Unassociated Document


    
      

    

    
      Exhibit
4.6

      


      THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE LENDER THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH
ACT.

      


      SECURED PROMISSORY
NOTE

      


      
        	 
      	 
      	
                Date
      of Issuance

              
	
                $1,750,000

              	 
      	
                July
      15, 2008

              


      

      


      


      FOR VALUE
RECEIVED, La Jolla Cove Investors, Inc., a California corporation (the
“Company”), hereby promises to pay Espre Solutions, Inc. (the “Lender”), the
principal sum of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000)
(the “Principal Amount”), plus interest calculated pursuant to Section 1
below. Unless earlier paid under the terms hereof, the principal and
accrued interest shall be due and payable by the Company on demand by the Lender
at any time after January 30, 2011 (the “Maturity Date”).

      


      This
Secured Promissory Note (the “Note”) is issued in connection with that
certain Securities Purchase Agreement between the parties hereto, dated as
of the date hereof (the “Purchase Agreement”), and capitalized terms not defined
herein shall have the meaning set forth in the Purchase Agreement.

      


      1.            
Interest.  The
Company promises to pay interest to Lender at the rate of Six and One-Quarter
Percent (6 1⁄4 %) per annum, simple interest (subject to adjustment as provided
below) (the “Interest Rate”), on the outstanding principal amount of this Note,
which interest shall be calculated from the date of this Note, until the date on
which all amounts due and payable on this Note are paid in full or this Note is
otherwise cancelled, (the “Payoff Date”).  Interest hereunder shall be
paid on a monthly basis, commencing on the 15th day of
the month following the month of issuance of this Note. All accrued and
unpaid interest shall be due and payable on the Payoff Date.  All
computations of interest shall be made on the basis of a year of 365 or 366
days, as the case may be, for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest is
payable.  Nothing contained in this Note shall require the Company at
any time to pay interest at a rate exceeding the maximum rate allowable under
California law and any payments in excess of such maximum shall be refunded to
the Company or credited to reduce the principal amount
hereunder.  Notwithstanding the foregoing, in the event that the
Lender’s Common Stock (the “Common Stock”) shall trade on the Trading Market (as
defined in the Debenture) or the over the counter market via the “pink sheets”
at a price per share that is $0.06 per share or lower at any time during the six
month period commencing on the date hereof and ending on the six month
anniversary of the date hereof (as adjusted for any stock splits, stock
dividends, combinations, subdivisions, recapitalizations or the like), then the
Interest Rate shall immediately be decreased to Four and Three-Quarters Percent
(4 3⁄4 %) and shall remain at such level for the duration of this
Note.

       

      
        	 
      	 
      	 
      
	
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      2.             Payment.  All
payments shall be made in lawful money of the United States of America at the
principal office of the Company, or at such other place as the holder hereof may
from time to time designate in writing to the Company.  Payment shall
be credited first to Costs (as defined below), if any, then to accrued interest
due and payable and any remainder applied to principal.  Prepayment of
principal, in part or in full, together with accrued interest, may be made from
time to time in the sole discretion of the Company without the Lender’s
consent.

      


      3.          
  Prepayment
Obligation.  Notwithstanding the option of the Company to
prepay any portion of this Note, as set forth in Section 2 hereof, the Company
shall prepay, on a monthly basis commencing 180 days from the date of issuance
of this Note, on any date(s) of such month during which this Note remains
outstanding (each date referred to herein as the “Periodic Prepayment Date”), an
amount equal to not less than $500,000 (or such lesser amount that equals the
remaining outstanding principal and accrued and unpaid interest under this
Note), with the amount, if any, in excess of such sum to be determined by and in
the sole and absolute discretion of the Company, until all principal and accrued
and unpaid interest under this Note has been paid (the “Prepayment
Obligation”).  The Company’s obligation to satisfy any of the
Prepayment Obligation on a Periodic Prepayment Date or otherwise make any
prepayment required under this Section 3 shall be subject to the satisfaction of
each of the following conditions on each Periodic Prepayment Date:

      


