EXHIBIT 10.51
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PROMISSORY NOTE
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$350,000.00 October 10, 2001
Lake Oswego, Oregon
FOR VALUE RECEIVED, TSET, INC., a Nevada Corporation (the "Borrower"),
hereby promises to pay to the order of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Lender"), at
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, or such other place or places
as he may hereafter designate to the Borrower, in lawful money of the United
States of America, the original principal sum of Three Hundred Fifty Thousand
Dollars (US $350,000.00), together with accrued interest on the unpaid principal
balance hereof from the date of this Note until all amounts due and payable
hereunder are paid in full.
Except as otherwise provided herein, interest shall accrue as of the date
of this Note and shall be calculated on the entire principal sum outstanding
from time to time at the IRS Midterm Rate per annum. The entire principal amount
and all accrued interest shall be due and payable by the Borrower on June 30,
2006. The Borrower shall pay installments of principal and interest in an amount
equal to Twenty Thousand Dollars (US $20,000.00) in cash quarterly in arrears.
The first installment payment under this Note shall be due on March 31, 2002 and
each subsequent installment payment shall be due on the last day of each
corresponding quarter thereafter. Any installment of principal or interest due
under this Note which is not promptly paid by the tenth (10th) calendar day
following the applicable due date, such payment shall bear interest at the rate
of the IRS Midterm Rate plus five percent (5%) per annum commencing on the date
immediately following the day upon which the payment was due until the amount of
any such payment is paid to the Lender in full. In addition, in the event the
Borrower fails to make any installment payment of principal or interest due
under this Note which is not promptly paid by the tenth (10th) day following the
applicable due date, the Borrower shall grant to the Lender a fully vested and
immediately exercisable three (3) year option to purchase ten thousand (10,000)
shares of the Borrower's common stock, par value $0.001 per share (the "Common
Stock"), at a purchase price per share equal to the closing price of the
Borrower's Common Stock as of the date such installment payment was due. Failure
to make required quarterly installments will only be considered an Event of
Default (as defined herein) upon the failure by the Borrower to timely make
three (3) quarterly installments under this Note. Upon the occurrence of any
Event of Default, (as defined herein) by the Borrower of any term or provision
of this Note, all sums outstanding under this Note shall thereupon immediately
bear interest at the rate of the IRS Midterm Rate plus five percent (5%) per
annum until all outstanding amounts owing to the Lender under this Note have
been paid in full. The Borrower does not intend or expect to pay, nor does the
Lender intend or expect to charge, collect or accept, any interest greater than
the highest legal rate of interest which may be charged under any applicable
law. Should the acceleration hereof or any charges made hereunder result in the
computation or earning of interest in excess of such legal rate, any and all
such excess shall be and the same is hereby waived by the Lender, and any such
excess shall be credited by the Lender to the principal balance hereof.
If any amount hereunder is payable on a day which is a Saturday, Sunday,
legal holiday or a day on which banking institutions in Lake Oswego, Oregon are
authorized or required by law or by local proclamation to close, the due date
thereof shall be extended to the next succeeding business day and interest
thereon shall accrue during the period of such extension at the rate provided
herein.
At the option of the Lender, all sums advanced hereunder together with
accrued interest thereon shall become immediately due and payable, without
notice or demand, upon the occurrence of any one or more of the following events
of default (an "Event of Default"): (a) failure to timely make three (3)
quarterly installments of principal and interest due under this Note; (b) the
commencement of any proceedings under any bankruptcy laws of any jurisdiction or
under any insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter
in effect (whether in law or equity) is filed by or against the Borrower or for
all or any part of its property; or (c) in the event the Borrower receives cash
gross proceeds from a single or series of financings during the term of this
Note in an amount equal to or greater than Ten Million Dollars (US
$10,000,000.00). The Borrower's failure to timely make the Initial Payment, as
defined in Section 7 of the Agreement to which this Note is attached as Exhibit
B, shall be counted as one of the missed installments for purposes of the clause
(a) of this paragraph in determining the occurrence of an Event of Default.
The Borrower and any endorsers, sureties, guarantors, and assignors of
this Note (including any other persons ever liable for payment for any amounts
due hereunder) hereby jointly and severally waive notice, presentment, demand
for payment, protest, notice of protest and nonpayment or dishonor, diligence in
collecting amounts due hereunder, grace, and all other formalities of any kind
whatsoever, and consent to all extensions without notice for any periods of time
and partial payments, all without prejudice to the Lender. No failure, delay, or
omission by the Lender or any holder of this Note in exercising any right,
power, or remedy (collectively, "right") hereunder shall operate as a waiver or
relinquishment thereof, nor shall any single or partial exercise of any such
right preclude any other or further exercise thereof or the exercise of any
other right hereunder. The Lender's rights hereunder are cumulative and not
exclusive of any other rights provided at law or in equity.
The Lender shall have the right to assign this Note or payments of amounts
due hereunder. The Borrower shall have the right to assign this Note in whole or
in part as long as the Borrower remains liable for all sums due hereunder.
If this Note becomes in default and is placed in the hands of an attorney,
the Borrower agrees to pay any and all fees, costs, charges and expenses
incurred by the Lender, including, but not limited to, reasonable attorney's
fees; provided, however, that no such payments by the Borrower shall be
construed as interest or finance charges hereunder for purposes of determining
the maximum lawful rate of interest payable hereunder.
The principal amount of this Note may be prepaid in whole or in part at
any time prior to the maturity of this Note without premium, penalty, or fee.
Each prepayment of principal shall be credited first to accrued interest and
then to reduce the unpaid principal amount hereof. No partial prepayment of
principal shall act to suspend, postpone or waive any regularly scheduled
payment of interest due under this Note.
This Note shall be construed and enforced according to the laws of the
State of Nevada, excluding all principles of choice of laws, conflict of laws or
comity. Each person now or hereafter becoming obligated for the payment of the
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indebtedness evidenced by this Note hereby consents to personal jurisdiction and
venue in Clackamas County, Oregon, in the event of any litigation in any way
arising out of the loan evidenced hereby.
The terms of this Note may not be changed orally. This Note shall be
binding on the successors and assigns of the Borrower. The Borrower shall not
assign this Note nor delegate any of its obligations hereunder without the
Lender's prior written consent.
Any notice required or permitted hereunder shall be provided to the Lender
at the address first written above, and any similar notice to the Borrower shall
be provided to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
(unless the Borrower provides written notice to the Lender of any different
address). The Borrower shall notify the Lender in writing of the street address
of its physical offices, whether in Lake Oswego or elsewhere. Notices provided
hereunder shall be given in writing and shall be deemed given when delivered in
person, when sent by facsimile or other electronic transmission (with
confirmation of delivery or answerback to be attached), three days after being
sent via express or courier delivery, or ten (10) days after being sent via
registered or certified mail (return receipt requested), in all cases with
postage and delivery charges prepaid by the sender.
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT WHICH IT MAY HAVE TO A TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION BASED HEREON, OR ARISING OUT OF, UNDER OR IN ANY WAY CONNECTED WITH
THE DEALINGS BETWEEN THE LENDER AND THE BORROWER, THIS NOTE, OR ANY DOCUMENTS
EXECUTED IN CONNECTION HEREWITH, OR THE FINANCING CONTEMPLATED HEREBY, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF ANY PARTY HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER EXTENDING THE LOAN EVIDENCED
BY THIS NOTE.
TSET, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
