EXHIBIT 10.2
THIS PROMISSORY NOTE IS SUBJECT TO THE TERMS OF THE SUBORDINATION
AGREEMENT DATED OF EVEN DATE HEREWITH EXECUTED BY AND AMONG XXXXX FARGO RETAIL
FINANCE, LLC, GADZOOKS, INC., AND GRYPHON MASTER FUND, L.P. (AS THE SAME MAY
HEREAFTER BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO
TIME, THE "SUBORDINATION AGREEMENT"). PAYMENTS HEREUNDER MAY BE SUBORDINATED, TO
THE EXTENT AND IN THE MANNER SET FORTH IN THE SUBORDINATION AGREEMENT, TO THE
PRIOR PAYMENT IN FULL OF THE SENIOR DEBT (AS SUCH TERM IS DEFINED IN THE
SUBORDINATION AGREEMENT).
PROMISSORY NOTE
$5,000,000.00 Dallas, Texas October 29, 2004
FOR VALUE RECEIVED, the undersigned, GADZOOKS, INC., a Texas corporation
(the "Borrower"), hereby promises to pay to the order of GRYPHON MASTER FUND,
L.P., a Bermuda limited partnership (the "Lender"), at the Lender's office
located at 000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, in lawful money
of the United States of America and in immediately available funds, the
principal sum of the aggregate Loan on the dates and in the principal amounts
provided in the Loan Agreement (defined below), and to pay interest on the
unpaid principal amount of the Loan (as such term is defined in the Loan
Agreement), at such office, in like money and funds, for the period commencing
on the date of the Loan until the Loan shall be paid in full, at the rates per
annum and on the dates provided in the Loan Agreement.
This Promissory Note (the "Note") is the Subordinated Note referred to in
the Debtor-in-Possession Loan and Security Agreement dated of even date with
this Note executed by and between the Borrower and the Lender (as the same may
hereafter be amended, restated, modified, or supplemented from time to time,
being referred to herein as the "Loan Agreement"), and evidences the Loan made
by the Lender thereunder. The Loan Agreement, among other things, contains
provisions for acceleration of the maturity of this Note upon the happening of
certain stated events. Capitalized terms used in this Note have the respective
meanings assigned to them in the Loan Agreement.
Interest on the indebtedness evidenced by this Note shall be computed on
the basis of a year of 360 days and the actual number of days elapsed (including
the first day but excluding the last day) unless such calculation would result
in a usurious rate, in which case interest shall be calculated on the basis of a
year of 365 or 366 days, as the case may be.
Notwithstanding anything to the contrary contained herein, no provision of
this Note shall require the payment or permit the collection of interest in
excess of the maximum rate of interest allowed under Applicable Law (the
"Maximum Rate"). If any excess of interest in such respect is herein provided
for, or shall be adjudicated to be so provided, in this Note or otherwise in
connection with this loan transaction, the provisions of this paragraph shall
govern and prevail, and neither the Borrower nor the sureties, guarantors,
successors or assigns of the Borrower shall be obligated to pay the excess
amount of such interest, or any other excess sum paid for the use, forbearance
or detention of sums loaned pursuant hereto. If for any reason
interest in excess of the Maximum Rate shall be deemed charged, required or
permitted by any court of competent jurisdiction, any such excess shall be
applied as a payment and reduction of the principal of indebtedness evidenced by
this Note; and, if the principal amount hereof has been paid in full, any
remaining excess shall forthwith be paid to the Borrower. In determining whether
or not the interest paid or payable exceeds the Maximum Rate, the Borrower and
the Lender shall, to the extent permitted by applicable law, (a) characterize
any non-principal payment as an expense, fee, or premium rather than as
interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the entire contemplated term of the indebtedness
evidenced by this Note so that the interest for the entire term does not exceed
the Maximum Rate.
This Note shall be governed by and construed in accordance with the laws
of the State of Texas and the applicable laws of the United States of America.
This Note is performable in Dallas County, Texas.
The Borrower and each surety, guarantor, endorser, and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the Lender. The Lender shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
THIS NOTE AND ALL OTHER INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND
DELIVERED BY BORROWER IN CONNECTION WITH THE INDEBTEDNESS EVIDENCED BY THIS NOTE
EMBODY THE FINAL, ENTIRE AGREEMENT OF BORROWER AND LENDER WITH RESPECT TO THE
INDEBTEDNESS EVIDENCED BY THIS NOTE AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE INDEBTEDNESS EVIDENCED BY THIS NOTE AND MAY NOT BE CONTRADICTED
OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF BORROWER AND LENDER. THERE ARE NO ORAL AGREEMENTS BETWEEN
BORROWER AND LENDER.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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BORROWER:
GADZOOKS, INC.,
a Texas corporation
By:/s/ Xxxxxx X. Xxxxxxxxxxx
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Print Name: Xxxxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