      3.1          
The Company may immediately sell all of the Common Stock Issued at Conversion
(as defined in the Debenture) pursuant to Rule 144 promulgated by the SEC (as
defined in the Debenture) pursuant to the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC having substantially the same effect as such Rule;

      


      3.2          
No Event of Default (as defined in the Debenture) has occurred under the
Debenture;

       

      3.3          
The average Volume Weighted Average Price (as defined in the Debenture) per
share of the Lender’s Common Stock for every period of ten consecutive Trading
Days (as defined in the Debenture) during the term of this Note shall not be
less than $0.062 per share (as adjusted for any stock splits, stock dividends,
combinations, subdivisions, recapitalizations or the like); and

      


      3.4          
The Lender shall have honored all Conversion Notices (as defined in the
Debenture) submitted by the Holder (as defined in the Debenture) within the
applicable time period set forth in the Debenture.

      


      The
amount of any such prepayment made by the Company under the terms of this
Section 3 (each such prepayment referred to herein as a “Periodic Prepayment”)
shall be credited first to Costs, if any, then to accrued interest due and
payable under this Note and the remainder applied to principal.  Any
prepayment made by the Company under this Note in excess of any otherwise
required Periodic Prepayment may be applied to any future required Periodic
Prepayment at the option of the Company, subject to the sole and absolute
discretion of the Company.  In the event that the Company fails to
deliver any Periodic Prepayment that is otherwise required under the terms of
this Section 3 or otherwise fails to satisfy the Prepayment Obligation, the
Lender’s sole and exclusive remedy shall be limited to the Interest Rate being
increased by 0.25 percentage points per Periodic Prepayment required under this
Section 3 that is not paid by the Company to the Lender, provided however, that
in no event shall the Interest Rate exceed an amount equal to twelve and
one-half percent (12.5%).  In no event shall any failure by the
Company to (i) pay any Periodic Prepayment, or (ii) otherwise satisfy the
Prepayment Obligation as required hereunder give any right to the Lender to
collect upon the Collateral or otherwise collect any outstanding sums under this
Note.

       

      
        	 
      	 
      	 
      
	
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      4.           
 Recourse.  Each
party hereto accepts and agrees that this Note is a full recourse promissory
note and that subject to the terms of this Note, Lender may exercise any and all
remedies available to it under law.

      


      5.            
Security
Interest.

      


      5.1          
To secure the payment and performance of the Company’s obligations under this
Note, provided however that any obligations of the Company to prepay any amounts
under this Note pursuant to Section 3 are not so secured, the Company hereby
grants to Lender a security interest in the Company’s entire right, title, and
interest in and to all of the following, wherever located and whether now
existing or owned or hereafter acquired or arising (collectively, the
“Collateral”):

      


      (a)           all
accounts, accounts receivable, contract rights, rights to payment, letters of
credit, documents, securities, promissory notes, debentures, money, and
investment property, whether held directly or through a securities intermediary,
and other obligations of any kind owed to the Company, however
evidenced;

      


      (b)           all
inventory, including, without limitation, all materials, components, work in
progress, finished goods, merchandise, and all other goods which are held for
sale, lease or other disposition or furnished under contracts of service or
consumed in the Company’s business;

      


      (c)           all
equipment, including, without limitation, all machinery, furniture, furnishings,
fixtures, tools, parts, automobiles, trucks, and other vehicles, appliances,
computer and other electronic data processing equipment and other office
equipment, computer programs and related data processing software, and all
additions, substitutions, replacements, parts, accessories, and accessions to
and for the foregoing;

      


      (d)           all
books, records and other written, electronic or other documentation in whatever
form maintained by or for the Company in connection with the ownership of its
assets or the conduct of its business; and

      


      (e)           all
products and proceeds, including insurance proceeds, of any and all of the
foregoing.

       

      
        	 
      	 
      	 
      
	
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      Notwithstanding
the foregoing, no security interest is granted in any contract rights if such
grant causes a default enforceable under applicable law or if a third party has
the right enforceable under applicable law to terminate the Company’s rights
under or with respect to any such contract and such third party has exercised
such right of termination.

