EXHIBIT 10.2
SECURED DEMAND NOTE
PRIVATE
$100,000.00 September 8, 1998
For value received, Howtek, Inc., a Delaware company with a principal place of
business at 21 Park Avenue, Hudson, New Hampshire 03051 (the "Company") promises
to pay to the order of Lawrence A. Howard, at 660 Madison Ave., 14th Floor, New
York, NY 10021 (the "Payee"), the principal amount of one hundred thousand
dollars ($100,000). Principal on this Note shall be due and payable in full,
together with interest accrued and any penalties provided for herein, on five
(5) day's written notice. Payments will be made by certified check delivered to
the Payee or the holder at the address furnished to the Borrower for that
purpose. Principal on this note shall bear interest at the rate of 12% per
annum, compounded monthly.
The Borrower may pay this Note in whole or in part without penalty or premium at
anytime prior to maturity.
The principal on this Note is secured by a security interest in certain assets
of the Company granted pursuant to a certain Security Agreement between the
Borrower and the Payee of even date hereof. This Note is entitled to all of the
benefits and obligations of said Security Agreement. Upon any Event of Default,
as defined in the Security Agreement, this Note shall be forthwith accelerated
and due and payable for an amount equal to the principal then outstanding. The
Borrower hereby agrees to execute and make all appropriate filings of any
financing statements or other filings which shall evidence the Borrower's grant
of a security interest to the Payee in order to secure the performance of the
obligations of the Borrower pursuant to this Note.
The Borrower and all endorsers and guarantors of the Note hereby waive
presentment (other than on maturity), demand, notice of nonpayment, protest and
all other demands and notices in connection with the delivery acceptance,
performance or enforcement of this Note and agree to pay upon demand all costs,
charges and expenses of collecting amounts due under the Note or the Agreements,
including attorney's fees and expenses, court costs and other disbursements
incurred or paid by the Payee in connection therewith. This Note shall be
binding upon and inure to the benefit of the Borrower and the Payee and their
respective successors and assigns.
This Note shall be governed by and construed in accordance with the internal
laws of the State of New Hampshire.
IN WITNESS WHEREOF, Borrower has caused its duly authorized officer to execute
this Note as an instrument under seal as of the date first written above.
HOWTEK, INC.
/s/ W. Scott Parr
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By: W. Scott Parr, President & CEO
Witness: /s/ Constance Webster
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SECURITY AGREEMENT
Howtek, Inc. a Delaware corporation with a principal place of business at 21
Park Ave. (hereinafter called the "debtor"), subject to the terms and conditions
hereof, hereby assigns, mortgages, pledges, transfers and grants a continuing
security interest to Lawrence A. Howard (hereinafter called the "Secured
Party"), in all of the Debtor's right and interest in and to all accounts,
contract rights, rights to payment, inventory, equipment, intangible property,
patents and other property or rights of any kind. The property described above
shall hereafter be collectively referred to as the "Collateral."
The Collateral is pledged and mortgaged and a security interest therein is
granted to the Secured Party, as security for payment of all sums due under
certain Secured Term Note (the "Note") of the Debtor in the original aggregate
principal amount of $100,000. (hereinafter referred to as the "obligations")
issued by the Debtor to Lawrence A. Howard, dated as of September 8, 1998.
1. Covenants Re Collateral.
(a) The Debtor will join with the Secured Party in executing
appropriate financing statements under the Uniform Commercial Code (the
"Code") and will at all times and from time to time, at the request of the
Secured Party, do, make, execute and deliver all such additional and
further acts, things, deeds, assurances, instruments and financing
statements as the Secured Party may require, to vest more completely and
assure to the Secured Party its rights hereunder in or to the Collateral,
including without limitation, the preparation, execution and delivery of
any additional financing statements and security agreements extending to
any Collateral which is, or may subsequently become located outside the
State of New Hampshire. The Debtor hereby appoints the Secured Party as its
authorized agent and attorney-in-fact to execute and file appropriate
financing statements, continuation statements and termination statements in
each and every jurisdiction in which the Collateral is or may be located,
now or in the future.
