EXHIBIT 10.2
RELEASE AND SETTLEMENT AGREEMENT
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This Release and Settlement Agreement ("Settlement Agreement") is made and
entered into effective as of November 1, 1997, by and between U.S. Wireless
Data, Inc, (a Colorado Company) 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000
(referred to as "Company"), and entrenet Group, LLC, 0000 Xx Xxxxxxx Xxxxxxx,
Xxxxx X, Xxxxx Xxxx, Xxxxxxxxxx 00000 (referred to as "entrenet").
RECITALS
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A. Company and entrenet entered into a Engagement Agreement dated June 3,
1997, whereby entrenet agreed to perform certain services for Company
(hereinafter referred to as the "Engagement Agreement").
B. Disputes as to the amounts due to entrenet by Company under the
Engagement Agreement as well as disputes regarding Convertible Notes
and warrants for the acquisition of stock in Company pursuant to the
Engagement have arisen between Company, and entrenet (the "Disputes").
C. The purpose of this Settlement Agreement is to provide an agreement
that will resolve all Disputes between the interested parties.
D. The parties have attempted to negotiate a resolution of these Disputes
which, if not resolved, would likely have resulted in arbitration
and/or litigation.
E. The parties have now agreed to settle the Disputes. The settlement
allows the parties to avoid substantial expenditures, the burden of
further negotiations, and the likelihood of arbitration or litigation,
all on the terms and conditions set forth below.
AGREEMENT
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NOW, THEREFORE, in consideration of the payments, mutual covenants, warranties
and representations set forth below, the parties hereto do hereby agree to
settle the Disputes among them on the following terms and conditions:
1. Acknowledged Amount Owed. The parties acknowledge and agree that the
entire amount due under the Engagement Agreement from Company to entrenet is
$150,000 in the form of a 10% Convertible Subordinated Note due June 2, 1998 and
$40,000 in the form of 280,000 shares of Common Stock of the Company to which
entrenet acquired a binding fully vested and unconditional contractual right as
of July 25, 1997 (collectively referred to as the "Debt"). Share certificates
representing such Common Stock shall be delivered to entrenet (See * below).
Payment of the Debt will result in full payment and full satisfaction of all
amounts and obligations due entrenet from Company under the Engagement
Agreement.
(*) as soon as practicable following approval of the proposed increase in
Common Stock which will be submitted to shareholders at the Company's next
Annual Meeting of Shareholders.
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Initial: entrenet /s/ JB Company /s/ EK
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2. The Corporation's Obligation to Register. If the Corporation at any
time proposes to initiate a registration of its securities under the Securities
Act of 1933, as amended (the "Securities Act") and thereafter to register any of
its securities under the Securities Act (other than a registration effected
solely to implement an employee benefit plan, a transaction to which Rule 145 of
the Commission is applicable or any other form or type of registration in which
Registrable Securities cannot be included pursuant to Commission rule or
practice), it will give written notice to entrenet of its intention to do so. If
such registration is proposed to be on a form which permits inclusion of the
Stock issued to entrenet pursuant to this Settlement Agreement or the Stock
underlying the conversion of this Note issued to entrenet pursuant to this
Settlement Agreement, upon the written request from any Holder within 20 days
after transmittal by the Corporation to the Holder of such notice, the
Corporation will, subject to the limits contained in this Section, use its best
efforts to cause all such Stock underlying the conversion of this Note to be
registered under the Securities Act and qualified for sale under any relevant
state blue sky law, all to the extent requisite to permit such sale or other
disposition by Holder of the Stock so registered. Notwithstanding any other
provision of this Section, if the underwriter managing such registration
notifies the Holder in writing that market or economic conditions limit the
amount of securities which may reasonably be expected to be sold, Holder will at
a minimum be allowed to register their Stock pro rata based on the ratio of the
total number of shares of Stock to be offered for sale by the Corporation to the
total shares outstanding just prior to the offering. The Corporation and
entrenet will enter into a customary registration agreement setting forth the
terms of such registration at the time the Corporation proposes to register any
shares for entrenet.
