PROMISSORY NOTE
$150,000 JULY 1, 1997
WHEREAS, Xxxxx Xxxxxxx (the "Lender") desires to loan to Data Net
International, Incorporated, a California Corporation (the "Borrower") and
the Borrower desires to borrow from the Lender, the principal amount of
$150,000 pursuant to the terms and conditions contained in this promissory
Note (the "Note").
NOW, THEREFORE, for good and valuable consideration herein
contained, lender xxxxxx agrees to loan to Xxxxxxxx, and Xxxxxxxx hereby
promises to pay to the order of lender or his successors or assignees, the
principal amount of one hundred fifty thousand ($150,000) dollars on the
following schedule:
PAYMENT DATE PRINCIPAL PAYMENT
------------ ------------------
First Installment--November 31, 1997 $ 50,000
Second Installment--February 28, 1998 100,000
Provided, however, that (i) in the event that the Borrower in its sole
discretion consummates a qualified financing (as hereinafter defined) prior
to the payment of the first installment, $50,000 of the proceeds of such
qualified financing shall be immediately applied to repayment of the first
installment; and (ii) in the event that Borrower in its sole discretion
consummates a qualified IPO (as hereinafter defined) prior to payment of the
second installment, $100,000 of proceeds of such qualified financing shall be
immediately applied to prepayment of second installment.
For purposes of this Note, (i) a Qualified Financing shall mean a
subordinated debt or equity financing transaction or a series of subordinated
or equity financing transactions, which yield gross proceeds to the Borrower
or any of its subsidiaries of at least $1,000,000 and (ii) a Qualified IPO
shall mean an initial underwritten offering by the Borrower of its securities
to the public pursuant to a registration statement filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended.
Xxxxxxxx also promises to pay interest on the $150,000 principal
amount of this Note at a rate of ten percent (10%) per
annum (on the basis of a 360 day year and actual number of days elapsed)
from and including the date hereof until such principal sum shall be paid in
full according to this formula of (10%) per annum. Beginning July 1st 1997,
interest accrued shall be included in the 1st and 2nd installments indicated
above.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in immediately
available funds to Lender, at his office located at c/o Glasgal
Communications Inc., 00 Xxxxxxxx Xxx, Xxxxxx, Xxx Xxxxxx 00000 or at such
other place as shall be designated in writing by Lender for such purpose.
Borrower hereby waves diligence, presentment, dishonor, demand,
notice and protest and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder.
Xxxxxxxx promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note.
The Borrower reserves the right to prepay the unpaid principal
balance of this Note in whole, at any time, without penalty or premium.
In the event that a qualified financing does not occur prior to
November 30, 1997, and as a result this Note is not paid in full on or prior
to Feb. 28, 1998, this Note shall be converted into such number of shares of
the common stock of the Borrower as shall equal the principal amount then
outstanding plus accrued interest divided by a fraction, the number of which
shall equal the greater of $20,000,000 or the fair market value of the
Borrower at the time of such conversion, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
conversion (the "Common Stock").
Whenever any payment on this Note shall be stated to be due on a
Saturday, a Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law, regulation or executive order to
remain closed (a "Legal Holiday"), such payments shall be made on the next
succeeding day which is not a Legal Holiday and such extension of time shall
be included in the computation of the payment of interest on this Note.
The terms of this Note are not subject to amendment except by
written agreement of Xxxxxx and Xxxxxxxx and Borrower may not assign its
obligations hereunder without the prior written consent of Xxxxxx.
This Note shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without regard to
principles of conflicts of laws.
IN WITNESS WHEREOF, Xxxxxxxx has duly executed this Note, the
day and year first above written.
DATA NET INTERNATIONAL, INCORPORATED
By: /s/ XXX XXXXXXXX
---------------------------------
Name: Xxx Xxxxxxxx
Title: Chief Executive Officer
By: XXXXX XXXXXXX
Signed: /s/ XXXXX XXXXXXX
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