      


      5.2           The
security interest on the Collateral granted by this Note shall continue and
remain in effect until terminated pursuant to subsection 5.4 below.

      


      5.3           The
Company shall execute any further documents reasonably requested by Lender,
which are necessary or appropriate to perfect Lender’s security interest in the
Collateral.

      


      5.4           Upon
the Payoff Date, the security interest granted pursuant to this Section 5 shall
terminate, and Lender shall promptly execute and deliver to the Company such
documents and instruments reasonably requested by the Company as shall be
necessary to evidence termination of all security interests given by the Company
to Lender hereunder.

      


      5.5           So
long as an Event of Default does not exist, the Company shall have the right to
possess the Collateral, manage its property and sell its inventory in the
ordinary course of business.

      


      6.           
 Event of
Default.  An “Event of Default” shall exist under this Note
upon the happening of a failure of the Company to pay the outstanding Principal
Amount and all other outstanding sums under this Note, including accrued and
unpaid interest thereon, on the Maturity Date, provided that such sums have not
previously been paid, at the Company’s sole option, prior to the Maturity Date,
which failure is not cured within 20 days after the Company’s receipt of written
notice thereof sent by Lender to the Company.  Any failure by the
Company to (i) pay any Periodic Prepayment that may otherwise be due under this
Note, or (ii) satisfy the Prepayment Obligation shall not be an Event of Default
under this Note.  Upon the occurrence of an Event of Default, Lender
shall have all of the rights and remedies afforded by the Uniform Commercial
Code as from time to time in effect in the State of California or afforded by
other applicable law.

      


      7.           
 Subordination.  The
indebtedness evidenced by this Note shall be subordinated to any Senior
Indebtedness of the Company.  For the purposes of this Note, “Senior
Indebtedness” shall mean the principal of (and premium, if any) and unpaid
interest on, indebtedness of the Company, or with respect to which the Company
is a guarantor, to banks, insurance companies, lease financing institutions or
other lending or financial institutions regularly engaged in the business of
lending money, which is for money borrowed (or purchase or lease of equipment in
the case of lease financing) by the Company, and which is approved by the Board
of Directors of the Company, whether or not secured, and whether or not
previously incurred or incurred in the future.  Senior Indebtedness
shall include all obligations of the Company pursuant to any modifications,
renewals and extensions of such Senior Indebtedness.  Lender
acknowledges that the Company may incur additional Senior Indebtedness and that
such Senior Indebtedness shall be senior in repayment preference to the
Note.  Upon written request of the Company, Lender agrees to execute a
subordination agreement from any lender of Senior Indebtedness in order to give
effect to this Section 7.

       

      
        	 
      	 
      	 
      
	
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      8.           
 Amendments and
Waivers; Cure Period.  This Note may not be amended without the
prior written consent of each of the Company and the Lender.  Any
waiver by the Company or the Lender of a breach of any provision of this Note
shall not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Note.  The
failure of the Company or the Lender to insist upon strict adherence to any term
of this Note on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Note.  Any waiver by the Company
or the Lender must be in writing.  Any amendment or waiver effected in
accordance with this Section 8 shall be binding upon Lender and Lender’s
successors and assigns.  Any party to this Note shall have a cure
period of not less than thirty (30) days after receipt of written notice of any
alleged breach or default under the terms of this Note to cure such alleged
breach or default.

      


      9.           
 Transmittal of
Notices.  Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon confirmation of receipt, when sent
by facsimile; (iii) three (3) days after being sent by U.S. certified mail,
return receipt requested, or (iv) one (1) day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

       

      
        	
                 
      

              	
                (1)

              	
                If
      to the Lender, to:

              


      

      


      Espre
Solutions, Inc.

      5700 W.
Plano Parkway, Suite 2600

      Plano,
Texas 75093

      Telephone:      214-254-3708

      Facsimile:        214-254-3709

      


      
        	
                 
      

              	
                (2)

              	
                If
      to the Company, to:

              


      

      


      La Jolla
Cove Investors, Inc.

