{"id":41286,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/secured-promissory-note-cyberian-outpost-inc-and-fry-s.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"secured-promissory-note-cyberian-outpost-inc-and-fry-s","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/secured-promissory-note-cyberian-outpost-inc-and-fry-s.html","title":{"rendered":"Secured Promissory Note &#8211; Cyberian Outpost inc. and Fry&#8217;s Electronics Inc."},"content":{"rendered":"<pre>                            CYBERIAN OUTPOST, INC.\n\n                            SECURED PROMISSORY NOTE\n                            -----------------------\n\n\n$13,000,000                                                    September 4, 2001\n\n\n     FOR VALUE RECEIVED, the undersigned, CYBERIAN OUTPOST, INC., a Delaware\ncorporation (the \"Company\"), promises to pay to the order of FRY'S ELECTRONICS,\n                  -------\nINC., a California corporation (the \"Holder\"), on December 31, 2001 (the\n                                     ------\n\"Maturity Date\"), the principal amount of (a) THIRTEEN MILLION DOLLARS\n -------------                                                        \n($13,000,000.00) (the \"Maximum Principal Amount\"), or, if less, (b) the\n                       ------------------------                        \naggregate unpaid principal amount of all loans made by the Holder to the\nCompany.\n\n     This secured promissory note (this \"Note\") evidences loans made by the\n                                         ----                              \nHolder to the Company in connection with the execution and delivery of that\ncertain Merger Agreement dated of even date herewith (the \"Merger Agreement\")\n                                                           ----------------  \namong the Holder, a wholly-owned subsidiary of the Holder and the Company.  This\nNote is secured pursuant to that certain Collateral Assignment and Security\nAgreement of even date herewith (the \"Security Agreement\") made by the Company\n                                      ------------------                      \nin favor of the Holder.\n\n     The unpaid principal amount of this Note from time to time outstanding\nshall bear interest at the Interest Rate (as defined in Section 4), and such\nprincipal and interest shall be due and payable on the Maturity Date. Interest\nwill be computed on the basis of a 365-day year and the actual number of days\nelapsed including the first day but excluding the payment date. All payments of\nprincipal of and interest on this Note shall be payable in lawful currency of\nthe United States of America. All such payments shall be made by the Company to\nan account established by the Holder and notified to the Company and shall be\nrecorded on the books and records of the Company and the Holder.\n\n     If any payment on this Note becomes due and payable on a day other than a\nday on which commercial banks in San Jose, California are open for the\ntransaction of normal business (a \"Business Day\"), the maturity thereof shall be\n                                   ------------                                 \nextended to the next succeeding Business Day and, with respect to any payment of\nprincipal or interest thereon shall be payable at the then-applicable rate\nduring such extension.\n\n     The Holder is authorized to endorse on Schedule A attached hereto and made\na part hereof the amount of each loan made pursuant to this Note and the date\nand amount of each \n\n \npayment or prepayment of principal thereof. Each such endorsement shall, absent\nmanifest error, constitute prima facie evidence of the accuracy of the\n                           ----- ----- \ninformation endorsed.\n\n     In addition to, but not in limitation of, the foregoing, the Company\nfurther agrees to pay all expenses, including reasonable attorneys' fees and\nlegal expenses, incurred by the Holder in connection with (i) the making of any\nloans under this Note and (ii) endeavoring to collect any amounts payable\nhereunder which are not paid when due.\n\n     1.   Loans.  Subject to Section 1.4, through the earlier of the Maturity\n          -----                                                              \nDate or the occurrence of an Event of Default, the Holder will make the\nfollowing loans to the Company:\n\n          1.1  PCC Repayment.  Pursuant to the Company's instruction, the Holder\n               -------------                                                    \nwill loan $4,845,761.88 to the Company upon execution and delivery of this Note,\nwhich amount shall be paid directly by the Holder to Merrimack Services\nCorporation and\/or PC Connection, Inc., each creditors of the Company.  The\nbalance of the Maximum Principal Amount is referred to hereunder as the\n\"Remaining Amount.\"\n ----------------\n\n          1.2  Letters of Credit. Within five (5) days of the Holder's receipt\n               -----------------\nof the Company's written request therefor, the Holder shall from time to time\nguarantee letters of credit issued in the name of the Company for the benefit of\nthe Company's vendors and\/or service providers. Any such guarantee and letters\nof credit shall be in form and substance satisfactory to the Holder. The\nobligations guaranteed or as to which the Holder has otherwise committed in\norder to secure any such letters of credit shall not exceed one-half of the\nRemaining Amount. All (i) amounts paid by the Holder in respect of any such\nguarantee or commitment and (ii) issue or commitment fees and any other costs\nincurred by the Holder associated with such letters of credit shall constitute\nloans made hereunder, in each case deemed made when and as such amounts are paid\nor such fees or costs are incurred by the Holder.