3. Termination of Engagement Agreement. Upon execution of this
Settlement Agreement by all parties, the Engagement Agreement shall be deemed
terminated and void as of the effective date of this Settlement Agreement.
Thereafter, no party shall have any further obligation or liability, whether
accrued or potentially to accrue under the Engagement Agreement, including but
not limited to any further obligation by Company to entrenet or its affiliates
for (i) the payment of any monies to entrenet under the Engagement Agreement or
(ii) the issuance of any Company equity.
4. Mutual Release. Except for the provisions of this Settlement
Agreement, all parties to this Agreement on behalf of their representatives,
agents, servants, employees, heirs, successors, administrators, executors,
attorneys, co-partners, co-venturers, insurers, stockholders, predecessors,
officers, directors, shareholders and assigns, hereby forever releases and
discharges all other parties to this Agreement and each of their
representatives, agents, servants, employees, officers, administrators,
executors, co-partners, co-venturers, directors, shareholders, partners, heirs,
successors, assigns, insurers, predecessors, and attorneys of and from any and
all present and future obligations (accrued or unaccrued), claims, demands,
actions, causes of actions, debts, liabilities, agreements, or losses of any
type, whether known or unknown, suspected or unsuspected, fixed or contingent,
which have arisen or may hereafter arise out of or are in any way connected with
any of the following: any claim to monies owed by or equity ownership or rights
to acquire equity ownership in Company, the Engagement Agreement, and the
Disputes (collectively, the "Released Claims").
5. No Disparagement and Covenant Not to Xxx. All parties to this
Agreement shall refrain from making any public statements or statements to third
parties which demean any of the other parties to this Agreement or which call
into question the ethics or competence of any of the other parties to this
Agreement. All parties to this Agreement covenant and agree never to commence,
voluntarily aid in any way or prosecute or participate in any way in any action
or proceeding based upon the Released Claims. If any such action or proceeding
is commenced, this Release may be pleaded as a full and complete defense thereto
and/or such conduct shall be deemed a breach of this agreement.
Initial: entrenet /s/ JB Company /s/ EK
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6. Section 1542. All parties to this Agreement agree that the waivers
and releases provided for in this Settlement Agreement shall be effective as a
full and final release of and from all matters set forth in this Settlement
Agreement, and, in furtherance of this intention, each party hereby acknowledges
and agrees that it is familiar with and has been advised by legal counsel
concerning the legal effect of California Civil Code Section 1542, which
provides as follows:
A general release does not extend to claims that the creditor does not
know or suspect to exist in his favor at the time of executing this
release, which if known by him, must have materially affected his
settlement to debtor.
7. Advice of Counsel. All parties to this Agreement being aware of, and
having been advised by legal counsel as to the significance and legal effect of
Section 1542 of the California Civil Code, hereby expressly waives and
relinquishes any and all rights and benefits it may have thereunder or under any
other statute or common law principle of similar effect with respect to the
waiver and release provided for in this Settlement Agreement.
8. Unknown Facts. All parties to this Agreement hereby further
acknowledge that they are aware that they may hereafter discover facts in
addition to or different from those which they now know or believe to be true
with respect to the subject matter of this Release, but they agree that it is
each party's intention fully, finally, and forever to settle and release all of
the matters which are the subject of the waiver and release provided for herein,
notwithstanding the discovery hereafter of any additional or different facts
existing as of the date of this Settlement Agreement.
9. Affirmative Covenants. Upon execution of this Agreement by all
parties, or in accordance with Paragraph 1, Company shall deliver 280,000 shares
of the Company's Common Stock and a note in the amount of $150,000 in the form
attached as Exhibit 1, collectively as full payment and satisfaction for all
obligations under the Engagement Agreement. Payment of the 280,000 shares shall
be evidenced by the issuance of an IRS Form W-9 in the amount of $40,000 for the
1997 Calendar Year. Upon payment of the Note in cash or common stock of the
Company as a result of conversion, the Company will issue an IRS Form W-9 in the
amount of $150,000 plus accrued interest for the Calendar Year in which the
payment is made.
