EXHIBIT 10.85
PAYMENTS REQUIRED TO BE MADE HEREUNDER ARE SUBORDINATED PURSUANT TO CERTAIN
SUBORDINATION AGREEMENTS DESCRIBED HEREIN.
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") NOR IS SUCH REGISTRATION
CONTEMPLATED. THIS NOTE MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED AT ANY TIME WHATSOEVER UNLESS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE, EXCEPT UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER
OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY
TO IT AND TO ITS COUNSEL TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BE IN
VIOLATION OF THE ACT, OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.
SECURED SUBORDINATED PROMISSORY NOTE
U.S. $1,725,000 February 19, 1999
Bellevue, Washington
1. PROMISE TO PAY. FOR VALUE RECEIVED, the undersigned ("Maker"),
promises to pay to the order of Advantage Fund II Ltd., a British Virgin
Islands corporation ("Holder"), via wire transfer in accordance with written
instructions to be provided by Holder not less than three business days
prior to any payment date hereunder, the principal sum of U.S. One Million
Seven Hundred Twenty-Five Thousand Dollars and No/100 (US $1,725,000.00),
together with interest on the unpaid principal balance thereof, as provided
below.
2. INTEREST. The outstanding principal balance of this Note shall
bear interest at the rate of ten percent (10%) per annum from the date hereof
until paid in full (the "Interest Rate"). Interest shall be computed on a
daily basis and shall be due and payable in arrears on each March 31, June
30, September 30 and December 31, commencing March 31, 1999. Interest due
hereunder is payable in cash.
3. PAYMENT. Principal and any accrued but unpaid interest shall be due
and payable in full on June 30, 1999 ("Maturity Date"); provided the Maturity
Date shall be automatically extended to September 30, 1999 in the event
that on or before June 30, 1999 Maker and one or more third parties have
executed a letter of intent that would provide the capital necessary to
redeem this Note. Maker hereby covenants to apply the proceeds of any such
financing or any other issuance of stock or equity to redeem this Note in
accordance with Section 6.18 of the Loan and Security Agreement dated as of
even date hereof among Maker, certain subsidiaries of Maker and Holder (the
"Loan and Security Agreement"). Payment of principal and interest shall be
made only if and to the extent that payment of a distribution to
shareholders could be made under Section 23B.06.400 of the Washington
Business Corporation Act at the time of such payment of principal or
interest.
4. DEFAULT INTEREST. If Maker shall fail to pay any interest or
principal owing under this Note within five (5) days of the respective payment
date, then such unpaid amount shall bear interest at an interest rate equal to
the Interest Rate plus eight percent (8%).
5. ATTORNEYS' FEES AND COSTS. If this Note is placed in the hands of an
attorney for collection, Maker promises to pay Holder's reasonable
attorneys' fees and all costs actually incurred in the collection process.
Such fees and costs shall become part of the indebtedness evidenced by this
Note, and shall bear interest at the Interest Rate.
6. PREPAYMENT. Maker may prepay all or any portion of the sums due under
this Note without notice or penalty at any time.
7. SECURITY AND SUBORDINATION. The indebtedness evidenced by this Note
is secured by, and this Note is the "Promissory Note" referred to in, the Loan
and Security Agreement. Pursuant to that certain Intercreditor and
Subordination Agreement dated as of the date hereof among Maker, Holder,
The CIT Group/Credit Finance, Inc. and U.S. Bank National Association (the
"Subordination Agreement"), the indebtedness evidenced by this Note is
subordinated and junior (i) in right of payment to the payment of certain
Senior Indebtedness and Senior Subordinated Indebtedness (as defined in the
Subordination Agreement) and (ii) to the enforcement of rights and remedies
of the Senior Indebtedness and Senior Subordinated Indebtedness. Pursuant
to that certain Subordination Agreement dated as of the date hereof between
Maker, Xxxxxx, Xxxx and Xxxx Xxxxxx and the Xxxxxx Family Trust (the
"Xxxxxx Subordination Agreement"), the indebtedness evidenced by this Note
is subordinated and junior (i) in right of payment to the payment of
certain Xxxxxx Indebtedness (as defined in the Xxxxxx Subordination
Agreement) and (ii) to the enforcement of rights and remedies of the Xxxxxx
Indebtedness.
8.. LIABILITY. Maker hereby waives demand, presentment for payment,
protest and notice of protest and of nonpayment and agrees that any
modification or extension of the terms of payment made by Holder, with or
without notice, at the request of Maker or otherwise, or any release of all or
any portion of the security from the lien of Holder's security interest
therein, shall not diminish or impair Maker's liability for the payment of all
amounts due hereunder.
9. SUCCESSORS AND ASSIGNS. This Note shall be binding upon and inure to
the benefit of the Maker and the Holder and their respective successors
and assigns.
10. GOVERNING LAW. This Note shall be governed by, and construed and
interpreted in accordance with the laws of the State of Washington without
giving effect to conflict of laws principles of such state.
11. SEVERABILITY. If any provisions hereof or of any of the instruments
securing this Note is invalid or unenforceable in any jurisdiction, the
other provisions hereof and thereof shall remain in full force and effect
in such jurisdiction and the remaining provisions hereof shall be liberally
construed in favor of the Holder hereof in order to effectuate the
provisions hereof and of said instruments; and the invalidity of any
provision hereof or thereof in any jurisdiction shall not affect the
validity or enforceability of any other provisions or of such provisions in
any other jurisdiction.
12. MAXIMUM INTEREST RATE. Notwithstanding anything to the contrary
contained in this Note, in no event shall the total of all interest or
other charges payable under this Note that are or
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could be held to be in the nature of interest exceed the maximum rate
permitted to be charged by applicable law.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
MAKER:
RIDE, INC.
By: -------------------------------
Xxxxxx X. Xxxxxxxxxx, President
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