\n\n          1.3  Working Capital Loans.  Upon execution and delivery of this Note,\n               ---------------------\nthe Holder will loan $750,000 to the Company for working capital purposes.\nWithin five (5) days of the Holder's receipt of the Company's written request\ntherefor, the Holder will loan the Company additional monies for working capital\npurposes.  All such working capital loans made under this Note shall be in an\namount equal to $5,000 or an integral multiple thereof.\n\n          1.4  Certain Limits on Loans. Notwithstanding anything herein to the\n               -----------------------\ncontrary:\n\n                 a.   In no event shall amounts loaned pursuant to Section 1.3\n                      exceed one-half of the Remaining Amount.\n\n                 b.   In no event shall the Holder loan the Company aggregate\n                      proceeds in excess of the Maximum Principal Amount.\n\n                 c.   The Holder may, at any time and from time to time, refuse\n                      any loan request made by the Company to the extent, if at\n                      the time such loan is to be made:\n\n                                      -2-\n\n \n                    1.   the amount of monies theretofore loaned or so requested\n                         is in excess of the working capital budget attached on\n                         Schedule B hereto as of the time of such request;\n\n                    2.   the Holder reasonably believes that the Collateral (as\n                         defined in the Security Agreement), or the value\n                         thereof, has been impaired or constitutes insufficient\n                         security for amounts theretofore loaned or then-\n                         requested to be loaned;\n\n                    3.   the Holder reasonably believes that the Company has\n                         breached any of its representations, warranties,\n                         covenants and agreements under the Merger Agreement and\n                         such breach has not been cured to the satisfaction of\n                         the Holder; or\n\n                    4.   the Holder reasonably believes that the Company has\n                         breached any of its obligations under this Note or the\n                         Security Agreement and such breach has not been cured\n                         to the satisfaction of the Holder.\n\n     2.   Default.  The entire unpaid principal of this Note, together with all\n          -------                                                              \naccrued and unpaid interest, shall become and be immediately due and payable\nupon written demand of the Holder (or in the case of an event specified in\nSections 2(a), (d) or (e), automatically without notice), without any other\nnotice or demand of any kind or any presentment or protest, if any one of the\nfollowing events (an \"Event of Default\") shall occur and be continuing at the\n                      ----------------                                       \ntime of such demand, whether voluntarily or involuntarily, or, without\nlimitation, occurring or brought about by operation of law or pursuant to or in\ncompliance with any judgment, decree or order of any court or any order, rule or\nregulation of any governmental body:\n\n               a.   The Merger Agreement has been terminated by the Holder or\n                    the Company;\n\n               b.   The Company fails to comply with any of its agreements in\n                    this Note or the Security Agreement and such failure\n                    continues for 5 days after notice of the type specified\n                    below;\n\n               c.   Indebtedness or any interest thereon of the Company or any\n                    Subsidiary with a principal amount in excess of $10,000 is\n                    not paid within any applicable grace period after it shall\n                    become due and payable or is accelerated or permitted to be\n                    accelerated by the holders thereof because of a default;\n\n               d.   The Company or a Subsidiary pursuant to or within the\n                    meaning of any Bankruptcy Law:\n\n                    1.   commences a voluntary case;\n\n                                      -3-\n\n \n                    2.   consents to the entry of an order for relief against it\n                         in an involuntary case;\n\n                    3.   consents to the appointment of a custodian of it or for\n                         any substantial part of its property;\n\n                    4.   makes a general assignment for the benefit of its\n                         creditors; or\n\n                    5.   is unable to, or admits in writing its inability to,\n                         pay its debts as they become due;\n\n                    or takes any comparable action under any foreign laws\n                    relating to insolvency;\n\n               e.   