10. Availability of Information. entrenet hereby acknowledge that the
Company has made available to us the opportunity to ask questions of, and
receive representations from, management of the Company, concerning the business
and current condition of the Company, and to obtain any additional information,
to the extent the Company possesses such information or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of the
information provided by the Company.
11. entrenet Representations and Warranties. entrenet represent and
warrant to the Company (and understand that it is relying upon the accuracy and
completeness of such representations and warranties in connection with the
availability of an exemption for the offer and sale of the shares, the
promissory note, and the shares underlying the promissory note (hereafter the
"Securities"), from the registration requirements of applicable federal and
state securities laws) that:
Initial: entrenet /s/ JB Company /s/ EK
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a. entrenet understands that entrenet must bear the economic
risk of this investment for an indefinite period of time; that the
Securities have not been registered under the Securities Act of 1933,
as amended (the "1933 Act"), or any state securities laws and,
therefore, cannot be resold unless they are subsequently registered
under the 1933 Act and applicable state securities laws or unless an
exemption from such registration is available; that entrenet may not
resell or otherwise dispose of all or any part of the Securities,
except as permitted by law, including, without limitation, any and all
applicable provisions of this Agreement and any regulations under the
1933 Act and applicable state securities laws; that the Company will
restrict the transfer of the Securities in accordance with the
representations contained in this paragraph; that except as otherwise
provided herein, the Company does not have any present intention of
registering the Securities under the 1933 Act or of supplying the
information which may be necessary to enable us to sell any of the
Securities; and that Rule 144 under the 1933 Act may not be available
as a basis for exemption from registration of any of the shares of
Common Stock issuable hereunder or upon conversion of the promissory
note.
b. entrenet agrees that any certificate representing the
Securities or any component thereof will contain and be endorsed with
the following, or a substantially equivalent, legend:
"The Securities represented by this Certificate have not been
registered under the Securities Act of 1933 (the "Act"), and
are "Restricted Securities" as that term is defined in Rule
144 under the Act. The Securities may not be offered for sale,
sold or otherwise transferred except pursuant to an effective
registration statement under the Act, or pursuant to an
exemption from registration under the Act, the availability of
which is to be established to the satisfaction of the
Company."
c. entrenet is the only party in interest with respect to this
Agreement, and entrenet is acquiring the Securities for investment for
our own account for long-term investment only, and not with an intent
to resell, fractionalize, divide or re-distribute all or any part of
the Securities to any other person.
d. entrenet is California Limited Liability Company whose
members are all U.S. Corporations or individuals that are at least 21
years old and a citizen of the United States. entrenet has such
knowledge and experience in financial and business matters that
entrenet is fully capable of evaluating the merits and risks of the
prospective investment.
e. entrenet acknowledge that the securities offered involve a
high degree of risk and that purchase of the Securities should be only
by persons who can afford to sustain a total loss of their investment.
f. entrenet has consulted with our attorney, accountant or
investment adviser with respect to the investment contemplated hereby
and its suitability for us to the extent that entrenet have deemed
necessary.
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Initial: entrenet /s/ JB Company /s/ EK
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g. entrenet has adequate means of providing for our current
needs and personal contingencies and has no need for liquidity in
connection with this investment. entrenet has the financial ability to
bear the economic risk of this investment.
h. entrenet's overall commitment to investments, which are not
readily marketable, is not disproportionate to its net worth, and its
investment in the Company will not cause such overall commitment to
become excessive.
i. entrenet has evaluated the risks of investing in securities
described herein, and has determined that the Securities are a suitable
investment for it.
