1
EXHIBIT 10.14
Tucker, Georgia Up to $200,000 Principal Amount
November 26, 1997
DEMAND SECURED PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay to the
order of the persons (individually, a "Lender," and collectively, the "Lenders")
named on Schedule I, as such Schedule may be amended from time to time pursuant
hereto ("Schedule I"), at their respective addresses set forth on Schedule I or
at such other place or places as the respective Lenders may from time to time
designate with respect to themselves, the aggregate principal sum of TWO HUNDRED
THOUSAND and NO/100 Dollars ($200,000.00), or such lesser principal amount as
may be advanced from time to time to Borrower by the Lenders and set forth on
Schedule I, together with interest thereon at the rate or rates hereafter
specified and any and all other sums which may be owing to the Lenders by
Borrower pursuant to this Promissory Note. The Borrower shall pay to each Lender
the principal amounts set forth by such Lender's name on Schedule I, plus
interest, under the terms and conditions of this Promissory Note.
1. INTEREST. From the date hereof until all sums due hereunder, including
principal, interest, charges, fees and expenses are paid in full, the
principal amount outstanding from time to time pursuant to this
Promissory Note shall bear interest at the fixed per annum rate of 10%.
2. CALCULATION OF INTEREST. Interest shall be calculated on the basis of
a 360 day year applied to the actual days on which there exists an
unpaid balance hereunder.
3. REPAYMENT. BORROWER SHALL MAKE PAYMENTS OF PRINCIPAL AND ALL UNPAID
INTEREST, EXPENSES, CHARGES AND OTHER FEES IN FULL TO A LENDER ON DEMAND
BY SUCH LENDER, WHICH MAY BE MADE AT ANY TIME, WITHOUT NOTICE, AND
WITHOUT REGARD TO WHETHER A DEFAULT HAS OCCURRED. No Lender shall have
the right to demand or require that payment be made to any other Lender.
All accrued and unpaid interest shall be paid by Borrower on the first
day of each successive month, beginning on January 1, 1998, and
continuing until the maturity of this Promissory Note (whether upon
demand, stated maturity, acceleration or otherwise) at which time all
sums due hereunder, including principal, interest, charges, fees and
expenses, shall be paid in full.
4. LATE PAYMENT CHARGE. If any payment due hereunder (including any
payment in whole or in part of principal) is not received by a Lender
within 15 calendar days after its due date, Borrower shall pay a late
payment charge equal to 5% of the amount then due.
5. APPLICATION OF PAYMENTS. All payments made pursuant to this Promissory
Note shall be applied first to accrued and unpaid interest, then to
unpaid expenses and charges payable hereunder, and then to principal, or
in such other order or proportion as any Lender, in such Lender's sole
discretion, may elect from time to time with respect to such amounts
owed to such Lender.
1
2
6. USE OF PROCEEDS. Borrower represents and agrees that the proceeds of the
loan evidenced by this Promissory Note shall be used solely for working
capital business purposes (namely, to purchase inventory necessary to
launch Borrower's nutritional product line) and shall not be used for
any personal, family, household, consumer or other purpose, including
but not limited to the purchase or carrying of margin stock or other
securities.
7. SECURITY. Sums due under this Promissory Note are secured by, and
Borrower hereby assigns, conveys and grants a security interest to each
Lender named on Schedule I, jointly and severally, in and to, all
tangible and intangible property, property rights and assets of Borrower
now owned or hereafter acquired, including but not limited to all
accounts, receivables, money, securities, equipment, furniture,
fixtures, inventory, goods, software, patents, trademarks, service
marks, tradenames, copyrights, works, works in progress, programs,
program documentation, intellectual property and rights, contracts,
contract rights, instruments, documents, general intangibles, chattel
paper, notes, and other choses in action, all deposits and property of
Borrower now or at any time hereafter in the possession of the Lenders,
and all proceeds and products of the foregoing and all rights related
thereto. In addition, this Promissory Note is secured by all property
described as collateral in any security agreement, financing statement,
mortgage, deed of trust, pledge agreement or other document previously,
simultaneously, or hereafter entered into by Borrower in connection with
any obligation or liability of Borrower to the Lenders, such other
security document(s) including but not limited to the UCC-1 financing
statement of even date herewith. This Promissory Note specifically
incorporates by reference, as if fully set forth herein, all of the
language and provisions of the security documents described generally or
specifically above. The lien created by the security interest granted
herein shall not expire until each Lender named on Schedule I has been
paid all amounts due under this Promissory Note.