There shall be commenced against the Company any case,\n                    proceeding or action of the type referred to in Section 2(e)\n                    hereof or a court of competent jurisdiction enters an order\n                    or decree under any Bankruptcy Law that:\n\n                    1.   is for relief against the Company or any Subsidiary in\n                         an involuntary case;\n\n                    2.   appoints a custodian of the Company or any Subsidiary\n                         or for any substantial part of its property; or\n\n                    3.   orders the winding up or liquidation of the Company or\n                         any Subsidiary;\n\n                    or any similar relief is granted under any foreign laws;\n\n               f.   Any judgment or decree for the payment of money in excess of\n                    $10,000 is rendered against the Company or any Subsidiary\n                    and is not discharged and either (1) an enforcement\n                    proceeding has been commenced by any creditor upon such\n                    judgment or decree or (2) there is a period of 10 days\n                    following such judgment during which such judgment or decree\n                    is not discharged, waived or the execution thereof stayed;\n                    and\n\n               g.   The Security Agreement shall cease, for any reason, to be in\n                    full force and effect, or the Company shall so assert, or\n                    any Lien (as defined in the Security Agreement) created by\n                    the Security Agreement shall cease to be enforceable and of\n                    the same effect and priority purported to be created\n                    thereby.\n\n                                      -4-\n\n \n     3.   Covenants.\n          --------- \n\n          3.1  Working Capital Budget.  Within seven (7) days of the date\n               ----------------------                                    \nhereof, the Company shall submit to Holder for its consideration and approval,\nin its sole discretion, a working capital budget for the Company for the ninety\n(90) day period from and after the date hereof.  The working capital budget in\nthe form approved by the Holder shall be attached as Schedule B to this Note.\n\n          3.2  No Indirect Violations.  The Company shall cause all of its\n               ----------------------                                     \nSubsidiaries to observe Section 6.1 of the Merger Agreement as if such\nSubsidiary was a party to such agreement and subject to such Section to the same\nextent as the Company.\n\n          3.3  Use of Proceeds.  Neither the Company nor any of its Subsidiaries\n               ---------------                                                  \nshall use any amounts loaned hereunder in a manner inconsistent with those uses\nand those amounts specified in the working capital budget to be attached as\nSchedule B hereto.\n\n          3.4  No Investments. None of the Company or its Subsidiaries shall\n               --------------                                               \nmake any Investment in any Person.\n\n          3.5  Limitation on Restrictions on Distributions from Subsidiaries.\n               ------------------------------------------------------------- \nThe Company shall not, and shall not permit any Subsidiary to, create or permit\nto exist or become effective any consensual encumbrance or restriction on the\nability of any Subsidiary to (i) pay dividends or make any other distributions\non its Capital Stock or pay any Indebtedness or other obligation owed to the\nCompany, (ii) make any loans or advances to the Company or (iii) transfer any of\nits property or assets to the Company, except in the case of clause (iii), any\nencumbrance or restriction that restricts in a customary manner the subletting,\nassignment or transfer of any property or asset that is subject to a lease,\nlicense, conveyance or contract or similar property or asset.\n\n          3.6  Notice of Default.  The Company shall notify the Holder of any\n               -----------------                                             \nEvent of Default or default in the performance of any covenants or agreements\nunder this Note within one Business Day thereof.\n\n          3.7  Waiver of Stay, Extension or Usury Laws.  The Company covenants\n               ---------------------------------------                        \n(to the extent that it may lawfully do so) that it shall not at any time insist\nupon, plead, or in any manner whatsoever claim or take the benefit or advantage\nof, any stay or extension law or any usury law or other law that would prohibit\nor forgive the Company from paying all or any portion of the principal of and\/or\ninterest on this Note as contemplated herein, wherever enacted, now or at any\ntime hereafter in force, or which may affect the covenants or the performance of\nthis Note, and (to the extent that it may lawfully do so) the Company hereby\nexpressly waives all benefit or advantage of any such law, and covenants that it\nwill not hinder, delay or impede the execution of any power herein granted to\nthe Holder, but will suffer and permit the execution of every such power as\nthough no such law had been enacted.\n\n                                      -5-\n\n \n     4.   Certain Definitions.   