EXHIBIT 10.52
SECURED PROMISSORY NOTE
$250,000 ISSUED AS OF THE 31ST DAY OF AUGUST 1999
FREMONT, CALIFORNIA
FOR VALUE RECEIVED, Eastern Systems Technology, Inc., a California
corporation, ("DEBTOR"), hereby promises to pay (in lawful money of the United
States of America) to the order of NHancement Technologies Inc., a Delaware
corporation ("LENDER"), at the office of Lender located at 39420 Liberty Street,
Suite 250, Fremont, California 94538, or at such other place as Lender or a
future holder hereof (Lender or such other holder being sometimes referenced
herein as ("HOLDER")) may from time to time designate in writing, the principal
amount of Two Hundred Fifty Thousand Dollars ($250,000), together with interest
on the unpaid principal balance hereof, all as specified below. The principal
balance hereof, from time to time outstanding, shall bear interest at a fixed
rate equal to seven percent (7%) per annum. This Secured Promissory Note
("NOTE") has been issued pursuant to that certain Loan and Security Agreement,
dated an even date herewith, among Debtor and Lender (the "LOAN AGREEMENT"), and
all capitalized terms used herein and not otherwise defined herein shall have
the meanings indicated in the Loan Agreement.
1. PAYMENTS OF PRINCIPAL AND INTEREST.
1.1 INTEREST AND APPLICATION OF PAYMENTS. All payments made hereon
shall be applied first to the payment of all unpaid accrued interest (at the
rate specified herein) to the date of payment and the balance, if any, shall be
applied to the payment of principal. Interest shall thereupon cease on the
principal so credited. All interest accruing at the annual percentage rates
specified herein shall be calculated on the basis of a 360 day year and actual
days elapsed and any such accrued interest which is not paid when due shall be
added to unpaid principal and shall thereafter bear interest in the same manner
as the unpaid principal balance hereof.
1.2 REPAYMENTS. Principal and all accrued and unpaid interest shall be
all due and payable on the earlier of (i) one (1) year from the date hereof or
(ii) within thirty (30) days following the effective date of the first S-3
Registration Statement covering shares of Lender's Common Stock which may
hereafter be issued to Debtor which have an aggregate fair market value at such
effective date equal to or greater than the principal amount of the Note (the
"MATURITY DATE"). In the event such stock is issued to Debtor but Lender fails
to cause such S-3 Registration Statement to become effective, or if no public
market then exists for such shares of stock, in either such case by or on the
first anniversary date hereof, Lender agrees to extinguish this Note in
accordance with the terms of the Loan Agreement.
1.3 PREPAYMENT. The indebtedness hereunder may be prepaid in whole
or in part any time (without penalty or premium and in principal amounts of
$5,000 or more), at the election of Debtor. Upon Debtor's request, Lender
will provide the then-current payoff amount for purposes of any such election
to prepay in whole the indebtedness evidenced by this Note. In all events,
except as set forth
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in Section 1.2 above, all principal and interest hereunder shall be due and
payable not later than the Maturity Date.
2. SECURITY.
This Note is secured by and entitled to the benefits of the Loan Agreement to
which reference is hereby made for a description of the Collateral securing this
Note and the rights of Debtor and Holder with respect to such Collateral. Debtor
and Lender hereby acknowledge and agree that this Note shall be a negotiable
instrument within the meaning of Division 3 of the California Uniform Commercial
Code.
3. EVENTS OF DEFAULT AND ACCELERATION.
3.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
be deemed to be an event of default ("EVENT OF DEFAULT") hereunder and under
the Loan Agreement: (1) failure to cure any default in payment of principal
or interest due pursuant to the terms hereof or (2) the existence of an Event
of Default under the Loan Agreement.
3.2 ACCELERATION. Upon the occurrence of an Event of Default and at
the option of Holder (exercisable upon written notice to Debtor given in the
manner provider in the Loan Agreement), the entire payoff balance then
applicable (an amount equal to the sum of unpaid principal, accrued and
unpaid interest at the annual rates specified herein and any other charges
due from Debtor hereunder or under the Loan Agreement) shall become
immediately due and payable.
4. MISCELLANEOUS PROVISIONS.
4.1 ATTORNEYS' FEES. Should suit be brought to enforce, interpret or
collect any part of this Note, the prevailing party shall be entitled to
recover, as an element of the costs of suit and not as damages, reasonable
attorneys' fees and other costs of enforcement and collection.
