EXHIBIT 10.1

 

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ALPINE CREEK, INC.

 

and its parent company

 

SEARCHCORE, INC.

 

____________________________

 

PROMISSORY NOTE AND STOCK PURCHASE AGREEMENT 

15% Senior Promissory Note of Alpine Creek, Inc. 

and 

Common Stock of SearchCore, Inc. 

__________________________

 

 
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PROMISSORY NOTE AND STOCK PURCHASE AGREEMENT

 

This Promissory Note and Stock Purchase Agreement (this “Agreement”) is entered
into on November ___, 2014 (the “Effective Date”) by and between Alpine Creek,
Inc., a Texas corporation (“Alpine”) and SearchCore, Inc., a Nevada corporation
(“SearchCore” and, together with Alpine, each a “Seller” and collectively the
“Sellers”), on the one hand, and ___________________________(the “Purchaser”),
on the other hand.  The Sellers and the Purchaser shall each be referred to as a
“Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Alpine is seeking lenders to lend in the aggregate minimum amount of
Two Hundred Thousand Dollars ($200,000) (the “Minimum Offering”) up to Four
Hundred Thousand Dollars ($400,000) (the “Maximum Offering”), in units of Twenty
Five Thousand Dollars ($25,000) each (each a “Unit” and collectively the
“Units”);

 

WHEREAS, SearchCore has agreed to guaranty repayment of the loans, to issue to
each lender one (1) share of its common stock for each one dollar ($1.00) loaned
to Alpine, and to allow the Note (as defined below) to be converted into common
stock of SearchCore, subject to certain conditions;

 

WHEREAS, each Unit consists of (a) a 15% senior promissory note in the principal
amount of $25,000, the form of which is attached hereto as Exhibit A (the
“Note”), and (b) twenty five thousand (25,000) shares of SearchCore’s common
stock (the “Shares” and, together with the Note and the shares of common stock
to be acquired upon the conversion of the Note, the “Securities”);

 

WHEREAS, Sellers desire to sell, and the Purchaser desires to purchase Units on
the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and adequate consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties agree as follows:

 

AGREEMENT

 

1. PURCHASE OF UNITS:  On the Closing Date (as hereinafter defined), subject to
the terms and conditions set forth in this Agreement, the Purchaser hereby
agrees to purchase, and the Sellers hereby agree to sell, two (2) Units, with
each Unit consisting of the Note and the Shares, for a total purchase price of
Fifty Thousand Dollars ($50,000) (the “Purchase Price”), which will be the
aggregate principal amount of the Note.

 

 
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2. CLOSING AND DELIVERY: 

 

a) Upon the terms and subject to the conditions set forth herein, the
consummation of the purchase and sale of the Units (the “Closing”) shall be held
at the discretion of Sellers once the Minimum Offering is received (the “Closing
Date”) with Closings taking place periodically thereafter at the discretion of
Sellers until the Maximum Offering is sold.  From the Effective Date until the
first Closing, subscriptions will be held by Alpine until the Minimum Offering
is received.

 

b) The Closings shall take place at the offices of counsel for the Sellers set
forth in Section 6 hereof, or by the exchange of documents and instruments by
mail, courier, facsimile and wire transfer to the extent mutually acceptable to
the Parties hereto.  

 

c) At each Closing:

 

(i) The Sellers and the Purchaser shall execute this Agreement and the Note.

 

(ii) SearchCore shall execute and deliver to the Purchaser the Guaranty, the
form of which is attached hereto as Exhibit B.

 

d) Within five (5) business days of each Closing, SearchCore shall deliver to
the Purchaser the Shares, free from restrictions on transfer except as set forth
in this Agreement.

  

3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY PURCHASER:  The Purchaser
hereby represents, warrants and agrees as follows:

 

a)  Purchase for Own Account.  Purchaser is acquiring the Securities solely for
his, her, or its own account and beneficial interest for investment and not for
sale or with a view to distribution of the Securities or any part thereof, has
no present intention of selling (in connection with a distribution or
otherwise), granting any participation in, or otherwise distributing the same,
and does not presently have reason to anticipate a change in such intention.

 

b)  Ability to Bear Economic Risk.  Purchaser acknowledges that an investment in
the Securities involves a high degree of risk, and represents that he, she, or
it is able, without materially impairing his, her or its financial condition, to
hold the Securities for an indefinite period of time and to suffer a complete
loss of his, her, or its investment.

