Secured Promissory Note - Caldera Systems Inc. and The Canopy Group Inc.
SECURED PROMISSORY NOTE
Principal Amount: $300,000 Date of Note: December 29, 1999
FOR VALUE RECEIVED, CALDERA SYSTEMS, INC., a Utah corporation (the 'COMPANY'),
hereby promises to pay to the order of The Canopy Group, Inc. ('LENDER'), at 240
West Center Street, Orem, Utah 84057, or at such other address as Lender may
specify in writing, the principal sum of $300,000, or such other greater or
lesser amount as may be outstanding, together with interest at the rate of nine
and one-half percent (9.5%) per annum on the unpaid outstanding principal, said
principal and interest payable as follows;
Payable upon demand or if no demand is made, then any remaining
accrued interest and principal shall be due on January 14, 2000.
1. Interest shall be calculated from the date of note until repayment of note.
Each payment shall be applied first to accrued interest and the balance to
the reduction of principal. Interest shall be calculated based upon a 360
day year. Any installment not paid when due shall bear interest thereafter
at the rate of twelve percent (12%) per annum until paid. This note may be
prepaid in whole or in part at any time.
2. As security for the due performance and payment of Company's obligations
under this Note, Company has entered into a Security Agreement of even date
herewith with lender ('Security Agreement') whereby Company has granted to
Lender a security interest in any and all of the assets, properties, goods,
inventory, equipment, furniture, fixtures, leases, supplies, records,
money, documents, instruments, chattel paper, accounts, intellectual
property rights (including but not limited to, copyrights, moral rights,
patents, patent applications, trademarks, service marks, trade names, trade
secrets) and other general intangibles, whether owned by Company on the
date of this Note or hereafter acquired, and all proceeds thereof.
3. Acceptance by Lender of any partial payment shall not be deemed to
constitute a waiver by Lender to require prompt payment of this Note upon
demand. Any partial payment will be applied (a) first, to the payment of
accrued interest, and (b) second, (to the extent that the amount of such
prepayment exceeds the amount of all such accrued interest), to the payment
4. In the event of any action to enforce payment of this Note, in addition to
all other relief, the prevailing party in such action shall be entitled to
reasonable attorney's fees and expenses.
5. The Company hereby waives presentment, protest and demand, notice of
protest, demand, nonpayment or dishonor.
6. Company will be deemed to be in default under this Note and the outstanding
unpaid principal balance of this Note, together with all interest accrued
thereon, will immediately become due and payable in full, without the need
for any further action on the part of Lender, upon the occurrence of any of
the following events (each an 'EVENT OF DEFAULT'): (a) upon the filing by
or against Company of any voluntary or involuntary petition in bankruptcy
or any petition for relief under the federal bankruptcy code or any other
state or federal law for the relief of debtors: provided, however, with
respect to an involuntary petition in bankruptcy, such petition has not
been dismissed within thirty (30) days after the filing of such petition;
(b) upon the execution by Company of an assignment for the benefit of
creditors or the appointment of a receiver, custodian, trustee or similar
party to take possession of Company's assets or property; or (c) upon any
material breach, default or violation by Company of any term, condition,
obligation, representation or covenant of any agreement between Company and
Lender including the Security Agreement. Upon any Event of Default, Lender
will have, in addition to its rights and remedies under this Note, full
recourse against any real, personal,
tangible or intangible assets of Company, and may pursue any legal or
equitable remedies that are available to Lender, and may declare the entire
unpaid principal amount of this Note and all unpaid accrued interest under
this Note to be immediately due and payable in full.
7. This Note is to be governed by and construed in accordance with the laws of
the State of Utah.
8. As of the date of this Note, the Company hereby represents and warrants to
Lender that the Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Utah and has all
requisite corporate power and authority to (i) enter into this Note and the
Security Agreement, and (ii) carry on its business.
Executed as of the date first set forth above:
/s/ RANSOM LOVE
By: Ransom Love
Caldera Systems, Inc., President