1. Mutual Warranties and Representations. Each of the parties
hereto represents and warrants that:
a. It has the right and authority to enter into and execute
this Settlement Agreement;
b. It has not sold, assigned, transferred, conveyed,
hypothecated, encumbered or otherwise disposed of any of its rights
hereunder;
c. It has been represented by independent legal counsel of its
own choice in connection with the negotiation and execution of this
Settlement Agreement and has had adequate opportunity to undertake
whatever due diligence or investigation it deemed necessary to enter
into this Settlement Agreement; and
d. It has not commenced any litigation pending with respect to
the facts, circumstances, matters or events which are the subject
matter hereof except as expressly disclosed herein, and it has not
pledged said rights as security for the performance of any obligation
or otherwise encumbered said rights.
2. No Admission of Liability. Nothing in this Settlement Agreement
constitutes an admission of liability, responsibility or the merit or lack of
merit of any claim or defense on the part of entrenet or the Company.
3. Miscellaneous.
a. Additional Documents. Each of the parties agrees to execute
and deliver, at the request of the other parties, any and all other
documents or other written instruments as may be reasonably necessary
to effectuate this Settlement Agreement.
b. Applicable Law. This Settlement Agreement shall be governed
by and construed in accordance with the laws of the State of California
applicable to contracts between California residents entered into and
to be performed entirely within the State of California.
c. Attorneys' Fees Costs/Breaches. In the event either party
hereto engages the services of an attorney to bring suit to enforce,
interpret, or otherwise construe the whole or any part of this
Agreement, or for damages on account of any breach of covenant
contained herein, or to quiet title, or to enforce any other claim or
cause of action arising out of the circumstances surrounding the
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Initial: entrenet /s/ JB Company /s/ EK
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execution of this Agreement, the prevailing party in any such
litigation shall be entitled to recover from the other, reasonable
attorneys fees and costs incurred therein as part of any judgment
awarded by the court in which such litigation is determined.
d. Counterparts. This Settlement Agreement may be executed in
separate counterparts, each of which may be executed by less than all
of the parties, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.
e. Descriptive Headings. The headings used herein are
descriptive only and for the convenience of identifying provisions, and
are not determinative of the meaning or effect of any such provisions.
f. Entire Agreement. This Settlement Agreement constitutes the
entire agreement and understanding between the parties with respect to
the subject matters herein and therein, and shall supersede and replace
any prior agreements and understandings, whether oral or written, by
and among them with respect to such matters. The provisions of this
Settlement Agreement may be waived, altered, amended or repealed in
whole or in part only upon the written consent of all parties to this
Settlement Agreement.
g. Notices. All notices, requests, demands, instructions or
other communications required or permitted to be given under this
Settlement Agreement shall be in writing and directed to the parties at
the address set forth below. Such communications shall be deemed to
have been received upon delivery, if delivered personally. If given by
prepaid telegram, or if mailed first-class, postage prepaid, or if
mailed by registered or certified mail, return receipt requested, such
communications shall be deemed to have been received seventy-two (72)
hours after such dispatch. Either party hereto may change the address
to which such communications are to be directed by giving written
notice to the other party hereto of such change in the manner above
provided.
IF for Company: IF for entrenet:
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U.S. Wireless Data, Inc. entrenet Group, LLC
Xxxxxx Xxxxxxxxx Xxxxxxx X. Xxxxxx
Chief Financial Officer Chief Financial Officer
0000 Xxxxxx Xxxxxx, Xxxxx 000 0000 Xx Xxxxxxx Xxxxxxx, Xxxxx X
Xxxxxxxxxx, XX 00000. Xxxxx Xxxx, XX 00000
h. Severability. If for any reason any provision of this
Settlement Agreement shall be determined to be invalid or inoperative,
the validity and effect of the other provisions hereof shall not be
affected thereby, provided that no such severability shall be effective
if it causes a material detriment to any party.
i. Successors and Assigns. Subject to any provisions herein
with regard to assignment, all covenants and agreements herein shall
bind and inure to the benefit of the respective heirs, executors,
administrators, successors and assigns of the parties hereto.
j. Survival. The representations, warranties, covenants and
agreements made herein shall survive the execution and delivery at this
Settlement Agreement.