 

 
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c)  Access to Information.  The Purchaser acknowledges that the Purchaser has
been furnished with such financial and other information concerning the Sellers,
the directors and officers of the Sellers, and the business and proposed
business of the Sellers as the Purchaser considers necessary in connection with
the Purchaser’s investment in the Securities.  As a result, the Purchaser is
thoroughly familiar with the proposed business, operations, properties and
financial condition of the Sellers and has discussed with officers of the
Sellers any questions the Purchaser may have had with respect thereto.  The
Sellers’ financial statements represent current outstanding obligations,
including tax obligations.  The Sellers believe they will pay off these
obligations either through a capital raise or through structured payments.  The
Purchaser understands:

 

(i) The risks involved in this investment, including the speculative nature of
the investment;

 

(ii) The financial hazards involved in this investment, including the risk of
losing the Purchaser’s entire investment;

 

(iii) The lack of liquidity and restrictions on transfers of the Securities; and

 

(iv) The tax consequences of this investment.

 

The Purchaser has consulted with the Purchaser’s own legal, accounting, tax,
investment and other advisers with respect to the tax treatment of an investment
by the Purchaser in the Securities and the merits and risks of an investment in
the Securities.

 

d)  Securities Part of Private Placement.  The Purchaser has been advised that
the Securities have not been registered under the Securities Act of 1933, as
amended (the “Act”), or qualified under the securities law of any state, on the
ground, among others, that no distribution or public offering of the Securities
is to be effected and the Securities will be issued by the Sellers in connection
with a transaction that does not involve any public offering within the meaning
of section 4(a)(2) of the Act and/or Rule 506 of Regulation D as promulgated by
the Securities and Exchange Commission under the Act, and under any applicable
state blue sky authority.  The Purchaser understands that the Sellers are
relying in part on the Purchaser’s representations as set forth herein for
purposes of claiming such exemptions and that the basis for such exemptions may
not be present if, notwithstanding the Purchaser’s representations, the
Purchaser has in mind merely acquiring the Securities for resale on the
occurrence or nonoccurrence of some predetermined event.  The Purchaser has no
such intention.

 

e)  Purchaser Not Affiliated with Sellers.  The Purchaser, either alone or with
the Purchaser’s professional advisers (i) are unaffiliated with, have no equity
interest in, and are not compensated by the Sellers or any affiliate or selling
agent of the Sellers, directly or indirectly; (ii) has such knowledge and
experience in financial and business matters that the Purchaser is capable of
evaluating the merits and risks of an investment in the Securities; and (iii)
has the capacity to protect the Purchaser’s own interests in connection with the
Purchaser’s proposed investment in the Securities.

 

 
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f)  Further Limitations on Disposition.  Purchaser further acknowledges that the
Securities are restricted securities under Rule 144 of the Act, and, therefore,
when SearchCore issues certificates reflecting the ownership interest in the
Shares or the shares to be acquired upon the conversion of the Note, those
certificates will contain a restrictive legend substantially similar to the
following:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF
ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

 

Without in any way limiting the representations set forth above, Purchaser
further agrees not to make any disposition of all or any portion of the
Securities unless and until:

 

(i) There is then in effect a Registration Statement under the Act covering such
proposed disposition and such disposition is made in accordance with such
Registration Statement; or

 

(ii) Purchaser shall have notified SearchCore of the proposed disposition and
shall have furnished SearchCore with a detailed statement of the circumstances
surrounding the proposed disposition, and if reasonably requested by SearchCore,
Purchaser shall have furnished SearchCore with an opinion of counsel, reasonably
satisfactory to SearchCore, that such disposition will not require registration
under the Act or any applicable state securities laws.

 

Notwithstanding the provisions of subparagraphs (i) and (ii) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by such Purchaser to a partner (or retired partner) of Purchaser, or transfers
by gift, will or intestate succession to any spouse or lineal descendants or
ancestors, if all transferees agree in writing to be subject to the terms hereof
to the same extent as if they were Purchasers hereunder as long as the consent
of the Sellers is obtained.