As used in this Note, the following terms shall\n          -------------------                                                   \nhave the following meanings:\n\n          \"Bankruptcy Law\" means all applicable U.S. federal and state laws\n           --------------                                                  \nrelating to bankruptcy, insolvency, winding up, administration, receivership and\nother similar matters and any similar foreign law for the relief of creditors.\n\n          \"Capital Stock\" of any Person means any and all shares, interests,\n           -------------                                                    \nrights to purchase, warrants, options, participation or other equivalents of or\ninterests in (however designated) equity of such Person, including, without\nlimitation, any preferred stock, and if such Person is a partnership,\npartnership interests, but excluding any debt securities convertible into such\nequity.\n\n          \"Interest Rate\" shall mean the U.S. prime interest rate published in\n           -------------                                                      \nthe Wall Street Journal on the date hereof.\n\n          \"Investment\" in any Person means any direct or indirect advance, loan\n           ----------                                                          \n(other than advances to customers in the ordinary course of business that are\nrecorded as accounts receivable on the balance sheet of such Person) or other\nextension of credit (including by way of guarantee or similar arrangement) or\ncapital contribution to (by means of any transfer of cash or other property to\nothers or any payment for property or services for the account or use of\nothers), or any purchase or acquisition of Capital Stock, indebtedness or other\nsimilar instruments issued by such Person.\n\n          \"Person\" means any individual, corporation, partnership, limited\n           ------                                                         \nliability company, joint venture, association, joint-stock company, trust,\nunincorporated organization, government or any agency or political subdivision\nthereof or any other entity.\n\n          \"Subsidiary\" of any Person means any corporation, association,\n           ----------                                                   \npartnership or other business entity of which more than 50% of the total voting\npower of shares of Capital Stock or other interests (including partnership\ninterests) entitled (without regard to the occurrence of any contingency) to\nvote in the election of directors, managers or trustees thereof is at the time\nowned or controlled, directly or indirectly, by (i) such Person, (ii) such\nPerson and one or more Subsidiaries of such Person or (iii) one or more\nSubsidiaries of such Person.\n\n     5.   Loss, Theft, Destruction or Mutilation.  Upon receipt of evidence\n          --------------------------------------                           \nsatisfactory to the Company of the loss, theft, destruction or mutilation of\nthis Note and, in the case of such loss, theft or destruction, upon delivery to\nthe Company of an indemnity undertaking reasonably satisfactory to the Company,\nor, in the case of any such mutilation, upon surrender of this Note to the\nCompany, the Company will issue a new note, of like tenor and principal amount,\nin lieu of or in exchange for such lost, stolen, destroyed or mutilated Note.\nUpon the issuance of any substitute Note, the Company may require the payment to\nit of a sum sufficient to cover any tax or other governmental charge that may be\nimposed in relation thereto and any other reasonable expenses in connection\ntherewith.\n\n     6.   Notices and Demands.  All notices, demands and other communications\n          -------------------                                                \nprovided for in this Note or made under this Note shall be in writing and shall\nbe deemed to have been \n\n                                      -6-\n\n \nduly given if delivered by hand (whether by overnight courier or otherwise) or\nsent by registered or certified mail, return receipt requested, postage prepaid,\nto the Person to whom it is directed:\n\n          (a)  If to Holder, to it at the following address:\n\n\n               Fry's Electronics, Inc.        \n               600 East Brokaw Road          \n               San Jose, California  95112   \n               Attn: Executive Vice President \n\n          with a copy to:\n\n               Simpson Thacher &amp; Bartlett   \n               3330 Hillview Avenue         \n               Palo Alto, California 94304  \n               Attn: Richard Capelouto, Esq.\n                     Daniel Clivner, Esq.     \n\n          (b)  If to the Company, to it at the following address:\n\n\n               Cyberian Outpost, Inc.  \n               25 North Main Street    \n               Kent, Connecticut  06757\n               Attn: General Counsel   \n\n          with a copy to:\n\n               Mintz, Levin, Cohn, Ferris, Glovsy &amp; Popeo, P.C.\n               One Financial Center                            \n               Boston, Massachusetts  02111                    \n               Attn: Mark Chamberlain, Esq.                    \n\n     7.   Present Intent.  