be construed or so operate as to
require the Company to pay interest or any other charge for the use or loan of money at a greater
rate than is now lawful in such case to contract for, or to make any payment, or to do any act
contrary to applicable law. Should any interest paid by the Company, or parties liable for the
payment of this Note result in the computation or earning of interest or other charge for the use
or loan of money in excess of the maximum rate that is legally permitted under applicable law, then
any and all such excess is hereby waived by the Sellers and holder hereof, and any and all such
excess shall be automatically credited against any reduction of the balance due under this
indebtedness, and the portion of said excess which exceeds the balance due under this indebtedness
shall be repaid by the Sellers to the Company. The provisions of this Section shall supersede any
inconsistent provision of the Stock Purchase Agreement, the Mortgage and Security Agreement or any
other Related Transaction Document.
15) Documentary Stamp Tax. The Company shall pay any and all documentary stamp taxes
due on the principal amount of this Note and Mortgage.
16) Entire Agreement; Changes to be in Writing. The Stock Purchase Agreement and
Mortgage and Security Agreement are incorporated herein by reference. This Note and the Related
Transaction Documents constitute the entire agreement of the Company and Sellers and supersede all
prior undertakings and agreements with respect to the subject matter hereof. There are no oral
agreements between or among the parties with respect to the transactions contemplated herein. No
waiver, change, amendment or discharge of any term or condition hereof or any consent on the part
of any party hereto shall be of any force or effect unless made in writing and signed by the party
to be bound thereby.
IN WITNESS WHEREOF, the undersigned has executed this Note in Fort Lauderdale as of the date
first written above.
| SCORPION PERFORMANCE, INC. |
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| /s/ Xxxxxx Xxxxxxxx | ||||
| President | ||||