 

 
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g)  Accredited Investor Status.  Purchaser is an “accredited investor” as such
term is defined in Rule 501 under the Act because Purchaser either:

 

(i) has a net worth of at least $1,000,000 (for purposes of this question,
Purchaser may include spouse's net worth and may include the fair market value
of home furnishings and automobiles, but must exclude from the calculation the
value of Purchaser’s primary residence and the related amount of any
indebtedness on primary residence up to the fair market value of the primary
residence (any indebtedness that exceeds the fair market value of the primary
residence must be deducted from net worth calculation)), or

 

(ii) had an individual income of more than $200,000 in each of the two most
recent calendar years, and reasonably expects to have an individual income in
excess of $200,000 in the current calendar year; or along with Purchaser’s
spouse had joint income in excess of $300,000 in each of the two most recent
calendar years, and reasonably expects to have a joint income in excess of
$300,000 in the current calendar year.

 

For purposes of this Agreement, “individual income” means “adjusted gross
income” as reported for Federal income tax purposes, exclusive of any income
attributable to a spouse or to property owned by a spouse:  (i) the amount of
any interest income received which is tax-exempt under Section 103 of the
Internal Revenue Code of 1986, as amended, (the “Code”), (ii) the amount of
losses claimed as a limited partner in a limited partnership (as reported on
Schedule E of form 1040), (iii) any deduction claimed for depletion under
Section 611 et seq. of the Code and (iv) any amount by which income from
long-term capital gains has been reduced in arriving at adjusted gross income
pursuant to the provisions of Sections 1202 of the Internal Revenue Code as it
was in effect prior to enactment of the Tax Reform Act of 1986.

 

For purposes of this Agreement, “joint income” means, “adjusted gross income,”
as reported for federal income tax purposes, including any income attributable
to a spouse or to property owned by a spouse, and increased by the following
amounts:  (i) the amount of any interest income received which is tax-exempt
under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”),
(ii) the amount of losses claimed as a limited partner in a limited partnership
(as reported on Schedule E of Form 1040), (iii) any deduction claimed for
depletion under Section 611 et seq. of the Code and (iv) any amount by which
income from long-term capital gains has been reduced in arriving at adjusted
gross income pursuant to the provisions of Section 1202 of the Internal Revenue
Code as it was in effect prior to enactment of the Tax Reform Act of 1986.

 

h)  Purchaser Qualifications. 

 

(i) If the Purchaser is an individual, the Purchaser is over 21 years of age;
and if the Purchaser is an unincorporated association, all of its members are of
such age.

 

 
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(ii) If the Purchaser is a corporation, partnership, employee benefit plan or
IRA, the Purchaser was either:

 

(a) not formed for the purpose of investing in the Securities, has or will have
other substantial business or investments, and is (please check one):

 

_____  an employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, provided that the investment decision is
made by a plan fiduciary, as defined in section 3(21) of such Act, and the plan
fiduciary is a bank, savings and loan association, insurance company or
registered investment adviser; or

 

_____  an employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974 that has total assets in excess of
$5,000,000; or

 

_____  each of its shareholders, partners, or beneficiaries is an Accredited
Investor; or

 

_____  the plan is a self directed employee benefit plan and the investment
decision is made solely by a person that is an Accredited Investor; or

 

_____  a corporation, a partnership, or a Massachusetts or similar business
trust with total assets in excess of $5,000,000.

 

(b) formed for the specific purpose of investing in the Securities, and is an
Accredited Investor because each of its shareholders or beneficiaries is an
Accredited Investor.

 

(iii) If the Purchaser is a Trust, the Purchaser was either:

 

(a) not formed for the specific purpose of investing in the Securities, and is
an Accredited Investor because (please check one):

 

_____  the trust has total assets in excess of $5,000,000 and the investment
decision has been made by a “sophisticated person”; or

 

_____  the trustee making the investment decision on its behalf is a bank (as
defined in Section 3(a)(2) of the Act), a saving and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act, acting in
its fiduciary capacity; or

 

 
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_____  the undersigned trustee certifies that the trust is an Accredited
Investor because the grantor(s) of the trust may revoke the trust at any time
and regain title to the trust assets and has (have) retained sole investment
control over the assets of the trust and the (each) grantor(s) is an Accredited
Investor; or

 

_____  the undersigned trustee certifies that the trust is an Accredited
Investor because all of the beneficial owners of the trust are Accredited
Investors

 

(b) formed for the specific purpose of investing in the Securities, and the
undersigned trustee certifies that the trust is an Accredited Investor because
the grantor(s) of the trust may revoke the trust at any time and regain title to
the trust assets and has (have) retained sole investment control over the assets
of the trust and the (each) grantor(s) is an Accredited Investor.

