EXHIBIT 10.89(a)
----------------
PROMISSORY NOTE
---------------
$8,000 August 20, 2002
For valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned Vertical Computer Systems, Inc. ("Promissor"),
promises to pay to the order of Luiz Valdetaro ("Promissee"), in lawful money of
the United States of America the principal amount of Eight Thousand Dollars and
No Cents ($8,000.00 U.S.), together with interest on the amount of such
principal outstanding from time to time at the rate of ten (10%) per annum,
calculated on the basis of a three hundred sixty (360) day year containing
twelve (12) months of thirty (30) days each (the "Basic Interest Rate"), at the
times and in the manner provided herein.
1. PAYMENT OF PRINCIPAL AND INTEREST. Principal and interest shall be paid as
follows:
a. The principal, and all interest, fees, charges, and other amounts owing
hereunder and then unpaid shall be due and payable on February 20, 2003 (the
"Maturity Date").
b. Promissor shall pay all amounts owing under this Note in immediately
available funds to Promissee at Promissee's address as set forth herein, or at
such other place as may be specified in writing by Promissee. Each payment, when
made, shall be credited first to interest then due, and then at the option of
Promissee to principal, late charges, and other fees and expenses outstanding
hereunder in such order as Promissee may determine. Payments received after 6:00
p.m. (PST) on any banking day or at any time on any Saturday, Sunday, or holiday
shall be deemed received on the next banking day.
2. COLLATERAL AS SECURITY. This Note is secured by certain collateral, which
encumbers, among other things, the interest of in certain assets, as more
particularly described therein (the "Collateral"). This Note and the Collateral
Pledge Agreement of even date herewith, between Promissee and Pledgor(s), of
even date herewith, and any other documents or instruments given or to be given
to Promissee to secure the indebtedness evidenced by this Note are collectively
referred to herein as the "Loan Documents". The Company under no circumstances
will cancel the stock being held as Collateral unless required to do so by a
state or federal regulatory body.
3. INTEREST RATE UPON DEFAULT. Should Promissor fail to pay any amount owing
hereunder as and when due, whether the same is due regularly as scheduled or by
reason of acceleration following default or otherwise, then interest shall
accrue on the past due amount at the Basic Interest Rate. Such interest shall be
due and payable upon the earlier of demand or the first day of the calendar
month following the month in which the same shall have accrued.
4. DEFAULT; REMEDIES. Each of the following occurrences and conditions shall
constitute an Event of Default:
a. failure of Promissor to pay as and when due any money, whether
principal, interest, or otherwise, under this Note, or the breach or default of
any obligation to pay money under or secured by the Collateral Agreement; or
b. failure of Promissor to perform any obligation other than an obligation
to pay money, as and when performance of such obligation is due under this Note
or Loan Documents which failure continues for fifteen (15) days after notice
thereof from Promissee to Promissor; or
c. Promissor's making or at any time having made any representation,
warranty or disclosure to Promissee that is or was materially false or
misleading on the date as of which made, whether or not that representation or
disclosure appears in the Loan Documents; or
{WKM1896.DOC}
- -------------
Promissory Note
1 of 4
d. failure by Promissor to comply with any of the terms, provisions,
covenants, conditions or restrictions now or hereafter affecting the Collateral
or any part thereof or contained in any agreement related or pertaining to the
Collateral, which failure continues for fifteen (15) days after notice thereof
from Promissee to Promissor; or
e. the sale, transfer, conveyance, or lease of all or any portion of the
Collateral or of any of Promissor's rights therein, whether voluntarily,
involuntarily, or otherwise, or Promissor's entering into an agreement to do any
of the foregoing, in each case except as expressly permitted in the Stock Pledge
Agreement.
At any time following the occurrence of any Event of Default, or following the
occurrence of any event as a consequence of which the obligations evidenced
hereby may be accelerated, then at the election of Promissee and notwithstanding
anything to the contrary herein or elsewhere, the entire amount of principal
then outstanding under this Note and all interest, fees, charges, and other
amounts owing and then unpaid hereunder shall become immediately due and
payable, and Promissee may exercise any and all rights that it may have under
the Loan Documents, at law, in equity, and otherwise.
5. ATTORNEYS' FEES. Promissor shall pay to Promissee upon demand all costs
and expenses incurred by Promissee in connection with determination, protection,
or enforcement of any and all of Promissee's rights hereunder or under any of
the Loan Documents, including enforcement of any and all obligations of
Promissor hereunder and thereunder and protection, enhancement, or maintenance
of the security interests securing such obligations or the priority of the same.
Such costs and expenses shall be payable whether or not any suit is instituted,
and the same shall include without limitation attorneys' fees, expert witness
fees, costs of investigation, and all of such costs incurred in connection with
any trial, appellate proceeding, or any case or proceeding under Chapters 7, 11,
or 13 of the Bankruptcy Code or any successor thereto.