8. DEFAULT. Any of the following will be a default under this Promissory
Note: (a) failure to pay any principal, expense, fee, charge or interest
when due, or failure to perform any other obligations hereunder; (b) a
default by any Borrower upon any of the existing or future obligations
of any Borrower to the Lenders; (c) a default in any other agreement,
instrument or document between Borrower and any Lender, including,
without limitation, any security document referred to above, whether
previously, simultaneously, or hereafter entered into; (d) a material
adverse change in the financial condition of Borrower from that
expressed in the financial statement most recently submitted to the
Lenders prior to the date of this Promissory Note, as determined in good
faith by the Lenders in their sole discretion; (e) institution of
bankruptcy, insolvency, reorganization or receivership proceedings by or
against Borrower in any state or federal court; (f) the appointment of a
receiver, assignee, custodian, trustee or similar official under any
federal or state insolvency or creditors' rights law for any property of
Borrower; (g) failure of Borrower to furnish to the Lenders such
collateral or additional collateral as the Lenders may in good faith
request; (h) any warranty, representation, or statement to the Lenders
by or on behalf of Borrower proving to have been incorrect in any
material respect when made or furnished; (i) the occurrence of any event
which is, or would be with the passage of time or the giving of notice
or both, a default under any indebtedness of Borrower to any person
other than the Lenders; (j) any material loss, theft or substantial
damage,
2
3
not fully insured for the benefit of the Lenders, to any of the assets
of Borrower, or the sale, transfer, lease, encumbrance or other
disposition of all or any material part of the assets of Borrower other
than in the ordinary course of business of Borrower; (k) the entry of
any final judgment against Borrower for the payment of money in excess
of $5,000; (l) the levy upon or attachment of any assets of Borrower;
(m) the recordation of any federal, state or local tax lien against
Borrower; (n) a change of ownership or dissolution, merger,
consolidation, liquidation or reorganization of Borrower; (o) the
failure of Borrower to furnish to the Lenders such financial information
as the Lenders may require from time to time; or (p) the determination
in good faith by Lenders who hold, in the aggregate, a majority of the
outstanding principal amount of this Promissory Note (a "Majority in
Interest of the Lenders"), in their sole discretion, that the ability of
Borrower to pay or perform any of its obligations to the Lenders is
impaired for any reason.
9. REMEDIES. Upon a default, in addition to all other rights and
remedies available to the Lenders under any other document or agreement
between Borrower and the Lenders or under applicable law (including
the Uniform Commercial Code), a Majority in Interest of the Lenders,
in their sole discretion and without notice or demand, may: (a) raise
the rate of interest accruing on the unpaid balance due under this
Promissory Note by two percentage points above the rate of interest
otherwise applicable, independent of whether the Lenders elect to
accelerate the unpaid principal balance as a result of such default;
(b) declare the entire unpaid principal balance plus accrued interest
and all other sums due hereunder immediately due and payable; and (c)
exercise any rights of a secured creditor under the Uniform Commercial
Code and other law, including the right to take possession of the
collateral without the use of judicial process or hearing of any kind
and the right to require the debtor to assemble the collateral at such
place(s) as the Lenders may specify. Borrower agrees that a default
under this Promissory Note is a default by Borrower under all other
liabilities and obligations of Borrower to the Lenders, and that the
Lenders shall have the right to declare immediately due and payable all
of such other liabilities and obligations. Borrower agrees that any
notice required to be given under applicable law or otherwise in
connection with the Lenders' exercise of their remedies hereunder shall
be deemed to be reasonable if given at least five business days in
advance at the address set forth below by Borrower's signature.
Borrower waives the benefit of any and every statute, ordinance, or
rule of court which may be lawfully waived conferring upon Borrower any
right or privilege of exemption, homestead rights, stay of execution,
or supplementary proceedings, or other relief from the enforcement or
immediate enforcement of a judgment or related proceedings on a
judgment.
10. INTEREST RATE AFTER JUDGMENT. If judgment is entered against Borrower on
this Promissory Note, the amount of the judgment entered (which may
include principal, interest, charges, fees, and expenses) shall bear
interest at the higher of the above described default interest rate as
determined on the date of the entry of the judgment, or the legal rate
of interest then applicable to judgments in the jurisdiction in which
judgment was entered.
11. EXPENSES OF COLLECTION. Borrower shall pay all costs and expenses
incurred by the Lenders in collecting sums due under this Promissory
Note, including without limitation the
3
4
costs of any lien, judgment or other record searches, appraisals, travel
expenses and the like. In addition, if this Promissory Note is referred
to an attorney for collection, whether or not suit has been filed,
Borrower shall pay all of the Lenders' costs, fees (including, but not
limited to, the Lenders' attorneys' fees, charges and expenses) and all
other expenses resulting from such referral.