 

i) Purchaser Authorization.  The Purchaser, if not an individual, is empowered
and duly authorized to enter into this Agreement under any governing document,
partnership agreement, trust instrument, pension plan, charter, certificate of
incorporation, bylaw provision or the like; this Agreement constitutes a valid
and binding agreement of the Purchaser enforceable against the Purchaser in
accordance with its terms; and the person signing this Agreement on behalf of
the Purchaser is empowered and duly authorized to do so by the governing
document or trust instrument, pension plan, charter, certificate of
incorporation, bylaw provision, board of directors or stockholder resolution, or
the like.

 

j) No Backup Withholding.  The Social Security Number or taxpayer identification
shown in this Agreement is correct, and the Purchaser is not subject to backup
withholding because (i) the Purchaser has not been notified that he or she is
subject to backup withholding as a result of a failure to report all interest
and dividends or (ii) the Internal Revenue Service has notified the Purchaser
that he or she is no longer subject to backup withholding.

 

4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY THE SELLERS:  The Sellers,
severally but not jointly, hereby represent, warrant and agree as follows:

 

a)  Authority of Sellers.  The Sellers have all requisite authority to execute
and deliver this Agreement and to carry out and perform their obligations under
the terms of this Agreement.

 

 
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b)  Authorization.  All actions on the part of the Sellers necessary for the
authorization, execution, delivery and performance of this Agreement by the
Sellers and the performance of the Sellers’ obligations hereunder has been taken
or will be taken prior to the issuance of the Securities.  This Agreement, when
executed and delivered by the Sellers, shall constitute valid and binding
obligations of the Sellers enforceable in accordance with their terms, subject
to laws of general application relating to bankruptcy, insolvency, the relief of
debtors and, with respect to rights to indemnity, subject to federal and state
securities laws.  The issuance of the Securities will be validly issued, fully
paid and nonassessable, will not violate any preemptive rights, rights of first
refusal, or any other rights granted by Sellers, and will be issued in
compliance with all applicable federal and state securities laws, and will be
free of any liens or encumbrances, other than any liens or encumbrances created
by or imposed upon the Purchaser through no action of Sellers; provided,
however, that the Securities may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein or as otherwise
required by such laws at the time the transfer is proposed.

 

c)  Governmental Consents.  All consents, approvals, orders or authorizations
of, or registrations, qualifications, designations, declarations or filings
with, any governmental authority required on the part of Sellers in connection
with the valid execution and delivery of this Agreement, the offer, sale or
issuance of the Securities, or the consummation of any other transaction
contemplated hereby shall have been obtained, except for notices required or
permitted to be filed with certain state and federal securities commissions,
which notices will be filed on a timely basis.

 

e)  Securities Filings.  SearchCore is current in its filings with the
Securities and Exchange Commission under the Securities Exchange Act of 1934.

 

f)  Use of Proceeds.  The net proceeds from the sale of the Units will be used
and is subject to the limitations set forth in in Exhibit C attached hereto and
made a part hereof.

 

g)  Shell Status.  SearchCore was, in the past, a “shell” corporation as defined
in Rule 12b-2 under the Securities Exchange Act of 1934 (the “Exchange Act”) and
Rule 144(i) promulgated under the Securities Act of 1933 (the “Securities Act”),
and therefore the Purchaser understands and acknowledges that, in addition to a
six (6) month holding period beginning with the Effective Date, he, she or it is
restricted from selling the Shares and the shares of common stock to be acquired
upon the conversion of the Note in a public market transaction until the earlier
of (i) the effectiveness of a registration statement filed by SearchCore, or
(ii) until SearchCore “cures” its shell status by meeting the following
requirements:

 

(1) SearchCore is no longer a shell company as defined in Rule 144(i)(1);

 

(2) SearchCore has filed all reports (other than Form 8-K reports) required
under the Exchange Act for the preceding 12 months (or for a shorter period that
the issuer was required to file such reports and materials); and

 

 
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(3) SearchCore has filed current “Form 10 information” with the Commission
reflecting its status as an entity that is no longer an issuer described in Rule
144(i)(1), and at least one year has elapsed since the issuer filed that
information with the Commission.  See Rule 144(i)(2).