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Initial: entrenet /s/ JB Company /s/ EK
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k. Construction. The parties hereto and their counsel have
reviewed this Settlement Agreement and specifically agree that any rule
of construction, to the effect that ambiguities are to be resolved
against the drafting party, shall not apply to the interpretation of
this Settlement Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Settlement Agreement
effective as of the date first written above.
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Initial: entrenet /s/ JB Company /s/ EK
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CAUTION: THIS AGREEMENT CONTAINS A RELEASE. READ BEFORE SIGNING.
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U.S. Wireless Data, Inc. entrenet Group, LLC
By: /s/ Xxxx Xxxxx By: /s/ Xxxx Xxxxxxxxxx
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Xxxx Xxxxx Xxxx Xxxxxxxxxx
Chief Executive Officer Vice President
Date Executed: 11-26-97 Date Executed: 11-26-97
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Exhibit 1
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THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY
STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED ASSIGNED OR HYPOTHECATED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING THIS
NOTE AND/OR SUCH SECURITIES, OR THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THE NOTE AND/OR SUCH SECURITIES SATISFACTORY TO THE CORPORATION
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE
QUALIFICATION REQUIREMENTS UNDER STATE LAW.
U.S. WIRELESS DATA, INC.
10%, UNSECURED and NONASSIGNABLE,
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
DUE JUNE 2, 1998
$150,000 June 3, 1997
1) Obligation. FOR VALUE RECEIVED, U.S. Wireless Data, Inc, a Colorado
corporation (hereinafter called the "Corporation"), hereby promises to pay
entrenet Group LLC (hereinafter called the "Holder") the principal sum of
One Hundred Fifty Thousand Dollars ($150,000) payable in one payment of
principal and all accrued interest due on June 2, 1998 (the "Payment
Date"), unless earlier converted pursuant to the terms of this Debenture.
Interest shall accrue on this Debenture at the rate of ten percent (10%)
per annum (based on a 360-day year, 30-day month) until payment in full of
principal.
2) Medium of Payment. The principal and interest on this promissory note (this
"Note") are payable in lawful money of the United States of America at the
Holder's address set forth below, or at such other address as the Holder
hereof may from time to time designate to the Corporation in writing.
3) Prepayment. The Corporation may not prepay this Note in whole or in part at
any time prior to due date of this Note.
1
Initial: entrenet /s/ JB Company /s/ EK
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4) Subordination.
a. Senior Indebtedness. The payment of principal and interest on this
Note is subordinated to the prior payment in full of all Senior
Indebtedness of the Corporation, whether outstanding on this date or
thereafter. Senior Indebtedness is defined as the principal of, and premium
and interest on, indebtedness of the Corporation for money borrowed from,
or the payment of which has been guaranteed to, persons, firms or
corporations which engage in lending money, including, but without
limitation, banks, trust and charitable trusts, pension trusts,
governmental lenders and other investing organizations, evidenced by notes
or similar obligations.
b. Accelerated Maturity. If this Note is declared due and payable
before its express maturity because of the occurrence of an event of
default as defined in this Note, the Holder will be entitled to payment
only after there is first paid in full on the then outstanding Senior
Indebtedness all principal and interest then due and payable by
acceleration or otherwise, or after payment shall be provided for in a
manner satisfactory to the holders of such Senior Indebtedness.
c. No Reduction in Corporation's Obligations. No present or future
holder of Senior Indebtedness will be prejudiced by the Holder's right to
enforce this Note by any act or failure to act on the part of the
Corporation. The provisions of this Section 4 are solely for the purpose of
defining the relative rights of the holders of Senior Indebtedness on the
one hand and the Holder of this Note on the other hand, and nothing in this
Note will impair as between the Corporation and the Holder, the
Corporation's obligation to pay to the Holder the principal and interest in
accordance with its terms, nor will anything in this Note prevent the
Holder from exercising all remedies otherwise permitted by applicable law
upon default hereunder subject only to the rights, if any, under this
Section of holders of Senior Indebtedness to receive cash, property or
securities otherwise payable or deliverable to the Holder.
