EXHIBIT 10.26
NOTE MODIFICATION AGREEMENT
OF
FIRST RENEWAL AND EXTENSION
OF
INTEREST ONLY
NONRECOURSE PROMISSORY NOTE
AND SECURITY AGREEMENT
THIS AGREEMENT made the 10th day of April, 2004 between H.E.R.C. PRODUCTS
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INCORPORATED, a Delaware corporation, with its principal office at 0000 Xxxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 (hereinafter referred to as the "Maker") and
R. XXXX XXXXXXXXX, with his principal office address at 0000 Xxxxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 (hereinafter referred to as the "Holder" or
"Secured Party").
W I T N E S S E T H:
WHEREAS, Holder is the holder of that certain INTEREST ONLY NONRECOURSE
PROMISSORY NOTE AND SECURITY AGREEMENT, dated February 23, 2003, from Maker to
Holder, evidencing an indebtedness in the original principal amount of
$400,000.00 as secured by that Security Agreement made a part thereof
(hereinafter referred to as the "Indebtedness");
WHEREAS, the due date of that certain INTEREST ONLY NONRECOURSE PROMISSORY
NOTE AND SECURITY AGREEMENT, dated February 23, 2003, for the original principal
indebtedness of Four Hundred Thousand ($ 400,000.00) Dollars with interest
thereon was first extended by that certain FIRST RENEWAL AND EXTENSION OF
INTEREST ONLY NONRECOURSE PROMISSORY NOTE AND SECURITY AGREEMENT to February 23,
2005; and
WHEREAS, the Maker and the Holder have mutually agreed to modify the terms
of the Indebtedness.
NOW THEREFORE, in pursuance of said agreement and in consideration of the
sum of Ten ($10.00) Dollars and other good and valuable consideration each to
the other in hand paid, receipt of which is hereby acknowledged, the parties
hereto mutually covenant and agree that the Indebtedness evidenced in that
certain note and first renewal and extension in the total amount of $400,000.00
is hereby divided equally so as to hereinafter constitute two notes each of a
principal amount of $200,000.00 (hereinafter referred to together as the
"Notes"), which Notes evidence an original principal indebtedness of Four
Hundred Thousand ($400,000.00) Dollars.
The terms of payment of the Indebtedness evidenced by that certain INTEREST
ONLY NONRECOURSE PROMISSORY NOTE AND SECURITY AGREEMENT, dated February 23,
2003, is hereby modified and extended, and that note restated, as follows.
FOR VALUE RECEIVED, the undersigned Maker promises to pay to the order of
Holder at his principal office, or at such other place as the Holder may from
time to time designate in writing, the principal sum of the Indebtedness of FOUR
HUNDRED THOUSAND DOLLARS ($ 400,000.00) payable in the following manner:
1. Interest only at the rate of eight percent (8.0%) per annum on the
principal of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) shall be due and payable
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on the first day of the first month after the date of this Note Modification
Agreement, with the entire unpaid balance of the principal of TWO HUNDRED
THOUSAND DOLLARS ($200,000.00) with interest thereon to be paid in full on the
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date one (1) year from the date of the FIRST EXTENSION AND RENEWAL OF INTEREST
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ONLY NONRECOURSE PROMISSORY NOTE AND SECURITY AGREEMENT, dated February 23, 2004
(hereinafter referred to as "One Year Term Note"), on February 23, 2005. This
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One Year Term Note is delivered and accepted not in payment but for the purpose
of and in consideration of the extension of time of payment of one half of the
original Interest Only Nonrecourse Promissory Note and Security Agreement. This
Note Modification Agreement incorporates by specific reference that certain
Interest Only Nonrecourse Promissory Note and Security Agreement, dated February
23, 2003, by and between its Maker, H.E.R.C. Products Incorporated and its
Holder and Secured Party, R. Xxxx Xxxxxxxxx, and specifically incorporates all
the terms, conditions and secured party interests stated therein as modified
hereby.
2. Interest only at the rate of eight percent (8.0%) per annum on the
principal of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) shall be due and payable
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on the first day of the first month after the date of this Note Modification
Agreement, with the entire unpaid balance of the principal of TWO HUNDRED
THOUSAND DOLLARS ($200,000.00) with interest thereon to be paid in full on the
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date three (3) years from the date of the FIRST EXTENSION AND RENEWAL OF
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INTEREST ONLY NONRECOURSE PROMISSORY NOTE AND SECURITY AGREEMENT, dated February
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23, 2004 (hereinafter referred to as "Three Year Term Note"), on February 23,
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2007. This Three Year Term Note is delivered and accepted not in payment but for
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the purpose of and in consideration of the extension of time of payment of one
half of the original Interest Only Nonrecourse Promissory Note and Security
Agreement. This Note Modification Agreement incorporates by specific reference
that certain Interest Only Nonrecourse Promissory Note and Security Agreement,
dated February 23, 2003, by and between its Maker, H.E.R.C. Products
Incorporated and its Holder and Secured Party, R. Xxxx Xxxxxxxxx, and
specifically incorporates all the terms, conditions and secured party interests
stated therein as modified hereby.
It is hereby expressly agreed that should any default be made in payment of
any of the principal and interest on the One Year Term Note or the Three Year
Term Note on any day whereon the same, or either of them, is payable as above
expressed, or in the performance or observance of any of the other covenants,
terms or conditions of the Security Agreement or of any other instruments now or
hereafter securing these Notes, the balance of said principal sum of
Indebtedness, with all arrearages of interest thereon, shall, at the option of
the Holder of these Notes, become and be due and payable immediately, anything
contained to the contrary thereof in any ways notwithstanding, time being of the
essence.
By its acceptance hereof, Holder, for himself and his successors and
assigns, as the owner and holder hereof, agrees that no judgment, order, or
execution entered in any suit, action, or proceeding, either legal or equitable,
hereon or on the Security Agreement shall be enforced personally against the
undersigned duly authorized corporate officer or against any officer, director,
stockholder, partner, or principal, disclosed or undisclosed, of the
undersigned, for the purpose of obtaining satisfaction and payment of the debt
evidenced hereby; provided, however, that nothing herein contained shall limit
or be construed to limit or impair the enforcement against the property
encumbered by the Security Agreement of the rights and remedies of Holder and
his successors and assigns created under these Notes, the Security Agreement, or
under any other instrument executed in connection with this Indebtedness.
This Note shall be construed according to the laws of the State of Virginia.
IN WITNESS WHEREOF, the parties hereto have caused their names signed and
seals affixed hereto as of the day and year first written above.
MAKER: H.E.R.C. Products Incorporated
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/s/ S. Xxxxxx Xxxx
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S. Xxxxxx Xxxx, Chief Executive Officer
HOLDER: R. Xxxx Xxxxxxxxx
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/s/ R. Xxxx Xxxxxxxxx
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R. Xxxx Xxxxxxxxx