 

SearchCore filed “Form 10 information” on March 1, 2011 when it filed a
Registration Statement on Form S-1, and subsequently a Registration Statement on
Form 10 on January 31, 2013 for the purpose of becoming subject to the reporting
requirements of the Securities Exchange Act of 1934, which went effective
automatically sixty (60) days after its filing and accordingly SearchCore is
“cured” of its shell status as of the date hereof.  Notwithstanding the
foregoing, SearchCore could become subject to Rule 144(i) in the future if any
of the three obligations above are not satisfied.

 

5. INDEMNIFICATION:  The Purchaser hereby agrees to indemnify and defend Sellers
and their officers and directors and hold them harmless from and against any and
all liability, damage, cost or expense incurred on account of or arising out of:

 

(a) Any breach of or inaccuracy in the Purchaser’s representations, warranties
or agreements herein;

 

(b) Any disposition of any Securities contrary to any of the Purchaser’s
representations, warranties or agreements herein; and

 

(c) Any action, suit or proceeding based on (i) a claim that any of said
representations, warranties or agreements were inaccurate or misleading or
otherwise cause for obtaining damages or redress from Sellers or any director or
officer of Sellers under the Act, or (ii) any disposition of any Securities.

 

6. MISCELLANEOUS:

 

a)  Binding Agreement.  The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective successors and assigns of
the Parties.  Nothing in this Agreement, expressed or implied, is intended to
confer upon any third party any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this
Agreement.

 

b)  Governing Law; Venue.  This Agreement shall be governed by and construed
under the laws of the State of Texas as applied to agreements among Texas
residents, made and to be performed entirely within the State of Texas.  The
Parties agree that any action brought to enforce the terms of this Agreement
will be brought in the appropriate federal or state court having jurisdiction
over Smith County, Texas, United States of America.

 

 
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c)  Counterparts.  This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

d)  Titles and Subtitles.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

e)  Notices. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the Party to be
notified, (b) when sent by confirmed facsimile if sent during normal business
hours of the recipient, if not, then on the next business day, or (c) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt.  All communications
shall be sent as follows:

 

 

If to Sellers:

SearchCore, Inc.

 

 

Alpine Creek, Inc.

 

 

500 North Northeast Loop 323

 

 

Tyler, TX 75708

 

 

Attn: James Pakulis

 

 

   

with a copy to:

Clyde Snow & Sessions, PC

 

201 S. Main Street, 13th Floor

 

 

Salt Lake City, UT 84111

 

 

Attn: Brian A. Lebrecht

 

If to Purchaser:

 

or at such other address as Sellers or Purchaser may designate by ten (10) days
advance written notice to the other Party hereto.

 

f)  Modification; Waiver.  No modification or waiver of any provision of this
Agreement or consent to departure therefrom shall be effective unless in writing
and approved by the Parties.

 

g)  Entire Agreement; Successors.  This Agreement and the Exhibits hereto
constitute the full and entire understanding and agreement between the Parties
with regard to the subjects hereof and no Party shall be liable or bound to the
other Party in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein.  The representations,
warranties and agreements contained in this Agreement shall be binding on the
Purchaser’s successors, assigns, heirs and legal representatives and shall inure
to the benefit of the respective successors and assigns of the Parties and their
directors and officers. 

  

h)  Expenses.  Each Party shall pay their own expenses in connection with this
Agreement.  In addition, should either Party commence any action, suit or
proceeding to enforce this Agreement or any term or provision hereof, then in
addition to any other damages or awards that may be granted to the prevailing
Party, the prevailing Party shall be entitled to have and recover from the other
Party such prevailing Party’s reasonable attorneys’ fees and costs incurred in
connection therewith.

 

i)  Currency.  All currency is expressed in U.S. dollars.

 

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In Witness Whereof, the Parties have executed this Promissory Note and Stock
Purchase Agreement as of the date first written above. 