5) Conversion.
a. Timing. This Note is convertible into fully paid and nonassessable
shares of the Corporation's Common Stock, at the option of the Holder, at
any time and from time to time thereafter in whole or in part during the
term of this Note. The Corporation agrees to reserve sufficient shares for
issuance during the remaining term of this Note so as to be able to honor
the exercise of the conversion privilege, subject to the Corporations
increase in Common Stock to be presented at the next Shareholders'
Meeting..
b. Conversion Price. The Note shall be convertible into the
Corporation's Common Stock at a price of fifty cents ($0.50) per share. The
Conversion is payable by the cancellation of principal and any accrued
interest on this Note.
c. Notice of Conversion and Rights. In order to exercise the
conversion privilege granted to the Holder of this Note, the Holder will
surrender this Note to the
2
Initial: entrenet /s/ JB Company /s/ EK
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Corporation with duly executed Notice of Conversion specifying the portion
of the principal amount and any accrued and unpaid interest of the Note to
be converted. If the Common Stock into which this Note is convertible is to
be issued in a name or names other than that of the Holder, the Notice of
Conversion must bear or be accompanied by proper endorsement or assignment
of this Note. The Common Stock issued upon the conversion of this Note will
not be entitled to any dividend declared upon such stock prior to the date
of the receipt by the Corporation of such Notice of Conversion, and upon
such conversion, the Holder will not be entitled to any interest on this
Note not due and payable at or prior to the date such Notice of Conversion
is received by the Corporation.
d. Surrender and Cancellation of Note. This Note will be deemed to have
been surrendered for conversion and converted at the close of business on
the date on which it is received by the Corporation or a designated agent
of the Corporation with the duly executed Notice of Conversion, and on such
receipt, the Corporation will promptly issue and deliver to the person or
persons entitled a certificate or certificates of its Common Stock
evidencing the number of shares into which this Note will have been
converted, together with a new Note representing the unconverted and
unredeemed portion, if any, of the Note so converted. The new Note shall be
payable to the Holder and dated as of the date to which interest has been
paid on the converted Note. Such new Note shall otherwise be identical to
the converted Note. The Corporation will then cancel this Note. Only whole
shares of the Corporation's Common Stock will be issued on any conversion.
In the event that Holder of this Note is entitled to a faction of a share
of Common Stock, the Corporation shall instead pay such holder the cash
equivalent of that fractional share, computed by multiplying the fraction
by the applicable Conversion Price.
6) The Corporation's Obligation to Register. If the Corporation at any time
proposes to initiate a registration of its securities under the Securities
Act of 1933, as amended (the "Securities Act") and thereafter to register
any of its securities under the Securities Act (other than a registration
effected solely to implement an employee benefit plan, a transaction to
which Rule 145 of the Commission is applicable or any other form or type of
registration in which Registrable Securities cannot be included pursuant to
Commission rule or practice), it will give written notice to Holder of this
Note of its intention to do so. If such registration is proposed to be on a
form which permits inclusion of the Stock underlying the conversion of this
Note, upon the written request from any Holder within 20 days after
transmittal by the Corporation to the Holder of such notice, the
Corporation will, subject to the limits contained in this Section, use its
best efforts to cause all such Stock underlying the conversion of this Note
to be registered under the Securities Act and qualified for sale under any
relevant state blue sky law, all to the extent requisite to permit such
sale or other disposition by Holder of the Stock so registered.