(b) The Secured Party shall be under no obligation to take steps
necessary to preserve its rights in any Collateral against other parties
but may do so at its option and at the expense of the Debtor. At its option
and upon prior written notice to the Debtor, the Secured Party may
discharge any taxes, liens, security interests or other encumbrances to
which any Collateral is at any time subject, and may, upon the failure of
the Debtor so to do, purchase insurance on any Collateral and pay for the
preservation thereof, and the Debtor agrees to reimburse the Secured Party
on demand for any payments made or expenses incurred by the Secured Party
pursuant to the foregoing authorization. The Secured Party may, at any time
after default hereunder, take control of the Collateral to which the
Secured Party is entitled hereunder or under applicable law.
2.. Events of Default
If any of the following circumstances or events shall occur and be continuing
(individually, an "Event of Default"):
(a) failure by the Debtor to pay the principal on the Note when due by
its terms, or any installment thereof, for ten (10) after notice of any
default in payment has been made in writing to the Debtor by the Secured
Party; or
(b) the cessation of the business of the Debtor as a going concern; or
(c) the failure of the Debtor to perform or observe any other term,
covenant or agreement contained in this Agreement, or the Note on its part
to be performed or observed and any such failure remains unremedied for
thirty (30) days after notice of such breach has been provided to the
Debtor; or
(d) the Debtor's ability to pay the Obligations shall be impaired
because the Debtor shall be involved in financial difficulties as evidenced
(i) by its admitting in writing its inability to pay its debts generally as
they become due; (ii) by its commencement of a voluntary case under Title
11 of the United States Code, the
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Federal Bankruptcy Code, as from time to time in effect, or by its
authorizing, by appropriate proceedings of its Board of Directors or other
government body, the commencement of such voluntary case; (iii) by its
filing an answer or other pleading admitting or failing to deny the
material allegations of a petition filed against it commencing provided, or
by its failing to controvert timely the material allegations of any such
petition; (iv) by the entry of an order of relief in any involuntary case
commenced under such laws, except that the Debtor shall have a reasonable
period, not to exceed ninety (90) days, to have such order revoked; (v) by
its otherwise seeking relief as a debtor under any applicable law, of any
jurisdiction relating to the liquidation or reorganization of debtors or to
the modification or alteration of the rights of creditors, or by its
consenting to or acquiescing in such relief; (vi) by the entry of an order
by a court of competent jurisdiction (a) finding it to be bankrupt or
insolvent; (b) ordering or approving its liquidation, reorganization or any
modification or alteration of the rights of its creditors, or (c) assuming
custody of, or appointing a receiver or other custodian for, all or a
substantial part of its property or assets; or (vii) by its making an
assignment for the benefit of, or entering into a composition with, its
creditors, or appointing or consenting to the appointment of a receiver or
other custodian for all or a substantial part of its property;
then, and in any such event, the Secured Party may, by notice to the Debtor,
declare the entire unpaid principal amount of the Note, all interest accrued and
unpaid thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Note, all such accrued interest shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Debtor.
3. Annulment of Defaults.
Section 2 above is subject to the condition that, if at any time after the
principal of any of the Note or the Obligations shall have become due and
payable, and before any judgment or decree for the payment of the moneys so due,
or any thereof, shall have been entered, all arrears of interest upon all the
Note and all other sums payable under the Note or this Agreement (except the
principal of the Note which by such declaration shall have become payable) shall
have been duly paid, and every other default shall have been made good or cured,
then and in every such case the Secured Party shall, by written instrument filed
with the Debtor, rescind and annul such declaration and its consequences; but no
such rescission or annulment shall extend to or affect any subsequent default or
Event of Default or impair any right consequent thereon.