4.2 JURISDICTION. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A.
(IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES) INCLUDING, WITHOUT LIMITATION,
ANY CALIFORNIA LAWS GOVERNING USURY OR PERMISSIBLE RATES OF INTEREST. EXCEPT AS
SET FORTH BELOW, HOLDER AND DEBTOR HEREBY AGREE THAT ANY SUIT TO ENFORCE ANY
PROVISION OF, OR TO COLLECT, THIS NOTE SHALL BE BROUGHT IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA OR THE SUPERIOR OR
MUNICIPAL COURT IN AND FOR THE COUNTY OF ALAMEDA, CALIFORNIA, U.S.A. EXCEPT AS
SET FORTH BELOW, EACH PARTY HEREBY AGREES THAT SUCH COURTS SHALL HAVE EXCLUSIVE
IN PERSONAM JURISDICTION AND VENUE WITH RESPECT TO SUCH PARTY, AND EACH PARTY
HEREBY SUBMITS TO THE EXCLUSIVE IN PERSONAM JURISDICTION AND VENUE OF
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SUCH COURTS. IN ADDITION TO THE FOREGOING JURISDICTION, HOLDER, AT ITS SOLE
OPTION, MAY COMMENCE ANY SUCH SUIT IN ANY JURISDICTION IN WHICH DEBTOR HAS A
PRINCIPAL BUSINESS OFFICE OR WHERE ANY COLLATERAL SECURING THIS NOTE IS
LOCATED.
4.3 OBLIGATION UNCONDITIONAL. Except as provided in Section 1.2, no
provision of this Note or of any other agreement shall alter, impair or render
conditional the payment obligations of Debtor, which are absolute and
unconditional, to pay the principal and interest on this Note at the place and
at the respective times herein prescribed. Except as provided in Section 1.2,
Debtor shall in all events remain absolutely and unconditionally liable for the
payment and performance of all its obligations under the Debt Instruments.
4.4 DEBTOR'S WAIVERS. Except as expressly provided to the contrary
herein, Debtor hereby waives diligence, presentment, protest, demand of payment,
notice of protest, dishonor and nonpayment, and waives the legal effect of
Holder's failure to give all notices not expressly provided for herein. Debtor
expressly agrees that, without in any way affecting the liability of Debtor
hereunder, the Holder may extend the Maturity Date or the time for payment of
any amount due hereunder, accept additional security, release any party liable
hereunder, and release any security now or hereafter securing this Note. Debtor
further waives, to the full extent permitted by law, the right to plead any and
all statutes of limitation as a defense to any demand on this Note, or on any
agreement now or hereafter securing this Note.
4.5 LOSS OR DESTRUCTION. Upon receipt of evidence reasonably
satisfactory to Debtor of the loss or mutilation of this Note, Debtor will
execute and deliver, in substitution hereof, a replacement note.
4.6 SEVERANCE. Every provision of this Note is intended to be
severable. In the event any term or provision hereof is declared to be illegal
or invalid for any reason by a court of competent jurisdiction, such illegality
or invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable. Lender and
Debtor further agree to replace any such void or unenforceable provision of this
Note with valid and enforceable provisions which will achieve, to the extent
possible, the economic, business and other purposes of the void or unenforceable
provision.
4.7 WAIVERS AND DELAYS BY HOLDER TO BE STRICTLY LIMITED. Any waiver,
express or implied, of any breach or default hereunder shall not be considered a
waiver of any subsequent or different breach or default. No delay or omission on
the part of Holder in exercising any right under this Note or under any of the
documents referenced in Section 2 shall operate as a waiver of such right or of
any other right of the Holder hereunder.
4.8 MODIFICATION. No provision of this Note may be waived, modified or
discharged other than by an express writing signed by the party against whom
enforcement of such waiver, modification or discharge is sought.
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4.9 WAIVER OF JURY TRIAL. DEBTOR AND LENDER, TO THE EXTENT THEY MAY
LEGALLY DO SO, HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IF ANY
CLAIM, DEMAND, ACTION, CAUSE OF ACTION OR PROCEEDING ARISING UNDER OR WITH
RESPECT TO THIS NOTE TO WHICH THEY ARE PARTIES OR IN ANY WAY CONNECTED WITH,
OR RELATED TO, OR INCIDENTAL TO, THE DEALING OF THE PARTIES HERETO WITH
RESPECT TO THIS NOTE TO WHICH THEY ARE A PARTY OF THE TRANSACTIONS
CONTEMPLATED HEREBY IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING
AND IRRESPECTIVE OF WHETHER IN CONTRACT, TORT OR OTHERWISE. DEBTOR AND
LENDER, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY AGREE THAT ANY SUCH
CLAIM, DEMAND, ACTION, CAUSE OF ACTION OR PROCEEDING SHALL BE DECIDED BY A
COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 4.9 WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO THE WAIVER OF ITS OR
THEIR RIGHT TO TRIAL BY JURY.
DEBTOR:
EASTERN SYSTEMS TECHNOLOGY, INC.
By: /s/ Ram V. Mani
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Ram V. Mani, President
By: /s/ Ram V. Mani
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Ram V. Mani, Secretary