12. NEGOTIABLE INSTRUMENT. Borrower agrees that this Promissory Note
shall be deemed to be a negotiable instrument, even though this
Promissory Note may not qualify under applicable law, absent this
paragraph, as a negotiable instrument.
13. WAIVERS. Borrower, and all parties to this Promissory Note, whether
maker, endorser or guarantor, waive presentment, demand, notice of
dishonor and protest.
14. EXTENSIONS OF MATURITY. All parties to this Promissory Note, whether
maker, endorser or guarantor, agree that the maturity of this Promissory
Note, or any payment due hereunder, may be extended at any time or from
time to time without releasing, discharging or affecting the liability
of such party.
15. NOTICES. Any notice or demand required or permitted by or in connection
with this Promissory Note, without implying the obligation to provide
any notice or demand, shall be in writing at the addresses set forth
below or to such other address as may be hereafter specified by written
notice to the Lenders by Borrower or by a Lender to the Borrower, as the
case may be. Any such notice or demand shall be deemed to be effective
as of the date of hand delivery or facsimile transmission, one day after
dispatch if sent by telegram, mailgram, overnight delivery, express mail
or Federal Express, or three days after mailing if sent by first class
mail with postage prepaid.
16. ASSIGNABILITY. This Promissory Note may be assigned by the Lenders or
any holder at any time.
17. ADDITION OF LENDERS. Schedule I may be amended from time to time in
accordance with this Section 17 in order to add parties as Lenders
("Additional Lenders") under this Promissory Note and to set forth any
increases in amounts advanced by a Lender; provided, however, that in no
event may the aggregate principal amount advanced by the Lenders under
this Promissory Note exceed $200,000. Subject to such $200,000
limitation, (i) parties may be added to this Promissory Note as
Additional Lenders and their names, addresses and the principal amounts
advanced by them may be added to Schedule I upon the written consent of
the Borrower and such Additional Lenders and without the consent of any
other Lender, and (ii) Schedule I may be amended to reflect any increase
in the amount advanced by a Lender upon the written consent of the
Borrower and such Lender and without the consent of any other Lender.
18. JOINT AND SEVERAL LIABILITY. If more than one person or entity is
executing this Promissory Note as Borrower, all liabilities under this
Promissory Note shall be joint and several with respect to each of such
persons or entities.
4
5
19. BINDING NATURE. This Promissory Note shall inure to the benefit of and
be enforceable by each Lender and its successors and assigns and any
other person to whom such Lender may grant an interest in Borrower's
obligations to the Lender, and shall be binding and enforceable against
Borrower and Borrower's personal representatives, successors and
assigns.
20. INVALIDITY OF ANY PART. If any provision or part of any provision of
this Promissory Note shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this
Promissory Note, and this Promissory Note shall be construed as if such
invalid, illegal or unenforceable provision or part thereof had never
been contained herein, but only to the extent of its invalidity,
illegality or unenforceability.
21. MAXIMUM RATE OF INTEREST; COMMERCIAL LOAN. Notwithstanding any provision
of this Promissory Note to the contrary, Borrower shall not be obligated
to pay interest hereunder in excess of the maximum rate of interest
permitted by the laws of any state determined to govern this Promissory
Note or the laws of the United States applicable to loans in such state.
If any provision of this Promissory Note shall ever be construed to
require the payment of any amount of interest in excess of that
permitted by applicable law, then the interest to be paid hereunder
shall be held subject to reduction to the amount allowed under
applicable law, and any sums paid in excess of the interest rate allowed
by law shall be applied in reduction of the principal balance
outstanding under this Promissory Note. Borrower acknowledges that it
has been contemplated at all times by Borrower that the laws of the
State of Georgia will govern the maximum rate of interest that it is
permissible for the Lenders to charge Borrower under this Promissory
Note. Borrower warrants that this Promissory Note evidences a loan made
solely to acquire or carry on a business or commercial purpose.
22. CHOICE OF LAW; CONSENT TO VENUE AND JURISDICTION. THIS PROMISSORY NOTE
SHALL BE GOVERNED, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF GEORGIA, EVEN IF THE GEORGIA RULES GOVERNING CONFLICTS
OF LAWS WOULD OTHERWISE REQUIRE THAT THE LAWS OF ANOTHER JURISDICTION
GOVERN THIS PROMISSORY NOTE. BORROWER CONSENTS TO THE JURISDICTION AND
VENUE OF THE COURTS OF ANY COUNTY IN THE STATE OF GEORGIA OR TO THE
JURISDICTION AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF GEORGIA IN ANY ACTION OR JUDICIAL PROCEEDING BROUGHT TO
ENFORCE, CONSTRUE OR INTERPRET THIS PROMISSORY NOTE.