Notwithstanding any other provision of this Section, if the underwriter
managing such registration notifies the Holder in writing that market or
economic conditions limit the amount of securities which may reasonably be
expected to be sold, Holder will at a minimum be allowed to register their
Stock pro rata based on the ratio of the total number of shares of Stock to
be offered for sale by the Corporation to the total shares outstanding just
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Initial: entrenet /s/ JB Company /s/ EK
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prior to the offering. The Corporation and entrenet will enter into a
customary registration agreement setting forth the terms of such
registration at the time the Corporation proposes to register any shares
for entrenet.
7) Default.
a. Events of Default. Without notice, except as expressly provided
herein, the following will be deemed to be events of default:
i. Covenants. Failure on the part of the Corporation to
observe or perform any of the covenants or agreements on the part
of the Corporation contained in this Note after (A) written notice
of such failure, requiring the Corporation to remedy the same, has
been given to the Corporation by the Holder, and (B) such failure
has continued without remedy for a period of thirty days; or
ii. Receivership. The entry of a decree or order of a court
having jurisdiction in the matter for the appointment of a
receiver and such decree or order has continued in force
undischarged or unstayed for a period of one hundred twenty days;
or
iii.Bankruptcy. The Corporation institutes proceedings to be
adjudged a voluntary bankrupt, or consents to the filing of
bankruptcy proceedings against it, or files a petition or answer
or consent seeking reorganization under the National Bankruptcy
Act or any other similar or applicable federal or state law, or
consents to the filing of any such petition, or consents to the
appointment of a receiver, liquidator, or trustee in bankruptcy,
or makes a general assignment for the benefit of creditors, or
admits in writing its inability to pay its debts generally as they
become due; or
iv. Attachment. Any judgment, writ, or warrant of attachment
or of any similar process in an amount in excess of $100,000 is
entered or filed against the Corporation or against any of its
property or assets and remains unpaid, unvacated, unbonded or
unstayed for a period of 120 days.
b. Acceleration of Maturity. If any one or more of the foregoing events
of default occurs, the Holder, by notice in writing to the Corporation, may
declare the principal of and all accrued interest on this Note then
outstanding immediately due and payable without further notice or demand;
provided, however, that at any time after such declaration the same may be
rescinded and such event of default may be waived by the Holder by written
notice to the Corporation.
c. Payment on Acceleration. Upon any such acceleration of the maturity
of this Note, the Corporation will within 90 days pay to the Holder the
entire principal balance unpaid on this Note, together with accrued
interest thereon to the date of such payment.
d. Failure to Pay. If the Corporation fails to make payment to the
Holder as provided in the preceding Subsection (Payment on Acceleration),
the Holder will be entitled and empowered to take such measures as may be
appropriate to enforce the
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Initial: entrenet /s/ JB Company /s/ EK
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Corporation's obligations under this Note, by judicial proceedings or
otherwise. If suit is brought to enforce payment of this Note, the
Corporation promises to pay reasonable attorneys' fees to be fixed by the
Court.
8) Anti-dilution. If the Corporation elects to combine or subdivide its Common
Stock, the ratio used to determine the number of new shares to be issued in
exchange for the existing shares will be applied to the number of shares
into which this Note may be converted as provided in this Note, and the
conversion price will be appropriately adjusted.
9) No Assignment. This Note is unsecured, non-transferable and non-assignable.
Holder may not sell, assign, pledge, hypothecate or otherwise transfer this
Note
10) Notices. Any communication or notices may be delivered or mailed to the
offices of the Corporation at its principal place of business and to the
Holder at the Holder's address set forth below, or to such other addresses
as the Corporation, or Holder, may designate in writing from time to time.
11) Applicable Law. This Note shall be governed by and construed in accordance
with the laws of the State of California applicable to contracts between
California residents entered into and so be performed entirely within the
State of California.
Executed as of June 3,1997
By:
-------------------
Xxxx Xxxxx
Chief Executive Officer
Initial: entrenet /s/ JB Company /s/ EK
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The name and address of the registered Holder of this Note is:
entrenet Group LLC
0000 Xx Xxxxxxx Xxxxxxx, Xxxxx X
Xxxxx Xxxx, Xxxxxxxxxx 00000