      1150
Silverado Street, Suite 220

      La Jolla,
California 92037

      Telephone:     858-551-8789

      Facsimile:       858-551-8779

      


      Each of
the Lender or the Company may change the foregoing address by notice given
pursuant to this Section 9.

      


      10.           Successors and
Assigns.  This Note applies to, inures to the benefit of, and
binds the successors and assigns of the parties hereto.  Neither the
Lender nor the Company may assign its rights under this Note without the written
consent of the other party to this Note, provided, however, that the Company may
assign its obligations under this Note to any Affiliate of the Company in the
sole and absolute discretion of the Company, without any prior consent by the
Lender, provided that such transferee or assignee agrees in writing to be bound
by and subject to the terms and conditions of this Note.  Upon any
such transfer of this Note by the Company or the Lender, the Lender shall, upon
notice, surrender this Note to the Company for reissuance of a new note to the
transferee.  Any transfer of this Note may be effected only pursuant
to the terms hereof and by surrender of this Note to the Company and reissuance
of a new note to the transferee.  The Lender and any subsequent holder
of this Note receives this Note subject to the foregoing terms and conditions,
and agrees to comply with the foregoing terms and conditions for the benefit of
the Company and any other Lenders.

       

      
        	 
      	 
      	 
      
	
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      11.           Officers and Directors Not
Liable.  In no event shall any officer or director of the
Company be liable for any amounts due and payable pursuant to this
Note.

      


      12.           Expenses.  Should
any party hereto employ an attorney for the purpose of enforcing or construing
this Note, or any judgment based on this Note, in any legal proceeding
whatsoever, including insolvency, bankruptcy, arbitration, declaratory relief or
other litigation, the prevailing party shall be entitled to receive from the
other party or parties thereto reimbursement for all reasonable attorneys' fees
and all reasonable costs, including but not limited to service of process,
filing fees, court and court reporter costs, investigative costs, expert witness
fees, and the cost of any bonds, whether taxable or not (collectively, “Costs”),
and that such reimbursement shall be included in any judgment or final order
issued in that proceeding.  The "prevailing party" means the party
determined by the court to most nearly prevail and not necessarily the one in
whose favor a judgment is rendered.

      


      13.           Remedies Not
Waived.  No course of dealing between the parties hereto or any
delay in exercising any rights hereunder shall operate as a waiver by such
party.

      


      14.           Governing
Law.  This Note shall be governed by and construed under the
laws of the State of California as applied to other instruments made by
California residents to be performed entirely within the State of
California.  With respect to any suit, action or proceedings relating
to this Note, each of the Lender and the Company irrevocably submits to the
exclusive jurisdiction of the courts of the State of California sitting in San
Diego and the United States District Court located in the City of San Diego and
hereby waives, to the fullest extent permitted by applicable law, any claim that
any such suit, action or proceeding has been brought in an inconvenient
forum.  Subject to applicable law, each of the Company and the Lender
agrees that final judgment against it in any legal action or proceeding arising
out of or relating to this Note shall be conclusive and may be enforced in any
other jurisdiction within or outside the United States by suit on the judgment,
a certified copy of which judgment shall be conclusive evidence thereof and the
amount of the indebtedness, or by such other means provided by law.

       

      
        	 
      	 
      	 
      
	
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      15.           Counterparts.  This
Note may be executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.  Facsimile executions of this Note shall be deemed
original.

      


      IN
WITNESS WHEREOF, the parties hereto have duly caused this Note to be executed
and delivered on the date first above written.

       

       

      
        
          	 
      	
                  LA
      JOLLA COVE INVESTORS, INC.

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  By: 
      

                	/s/
      Travis W. Huff  
	 
      	
                  Name: 
      

                	Travis
      W. Huff  
	 
      	
                  Its: 
      

                	Portfolio
      Mgr/VP  
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  ESPRE
      SOLUTIONS, INC.

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  By: 
      

                	/s/
      Peter Leighton  
	 
      	
                  Name: 
      

                	Peter
      Leighton  
	 
      	
                  Its: 
      

                	President


        

      

       

    

    
       

      
        	 
      	 
      	 
      
	
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