23. UNCONDITIONAL OBLIGATIONS. Borrower's obligations under this Promissory
Note shall be the absolute and unconditional duties and obligations of
Borrower and shall be independent of any rights of set-off, recoupment
or counterclaim which Borrower might otherwise have against the Lenders,
and Borrower shall pay absolutely the payments of principal, interest,
fees, charges and expenses hereunder, free of any deductions and without
abatement, diminution or set-off.
5
6
24. ACTIONS AGAINST LENDERS. Any action brought by Borrower against any
Lender which is based, directly or indirectly, or in whole or in part,
upon this Promissory Note or any matter related to this Promissory Note
shall be brought only in the courts of the State of Georgia.
25. TIME IS OF THE ESSENCE. Time is of the essence in the payment and
performance of this Promissory Note.
26. WAIVER OF JURY TRIAL. BORROWER (BY EXECUTION OF THIS PROMISSORY NOTE)
AND EACH LENDER (BY ACCEPTANCE OF THIS PROMISSORY NOTE) AGREE THAT ANY
SUIT, ACTION, OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR
INSTITUTED BY BORROWER OR THE LENDERS ON OR WITH RESPECT TO THIS
PROMISSORY NOTE OR WHICH IN ANY WAY RELATES, DIRECTLY OR INDIRECTLY, TO
THE OBLIGATIONS OF BORROWER TO THE LENDERS UNDER THIS PROMISSORY NOTE,
OR THE DEALINGS OF THE PARTIES WITH RESPECT THERETO, SHALL BE TRIED ONLY
BY A COURT AND NOT BY A JURY. BORROWER (BY EXECUTION OF THIS PROMISSORY
NOTE) AND EACH LENDER (BY ACCEPTANCE OF THIS PROMISSORY NOTE) HEREBY
EACH EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT,
ACTION, OR PROCEEDING. BORROWER (BY EXECUTION OF THIS PROMISSORY NOTE)
AND EACH LENDER (BY ACCEPTANCE OF THIS PROMISSORY NOTE) ACKNOWLEDGE AND
AGREE THAT THIS PROVISION IS A SPECIFIC AND MATERIAL ASPECT OF THE
AGREEMENT BETWEEN THE PARTIES AND THAT THE LENDERS WOULD NOT ENTER INTO
THE TRANSACTION WITH BORROWER IF THIS PROVISION WERE NOT A PART OF THEIR
AGREEMENT.
6
7
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
undersigned hereby executes this Promissory Note under seal, as Borrower, as of
the date first written above.
Maxxis Group, Inc.
--------------------------------------
1901 Montreal Road, Suite 108
--------------------------------------
(Street Address)
Tucker, Georgia 30084
--------------------------------------
(City-State-Zip)
(770) 552-4766 (770) 552-8471
--------------------------------------
(Telephone) (Facsimile)
WITNESS/ATTEST:
/s/ Kelly Wilder By: /s/ Thomas O. Cordy (SEAL)
- ------------------------------------ ----------------------------
(Authorized Signature)
Kelly Wilder Thomas O. Cordy, President/CEO
- ------------------------------------ --------------------------------
(Print Name) (Print Name and Title)
7
8
SCHEDULE I
NAME AND ADDRESS OF LENDERS PRINCIPAL AMOUNT
- --------------------------- ----------------
Glenn W. Sturm $50,000
Nelson Mullins Riley & Scarborough, L.L.P
First Union Plaza
999 Peachtree Street, N.E., Suite 1400
Atlanta, Georgia 30309
Peter C. Quittmeyer 35,000
Nelson Mullins Riley & Scarborough, L.L.P
(see address above)
James Walker IV 30,000
Nelson Mullins Riley & Scarborough, L.L.P
(see address above)
James Walker III 20,000
2780 Habersham Road
Atlanta, Georgia 30305
TAF, L.P. 20,000
Nelson Mullins Riley & Scarborough, L.L.P
(see address above)
William J. Ching 10,000
Nelson Mullins Riley & Scarborough, L.L.P
(see address above)
Andrew L. Howell 7,500
Nelson Mullins Riley & Scarborough, L.L.P
(see address above)
Terresa R. Tarpley 5,000
Nelson Mullins Riley & Scarborough, L.L.P
(see address above)