 

“Alpine”

 

“Purchaser”

 

   

Alpine Creek, Inc.,

 

 

a Texas corporation

 

 

 

 

By: James Pakulis

 

 

Its: President

 

     

Dated:

 

Dated:

 

       

“SearchCore”

 

     

SearchCore, Inc.,

 

 

a Nevada corporation

 

     

 

 

By: James Pakulis

 

 

Its: President and Chief Executive Officer

 

 

  

No. of Units:________________________________________ ($25,000 per Unit, minimum
of one (1) Unit) Face Value of Note: $_________________________________ (equal
to the Purchase Price)

No. of Shares:_______________________________________

(25,000 Shares for each Unit purchased)

  

 
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To be completed by each Purchaser:

 

Email: 

 

 

SSN or FEIN:

 

   

Home Phone: 

 

 

Work Phone:

 

     

Street Address:

 

 

 

 

State of Residence: ________________________________________________________ 

For how long?____________________________________________________________ 

Do you maintain a residence in any other state?
__________________________________

 

In which state(s) do you

 

File state income tax returns: _____________________________________________ 

Vote: _______________________________________________________________ 

Hold current driver’s license: ____________________________________________ 

Maintain a house or apartment: ___________________________________________

 

Affiliations with SearchCore:
________________________________________________________ 

______________________________________________________________________________

 

 
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Exhibit A

 

15% Senior Promissory Note

 

 

 

 

 

 
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Exhibit B

 

Guaranty

 

 

 

 

 

 
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Exhibit C

 

Use of Proceeds

 

All of the proceeds from the sale of the Units (the “Proceeds”) will be placed
into a segregated, interest bearing checking account of Alpine.  The Proceeds
will be loaned as short-term financing in order to expedite and/or assist
customers of SearchCore and its wholly-owned subsidiary, Wisdom Homes of
America, Inc. (“Wisdom”), in purchasing a manufactured home from Wisdom.  The
customer loans will be secured by a first-position lien and/or UCC-1 filing in
assets such as other manufactured homes, land, automobiles, recreational
vehicles, campers, boats, etc.  The decision as to what is acceptable collateral
will be at the discretion of the Alpine.  Alpine will not loan more than Thirty
Thousand Dollars ($30,000) of the Proceeds to any single borrower or in
connection with any single transaction.

 

See also attached Funding Requirements and Guidelines.

 

 
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FUNDING REQUIREMENTS & GUIDELINES: 

 

Purpose Of  The Funding Guidelines:

The purpose of the Funding Guidelines are to provide a clear understanding as to
the rules, requirements and guidelines related to the deployment of capital
(i.e. funds) from the Credit Facility to the borrower.

 

Purpose Of Loan:

All loans are to be used for short term financing in order to assist the
borrower in a manufactured home purchase from Wisdom Homes Of America, Inc.

 

Short Term Financing:

In general, short term financing is defined as a period between 1 - 120 days.

 

Management:

Management of the Credit Facility are Jim Pakulis and Brent Nelms.

 

Collateral:

Funds loaned against asset(s) must be fully collateralized against those
asset(s). Collateralization will occur only when the Credit Facility receives 1)
clear title or 2) a first lien position on the assets pledged and in which the
loan is funded against.  All collateral must be physically inspected by
management or management’s representative prior to funding. 

 

Definition Of Assets To Be Used As Collateral

 

Real Property:

Real property is defined as unimproved and improved land, land with
structure(s), manufactured home affixed to the land, mobile home affixed to the
land, modular home affixed to the land, conventional structure (i.e. stick built
house).

 

Personal Property:

Personal property is defined as 5thwheel trailer, camper trailer, boat,
automobile, recreational vehicle, plane, motorcycle, and/or quad.  If another
asset presents itself, then management, in management’s sole discretion, will
determine the collateralization of the asset and whether a loan may be made
against the asset.  Assets that must be in the possession of the Credit Facility
prior to or at the time of funding include automobile, truck, 5th wheel, camper
trailer, boat, motorcycle and/or quad.

 

Possession Of Collateral:

Real property used as collateral will be maintained at its existing location.

 

Personal property used as collateral will be transferred to one of Wisdom Homes
Of America retail locations. Exceptions to this rule will be personal property
that cannot reasonably be kept at the retail center (i.e. airplane).