6. WAIVER OF NOTICE. Promissor and each endorser, guarantor and surety of
this Note hereby waive diligence, demand, presentment for payment, notice of
discharge, notice of nonpayment, protest and notice of protest, and specifically
consent to and waive notice of any renewals or extensions of this Note, whether
made to or in favor of Promissor or any other person or persons. Promissor and
each endorser, guarantor and surety of this Note further waive and renounce all
rights to the benefits of all statutes of limitation and any moratorium,
appraisement, by any federal exception and homestead now or hereafter provided
or state law or statute, including but not limited to exemptions provided by or
allowed under the Bankruptcy Code, both as to each of themselves personally and
as to all of their property, whether real or personal, against the enforcement
and collection of the obligations evidenced by this Note and any and all
extensions, renewals and modifications thereof.
7. NOTICES. All notices required hereunder or pertaining hereto shall be in
writing and shall be deemed delivered and effective upon the earlier of (i)
actual receipt, or (ii) the date of delivery or refusal of the addressee to
accept delivery if such notice is sent by express courier service or United
States mail, postage prepaid, certified or registered, return receipt requested,
in either case to the applicable address as follows:
To Promissee: Luiz Valdetaro
5137 West 141st Street
Hawthorne, CA 90250
To Promissor: Vertical Computer Systems, Inc.
6336 Wilshire Boulevard
Los Angeles, CA 90048
Attn: President
Notwithstanding the foregoing, any notice under or pertaining to the Loan
Documents or the obligations secured thereby given and effective in accordance
with applicable law shall be effective for purposes hereof. Either party may
change the address at which it is to receive notices hereunder to another
business address within the United States (but not a post office box or similar
mail receptacle) by giving notice of such change of address in accordance
herewith.
{WKM1896.DOC}
- -------------
Promissory Note
2 of 4
9. EXERCISE OF RIGHTS. No single or partial exercise of any of Lenders rights
or powers under this Note or any of the other Loan Documents shall preclude any
other or further exercise thereof or the exercise of any other right or power.
Promissee at all times shall have the right to proceed against any portion of
the security which secures payment of the indebtedness evidenced hereby in such
order and manner as Promissee may elect without waiving any rights with respect
to any other portion of such security. Each and all rights and remedies of
Promissee hereunder and under the Loan Documents are cumulative and in addition
to each and all other such rights and remedies. No exercise of any right or
remedy shall preclude exercise of any other right or remedy.
10. NO WAIVER. No failure of Promissee to insist upon strict performance of
any obligation of Promissor or to exercise any right or remedy hereunder or
under the Loan Documents, whether before or after any default, shall constitute
or give rise to a waiver thereof, and no waiver of any default shall constitute
a waiver of any future default or of any other default. No failure to accelerate
the debt evidenced hereby by reason of default hereunder or otherwise, and no
acceptance of any past due payment hereunder or acceptance of any amount less
than the amount then due, and no other indulgence that may be granted by
Promissee from time to time shall (a) preclude the exercise of any right that
Promissee may have at law, in equity, by contract or agreement or otherwise, or
(b) constitute or give rise to (i) a waiver of such right of acceleration or any
other right, or (ii) a novation of this Note or a reinstatement of the debt
evidenced hereby, or (iii) any waiver of Promissee's rights to demand and
receive from Promissor full and prompt payment and performance thereafter, to
impose late charges retroactively, or to declare a default. Promissor and each
endorser, guarantor, and surety of this Note hereby expressly waive the benefit
of any statute or rule of law or equity which would produce any result contrary
to or otherwise in conflict with any of the foregoing.
11. ASSIGNMENT; SUCCESSORS AND ASSIGNS. Promissee may assign or otherwise
transfer all or any part of its interest herein. Promptly following written
notice of such assignment or other transfer, duly executed by Promissee,
Promissor shall render full and complete performance hereunder as and when due
to the transferee so designated by Promissee. Promissor shall not assign or
transfer all or any of its interests or obligations hereunder, and any attempted
or purported assignment or transfer by Promissor shall be void and of no force
or effect, except to the extent that the same may be expressly permitted under
the Stock Pledge Agreements. Subject to the foregoing, the terms of this Note
shall apply to, be binding upon, and inure to the benefit of ail parties hereto
and their successors and assigns.
12. MODIFICATION. This Note shall not be modified, amended, or terminated,
except by written agreement duly executed and delivered by both Promissee and
Promissor.
13. CONFLICTS. In the event of any conflict between any provision of this Note
and any provision of the Stock Pledge Agreements, which conflict cannot
reasonably be resolved in such a way as to give effect to all provisions herein
and therein contained, this Note shall govern.
14. SEVERABILITY. If any provision of this Note or any payments pursuant to
the terms hereof shall be invalid or unenforceable to any extent, the remainder
of this Note and any other payments hereunder shall not be affected thereby and
shall be enforceable to the greatest extent permitted by law.
15. GOVERNING LAW. This Note shall be governed by and construed in accordance
with the laws of the State of California.
IN WITNESS WHEREOF, Promissor has executed and delivered this Note as of
the date first written above.
VERTICAL COMPUTER SYSTEMS, INC.
{WKM1896.DOC}
- -------------
Promissory Note
3 of 4
By __________________________
Richard Wade, President
4 of 4