By acceptance of this Note, the Holder acknowledges\n          --------------                                                      \nthat this Note is being acquired without a present intention of resale or\ndistribution, and that this Note will not be transferred, pledged or otherwise\ndisposed of by the Holder in the absence of an effective registration statement\nunder the Securities Act of 1933, as amended (the \"Securities Act\"), or an\n                                                   --------------         \nopinion of counsel (including in-house counsel) reasonably satisfactory to the\nCompany that such registration is, under the circumstances, not required.\n\n     8.   Miscellaneous Provisions.\n          ------------------------ \n\n          8.1  No Oral Modifications.  Neither this Note nor any term of this\n               ---------------------                                         \nNote may be changed, waived, discharged or terminated orally, but may only be\namended or modified by an instrument in writing signed by the Holder and the\nCompany.\n\n          8.2  Binding Effect.  This Note shall be binding upon and inure to the\n               --------------                                                   \nbenefit of the Company, the Holder of this Note and their respective heirs,\nsuccessors and assigns.\n\n                                      -7-\n\n \n          8.3  Governing Law, Jurisdiction; Jury Trial Waiver.  This Note shall\n               ----------------------------------------------                  \nbe governed by, and construed and interpreted in accordance with, the law of the\nState of New York.  The Company hereby irrevocably submits to the exclusive\njurisdiction of the United States District Court for the Southern District of\nNew York located in the borough of Manhattan in the City of New York, or, if\nsuch court does not have jurisdiction, the Supreme Court of the State of New\nYork, New York County, for the purposes of any suit, action or other proceeding\narising out of this Note.  The Company hereby further agrees that service of any\nprocess, summons, notice or document by U.S. registered mail to its address set\nforth in Section 7 shall be effective service of process for any action, suit or\nproceeding in New York with respect to any matters to which it has submitted to\njurisdiction as set forth above in the immediately preceding sentence.  Each of\nthe parties hereto irrevocably and unconditionally waives, to the extent\npermitted by applicable law, any objection to the laying of venue of any action,\nsuit or proceeding arising out of this Note in (a) the United States District\nCourt for the Southern District of New York or (b) the Supreme Court of the\nState of New York, New York County, and hereby further irrevocably and\nunconditionally waives, to the extent permitted by applicable law, and agrees\nnot to plead or claim in any such court that any such action, suit or proceeding\nbrought in any such court has been brought in an inconvenient forum.  To the\nextent permitted by applicable law, the Company waives the right to trial by\njury in any such action or proceeding.\n\n          8.4  Assignability.  The Holder may sell, assign, transfer or\n               -------------                                           \notherwise hypothecate (\"Transfer\") this Note to any other Person.  If any\n                        --------                                         \ninterest in this Note is Transferred in compliance with this Section 8.4, this\nNote shall be cancelled and each of the Company shall execute and deliver a new\nnote (in substantially the form of this Note) to each Person to whom an interest\nin this Note has been Transferred in an aggregate principal amount equal to such\nPerson's interest in this Note.\n\n          8.5  Costs.  The Company will pay all reasonable costs and expenses of\n               -----                                                            \ncollection, including attorneys' fees and disbursements, appraiser's fees and\ncourt costs, incurred or paid by the Holder in enforcing this Note, to the\nextent permitted by law, including all costs and reasonable attorneys' fees\nincurred in any appeal, bankruptcy proceeding, or other proceeding.\n\n                                      -8-\n\n \n     IN WITNESS WHEREOF, the Company has caused this Note to be executed in its\ncorporate name by its duly authorized officer this 4th day of September 2001.\n\n                                            CYBERIAN OUTPOST, INC.\n                                 \n                                 \n                                            By: \/s\/ Darryl Peck\n                                                ---------------\n                                                Title: CEO\n                                                       Darryl Peck\n\n\n\nAgreed and Accepted:\n\nFRY'S ELECTRONICS, INC.\n\n\nBy: \/s\/ Kathryn J. Kolder\n    ---------------------\n    Title: Exec V.P.\n           Kathryn J. Kolder\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7254],"corporate_contracts_industries":[9497],"corporate_contracts_types":[9560,9567],"class_list":["post-41286","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-cyberian-outpost-inc","corporate_contracts_industries-retail__electronics","corporate_contracts_types-finance","corporate_contracts_types-finance__loan"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41286","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41286"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41286"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41286"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}