 

 
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Clear Title:

On personal property used as collateral against the loan, clear title to the
asset must be transferred to the Credit Facility prior to funds being loaned to
the borrower.  Clear title is defined as the original title with executed Bill
Of Sale. The Credit Facility may make case by case exceptions as it relates to
the title if, in management’s best judgment, the borrower provides evidence
demonstrating that they are the rightful owner of the asset and the assets is
not currently pledged or collateralized.  This includes but is not limited, to
an executed powers of attorney, re-issue of the title from the motor vehicle
department or other governmental agency, or other demonstrative instruments.

 

First Lien Position:

On real property used as collateral against the loan, a first lien position must
be taken on the real property prior to funds being loaned to the borrower.  A
title report must be obtained and reviewed by management and clear title on the
subject property must be evident.  The filing and recordation of the first lien
position will be performed through the title company prior to funds being loaned
to borrower.

 

Valuation of assets:

Management will perform due diligence in determining the value of the asset
including, but not limited, to obtaining comparable values of other like or
similar assets on the internet, contacting retail centers that sell a similar
asset, or reviewing references for valuations (i.e. Kelley Blue Book). 
Management, in its sole discretion, will determine the value of the asset in
which funds are being loaned against.  The maximum management is allowed to fund
is one hundred percent of the determined value of the asset. 

 

Minimum Loan Per Transaction:

$1,000.00 – No loan may be less than $1,000 per transaction

 

Maximum Loan Per Transaction:

$30,000.00 – No loan may be greater than $30,000 per transaction

 

Personal Guarantee:

All borrowers will be required to sign a personal guarantee for the loan, in
addition to providing collateral.

 

Files:

Documentation must be maintained in each file. Documentation will be based on
the asset in which funds are loaned against, but shall include items such as
original title or other written instruments approved by management, first lien
documents, title report, value references (ie copies of Kelley’s Blue Book
values), personal guarantee from borrower, mortgage approval, personal financial
information and identification of borrower.

 

Loan Approvals:

All loans submitted to a lender must have a formal loan approval (conditions
pending acceptable) from an “Approved” lender. A copy of the approval must be
reviewed by the Credit Facility and in the file before disbursement of funds.

 

 
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Approved Service Providers:

Management will maintain a list of approved service providers. Service providers
include escrow/title companies, mortgage lenders and brokers, appraisers and
general contractors. The approved service providers must have an active license,
business certificate or evidence of good standing within the state they do
business, as well as the necessary insurance.

 

General Contractors (and sub-contractors):

General Contractors and sub-contractors must be on the approved contractor list.
Contract must be licensed and insured in Texas, or in the state in which the
services are being performed as it relates to the credit facility. Contractors
must supply Credit Facility with W-9’s. Credit Facility must receive a lien
waiver from the contractor upon completion of their work and receipt of payment
from Credit Facility. In general, contractors work includes the installation of
the following; electrical, dirt & pad, HUD/FHA permanent foundation*, septic,
sewer hookup, air conditioner, installation of water lines, water meter, and
manufactured home. The installation of a manufactured home includes joining the
two halves, tying down to the foundation, trimming the exterior and roofing. The
copies of all invoices on construction loans must be in the borrowers file.

 

Bank Account:

Management will maintain a bank account specifically for the Credit Facility
funds. This account may not be used for any other purpose then to conduct Credit
Facility business and transactions.

 

Quarterly Disbursement:

Management will disburse interest payments on a quarterly basis.

 

Monthly Reporting:

Management is required to provide a monthly report to investors showing a
summary of loans and loan approval sheet, which demonstrates the borrower met
the established criteria and that appropriate collateral is in place.  This must
be sent to the investor no later than the 5th day of the following month.

 

Shortfall:

If, after an individual loan transaction closes, the company has failed to
recoup the initial investment, the company is responsible for paying the
difference of the loaned amount and the shortfall on that specific transaction. 
The reconciliation must be done no later than 30 days after the closing of the
transaction.

 

90 Day Rule:

the company shall have the obligation and is required to report to the investors
if, after 90 days from funding a transaction, the company does not believes it
is likely they will recoup all of the investment capital used to make the
transaction. 

 

*HUD/FHA Permanent Foundation is a foundation that has been inspected by an FHA
representative. The inspection includes reviewing the foundation plans,
footings, and termite treatment.  These more stringent requirements are
necessary for the borrower to receive an FHA approved mortgage.

 

 

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