Exhibit 10.2
Purchase Money Note
THIS NOTE HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR ANY OTHER SECURITIES LAW. THIS NOTE MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
OF THE NOTE UNDER THE ACT AND ANY OTHER APPLICABLE SECURITIES LAWS,
OR THE RECEIPT BY THE MAKER OF AN OPINION OF COUNSEL OR OTHER
EVIDENCE ACCEPTABLE TO THE MAKER THAT SUCH SALE OR TRANSFER OF THIS
NOTE IS EXEMPT FROM REGISTRATION UNDER THE ACT.
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New York, New York
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$4,200,000
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February 23, 2009
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FOR
VALUE RECEIVED, the undersigned, Woodland Holdings Corp., a
Delaware corporation (the “ Maker ”), hereby
promises to pay to Ned B. Timmer, an individual, or his permitted
assigns (including any permitted assignee or other subsequent
holder hereof, the “ Payee ”), the principal sum
of Four Million Two Hundred Thousand and 00/100 Dollars
($4,200,000) (the “ Note ”), together with
interest thereon at the Note Rate (as defined below) from the date
hereof until paid in full, in coin or currency, which, at the time
or times of payment, is legal tender for payment of public and
private debts in the United States of America, all in accordance
with the terms hereinafter set forth. This Note is issued pursuant
to that certain Stock Purchase Agreement, dated as of the date
hereof, by and among Payee, Cornerworld Corporation, a Nevada
corporation (“ Cornerworld ”), the Maker
, and HCC Foundation, a Michigan
not-for-profit corporation (as may be amended or supplemented from
time to time , the “ Purchase Agreement
”).
1. Definitions . Capitalized terms used in this Note
without definition or reference to another agreement shall have the
meanings assigned to such terms in the Purchase Agreement. As used
in this Note, the following terms shall have the meanings indicated
herein and defined below:
“
Code ” means the Internal Revenue Code of 1986, as
amended, and Treasury Regulations promulgated
thereunder.
“
Free Cash Flow ” shall mean, for the period of
determination, EBITDA minus cash interest, cash taxes, capital
expenditures, debt repayments, Earn Out Payments (as defined under
the Stock Purchase Agreement), distributions, dividends, parent
company SG&A, plus or minus the net change in working
capital accounts.
“
Obligations ” means the principal, interest and other
amounts payable under this Note.
2.
Interest . The per
annum rate of interest to be charged on the Principal Amount shall
be twelve percent (12%) (the “ Note Rate ”) and
shall be payable in arrears on the fifteenth Business Day each
month, commencing on May 15, 2009, with interest accruing from the
date hereof. Interest shall be computed on the basis of a year of
360 days (consisting of twelve 30-day months) and the actual number
of days elapsed. Interest payable under this Note shall be paid by
Maker to Payee by wire transfer of immediately available funds to
an account designated by Payee by written notice to Maker prior to
the issuance of the Note.
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3. Maturity . Except as otherwise provided in
Sections 6 and 7 hereof, and subject to
Sections 8 and 9 hereof, the principal amount of this Note,
together with interest accrued and unpaid thereon, shall be due and
payable on February 23, 2012.
4.
Application of Payments . All payments made hereon shall be applied
first to accrued interest and the balance of any payment shall be
applied in reduction of the principal balance.
5.
Free Cash Flow Sweep . Upon the payment in full of all obligations
under the Secured Debenture dated as of the date hereof by the
Maker and Cornerworld in favor of the Payee, including any
refinanced amounts thereof, the Maker shall make a payment on the
outstanding Principal Amount in an aggregate principal amount equal
to 30% of Free Cash Flow for the quarter then ended.
6.
Security . This
Note shall be secured by the “Collateral” as defined in
and pursuant to the pledge and security agreements, dated as of the
date hereof, from Cornerworld and its subsidiaries in favor of the
Payee, as the same may be amended,
restated, supplemented or otherwise modified from time to
time . Upon the consummation of the transactions
contemplated by the Unit Purchase Agreement, Cornerworld and its
subsidiaries, as applicable, shall enter into an additional pledge
and security agreement granting the Payee a security interest in
certain of the assets of T2 Communications and
Visitatel.
7.
Place and Manner of Payment . All payments to be made hereon are to be made
at such place as the Payee of this Note may, from time to time, in
writing appoint.
8.
Optional Prepayment . The loan evidenced hereby may be prepaid in
all or in part at any time without premium or penalty.
9.
Events of Default; Mandatory Prepayments
. The occurrence of any of the
following shall constitute an “Event of Default” under
this Note:
(a)
the Maker shall fail to pay, within thirty (30) days after a
payment date, the full amount of any payment of principal and/or
interest required pursuant to the terms hereof; or
(b)
the occurrence of any Event of Default under the Secured Debenture
issued by Maker and other parties to Payee on the same date hereof;
or
(c)
the filing of a petition by or against the Maker under any
provision of the Bankruptcy Reform Act, Title 11 of the United
States Code, as amended or recodified from time to time, or under
any similar law relating to bankruptcy, insolvency or other relief
for debtors; or appointment of a receiver, trustee, custodian or
liquidator of or for all or any part of the assets or property of
the Maker; or the insolvency of the Maker; or the making of a
general assignment for the benefit of creditors by the Maker;
provided that any such proceeding is not dismissed within sixty
(60) days from the date on which it is filed or
instituted.
10. Acceleration Upon Default . The Maker shall
promptly inform the Payee of the occurrence of any of the events
described in Section 8. Upon the occurrence of any Event of
Default, the Payee, at its option, may by notice to the Maker,
declare the unpaid principal amount of this Note, all interest
accrued, and unpaid hereon and all other amounts payable hereunder
to
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be immediately due and payable,
whereupon the unpaid principal amount of this Note, all such
interest and all such other amounts shall become immediately due
and payable, without presentment, demand, protest or further notice
of any kind, in the event that Maker shall not have cured such
Event of Default within ten (10) days after receipt of such notice,
and proceed to enforce all other rights and remedies available to
the Payee under applicable law. Payee shall be entitled to recover
all attorney’s fees and costs incurred as a result of any
Event of Default, including the costs of collecting the amounts due
hereunder, which amounts shall be due upon demand.
11.
Right of Set-Off .
The liabi
