EXHIBIT 10.2

 

$800,000.00      

April 29, 2010     

San Diego, California

PROMISSORY TERM NOTE

FOR VALUE RECEIVED, Phoenix Footwear Group, Inc., a Delaware corporation, Belt
Company fka Chambers Belt Company, a Delaware corporation, Penobscot Shoe
Company, a Maine corporation, H.S. Trask & Company, a Montana corporation, and
Phoenix Delaware Acquisition, Inc., a Delaware corporation (individually and
collectively, the “Maker”), promises to pay to the order of First Community
Financial, a division of Pacific Western Bank, a California state-chartered bank
(the “Lender”), at its office located in Phoenix, Arizona, or at such other
place as the holder hereof may from time to time designate in writing, the
principal sum of **EIGHT HUNDRED THOUSAND and No/100** Dollars ($800,000.00).

Interest shall be charged on the unpaid principal balance from the date hereof
(and computed on the basis of a 12-month, 360 day year) at a rate (the “Note
Rate”) of 12.00% per annum.

Principal and interest shall be payable in equal, successive installments of
principal of $20,000.00 dollars each, commencing July 9, 2010 and continuing on
the Friday of each week thereafter until August 27, 2010, and then in equal,
successive installments of principal of $48,000.00 dollars each, commencing
September 3, 2010 and continuing on the Friday of each week thereafter until
October 29, 2010, and then in equal, successive installments of principal of
$52,000.00 dollars each, commencing November 5, 2010 and continuing on the
Friday of each week thereafter until November 26, 2010 at which time the entire
unpaid principal balance shall be paid in full, together with all accrued
interest and expenses, if any, due to the holder hereof.

Interest on the unpaid principal balance shall be payable on the 10th day of
each month commencing May 10, 2010 and continuing on the same day of each month
thereafter until all principal and interest hereunder have been fully paid.

All obligations hereunder (including principal, interest, costs and fees) not
discharged when due shall bear interest until paid in full, at a per annum rate
equal to the sum of the Note Rate and four percent (4%) per annum. In addition,
in the event that any payment is not paid within ten (10) days after the same
shall become due, and Lender does not exercise its option to accelerate the
maturity of this Note, a late charge of five percent (5%) of the overdue payment
or twenty five dollars ($25.00), whichever is greater, may be charged by Lender
for the purpose of defraying the costs and expenses instant to such delinquency.
Maker and Lender agree that Lender will be damaged as a result of the failure of
Maker to make timely payment of all obligations in terms of additional
administrative and other expense to which it would be put as a result of such
untimely payment and that it would be impracticable or extremely difficult to
estimate or to determine the amount of such damage. Accordingly the late charge
provided for is an attempt by the parties to agree on liquidated damages to
which Lender would be put as a result of such failure to make timely payment and
is not intended to be a penalty.

Upon the occurrence of any of the following, all obligations hereunder shall, at
the option of the holder hereof, become immediately due and payable, without
presentment for payment, diligence, grace, exhibition of this Note, protest,
further demand or notice of any kind, all of which are hereby expressly waived:
(i) any sum owing hereunder is not paid as agreed; (ii) Maker breaches any
representation, warranty or covenant under any other agreement, document or
record now or hereafter executed between Maker and Lender and the same is not
cured in the applicable grace period; or (iii) a Material Impairment has
occurred. For purposes hereof, a “Material Impairment” has the meaning given
thereto in the Accounts Receivable and Inventory Security Agreement dated
December 4, 2009 between Maker and Lender.

No provision of this Note or any other aspect of the transaction of which this
Note is a part is intended to or shall require or permit the holder, directly or
indirectly, to take, receive, contract for or reserve, in money, goods or things
in action, or in any other way, any interest (including amounts deemed by law to
be interest, such amounts to then be deemed to be an addition to the rate of
interest agreed upon) in excess of the maximum rate of interest permitted by law
in the State of California as of the date hereof. If any such excess shall
nevertheless be provided for, or be adjudicated by a federal or state court of
competent jurisdiction to be provided for, Maker shall not be obligated to pay
such excess, but, if paid, then such excess shall be applied against the unpaid
principal balance hereunder or, to the extent that the principal balance has
been paid in full by reason of such application or otherwise, such excess shall
be remitted to Maker.

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Maker hereby agrees: (a) to any and all extensions and renewals hereof, from
time to time, without notice, and that no such extension or renewal shall
constitute or be deemed a release of any obligation of any of Maker to the
holder hereof; (b) that the acceptance by the holder hereof of any performance
which does not comply strictly with the terms hereof shall not be deemed to be a
waiver or bar of any right of said holder, nor a release of any obligation of
any of Maker to the holder hereof; (c) to offsets of any sums or property owed
to them or any of them by the holder hereof at any time; (d) to pay the holder
hereof upon demand any and all costs, expenses and fees, including reasonable
attorneys’ fees, incurred by Lender (i) in negotiating or documenting any
extension or modification hereof, (ii) in any attempt to workout or to otherwise
adjust Maker’s obligations hereunder following the occurrence of an event of
default, (iii) in enforcing payment hereof whether incurred before, after or
irrespective of whether suit is commenced, and, in the event suit is brought to
enforce payment hereof, such costs, expenses and fees and all other issues in
such suit shall be determined by a court sitting without a jury, (iv) in
enforcing any security interest held as collateral for Maker’s obligations
including any proceeding seeking relief from the automatic stay in a Bankruptcy
proceeding commenced by or against Maker; and (v) in defending any litigation
arising out of this Note; (e) that this Note shall be governed by federal law
applicable to Lender and, to the extent not preempted by federal law, the laws
of the State of California without regard to its conflicts of law provisions.
Maker agrees to submit to the jurisdiction and venue of the state or federal
Courts sitting in California or Arizona at the election of Lender. This Note has
been accepted by Lender in the State of California.

Maker represents and warrants that the indebtedness represented by this Note is
for commercial or business purposes. Maker hereby waives to the fullest extent
possible the application of any statute of limitations applicable to the
obligations of Maker under this Note.

TO THE FULLEST EXTENT PERMITTED BY LAW, Lender AND MAKER HEREBY WAIVE THE RIGHT
TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER
Lender OR MAKER AGAINST THE OTHER.

In consideration for establishing this Loan on the terms and conditions provided
for herein, Maker agrees to pay to Lender upon the execution hereof a commitment
and funding fee of $16,000.00, which shall be deemed earned and non-refundable
upon payment thereof.

 

Phoenix Footwear Group, Inc.,

a Delaware corporation

   

Belt Company fka Chambers Belt Company,

a Delaware corporation

By:   /s/ James R. Riedman     By:   /s/ James R. Riedman   James R. Riedman    
  James R. Riedman Title:   Chairman     Title:   Chairman

Penobscot Shoe Company,

a Maine corporation

   

H.S. Trask & Co.,

a Montana corporation

By:   /s/ James R. Riedman     By:   /s/ James R. Riedman   James R. Riedman    
  James R. Riedman Title:   Chairman     Title:   Chairman

Phoenix Delaware Acquisition, Inc.,

a Delaware corporation

    By:   /s/ James R. Riedman         James R. Riedman       Title:   Chairman