4. Rights and Remedies on Default.
Upon the occurrence of any event of Default, and at any time thereafter, the
Secured Party shall have the rights and remedies of a secured party under the
Code in addition to the rights and remedies provided herein or in any other
instrument or agreement executed by Debtor. Wherever notification with respect
to the sale or other disposition of Collateral is required by law, such
notification of the time and place of public sale, or of the date after which a
private sale or other intended disposition is to be made, shall be deemed
reasonable if given to the Debtor at least twenty (20) days before the time of
such public sale, or the date after which any such private sale or other
intended disposition is to be made, as the case may be. Expenses of retaking,
holding, preparing for sale, selling or the like with respect to the Collateral,
shall include the Secured Party's reasonable attorneys' fees and the legal
expenses.
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5. General Intangibles and Names.
Upon the occurrence of any Event of Default or at any time thereafter, on
request of the Secured Party, the Debtor shall execute and deliver to such
Secured Party any and all instruments as may be required to further vest in the
Secured Party the right to the Collateral.
6. Waiver of Demand.
DEBTOR WAIVES ANY AND ALL RIGHTS THAT IT MAY HAVE TO NOTICE OF JUDICIAL HEARING
IN ADVANCE OF THE ENFORCEMENT OF ANY OF THE SECURED PARTY'S RIGHTS HEREUNDER,
INCLUDING, WITHOUT LIMITATION THE SECURED PARTY'S RIGHTS FOLLOWING AN EVENT OF
DEFAULT TO TAKE IMMEDIATE POSSESSION OF THE COLLATERAL AND EXERCISE ITS RIGHTS
WITH RESPECT THERETO. With respect both to the Obligations and the Collateral,
the Debtor assents to any extension or postponement of the time of payment of
any other indulgence, to any substitution, exchange or release of any
collateral, to the addition or release of any party or person primarily or
secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising, adjusting or discharge of any thereof, all in such
manner and at such time or times as the Secured Party may deem advisable.
7. General.
Any condition or restriction hereinabove imposed with respect to the Debtor may
be waived, modified or suspended by the Secured Party but only on the Secured
Party's consent in writing and only as so expressed in such writing and not
otherwise. The Secured Party shall not be deemed to have waived any of its other
rights hereunder or under any other agreement, instrument or paper signed by
Debtor unless such waiver be in writing and signed by the Secured Party. No
delay or omission on the part of the Secured Party in exercising any right shall
operate as a waiver of such right or any other right. A waiver on any one
occasion shall not be construed as a bar to, or waiver of, any right or remedy
on any future occasion. The Secured Party's rights and remedies, whether
evidenced hereby or by any other agreement, instrument or paper, shall be
cumulative and may be exercised separately or concurrently. Any demand upon, or
notice to, Debtor that the Secured Party may elect to give shall be effective
when deposited in the mails by first class mail, postage prepaid, addressed to
Debtor at the address shown at the beginning of this Security Agreement or as
modified by any notice given after the date hereof. If any term or condition
hereof shall be invalid or unenforceable to any extent or in any application,
then the remainder hereof shall not be affected thereby, and each and every term
and condition hereof shall be void and enforced to the fullest extent and in the
broadest application permitted by law. Whenever there are no Obligations
outstanding hereunder and no commitment on the part of any Secured Party under
any agreement which might give rise to any Obligation, the Debtor may then
terminate this Agreement upon written notice to the Secured Party. This
Agreement and all rights and obligation hereunder, including matters of
construction, validity and performance, shall be governed by the internal laws
of the State of New Hampshire.
IN WITNESS WHEREOF, this Security Agreement is executed as an instrument under
seal by each of the undersigned Debtor and Secured Party as of this 8th day of
September, 1998.
Howtek, Inc.
/s/ W. Scott Parr
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By: W. Scott Parr, President & CEO Witness: /s/ Constance Webster
----------------------------
/s/ Lawrence A. Howard Witness: /s/
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Lawrence A. Howard
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