Exhibit 10.39
ACKNOWLEDGEMENT OF DEFAULT
AND ASSIGNMENT OF PAYMENTS AGREEMENT
ACKNOWLEDGEMENT OF DEFAULT AND ASSIGNMENT OF PAYMENTS AGREEMENT,
dated as of February 15, 2002, among J Net Enterprises, Inc., a Nevada
corporation ("J Net") and InterWorld Corporation, a Delaware corporation
("InterWorld").
W I T N E S S E T H :
WHEREAS, on June 30, 2001, InterWorld and J Net entered into a
credit facility whereby J Net agreed to loan up to $20,000,000 to InterWorld
(the "Credit Facility");
WHEREAS, on June 30, 2001, to secure indebtedness under the Credit
Facility, J Net and InterWorld entered into a security agreement granting J
Net a security interest in certain collateral of InterWorld, including all of
its intellectual property (the "Security Agreement");
WHEREAS, on February 8, 2002, to further secure indebtedness under
the Credit Facility, J Net and InterWorld entered into a security agreement
granting J Net a security interest in certain trademarks and service marks of
InterWorld (the "IP Security Agreement," and together with the Security
Agreement, the "Security Agreements");
WHEREAS, as of the date hereof, InterWorld is currently in default
of the approximate amount of $17,000,000 outstanding under the Credit
Facility;
WHEREAS, InterWorld and Titan Technologies, LP d/b/a Titan
Ventures, LP ("Titan") have entered into an alliance agreement, dated
February 15, 2002 (the "Master Alliance Agreement") pursuant to which Titan
has agreed to make use of Interworld's intellectual property to market
software products on behalf of InterWorld;
WHEREAS, J Net wishes to exercise its interest in InterWorld's
intellectual property pursuant to Section 4 of the Security Agreement and
SS 9-607 of the Uniform Commercial Code of the State of New York ("UCC") by
requiring Titan to make any and all payments due under Section 3.3 of the
Master Alliance Agreement as directed by J Net until such time as such
payments satisfy the secured indebtedness in full; and
WHEREAS, the InterWorld is willing to consent to the waiver of any
applicable notice requirements under the UCC, and to cause Titan to make any
and all payments due under Section 3.3 of the Master Alliance Agreement as
directed by J Net until such time as such payments satisfy the secured
indebtedness in full.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Acknowledgement of Default and Monies Owed. ACKNOWLEDGEMENT OF
DEFAULT AND MONIES OWED acknowledges and agrees that: (A) InterWorld is in
default (beyond any and
all applicable grace periods) under the Credit Facility and Security
Agreements, including without limitation, as a result of its failure to make
monthly payments of principal and interest due under the Credit Facility; (B)
InterWorld has received timely and proper notice of its default under the
Credit Facility and Security Agreement, (C) the entire outstanding principal
balance of the Credit Facility is now due and payable, together with all
accrued interest thereon and all other sums owed J Net under the Credit
Facility; (D) the acceleration of the principal balance of the Note was duly
and properly declared by J Net and, accordingly, the entire outstanding
principal balance of the Credit Facility in the approximate amount of
$17,000,000 is now due and payable together with all accrued interest thereon
and all other sums and charges due under the Credit Facility (the
"Indebtedness"); and (E) InterWorld has no claims, defenses, setoffs or
counterclaims of any kind or nature whatsoever or in respect of the
Indebtedness, the Credit Facility or against J Net or otherwise.
2. Assignment of Payments under the Master Alliance Agreement;
Waiver of UCC Notice Provisions.
(a) InterWorld hereby acknowledges that J Net has a properly
perfected and enforceable security interest in, among certain other
collateral, the Master Alliance Agreement. Interworld hereby agrees that J
Net may exercise all of its rights pursuant to XXX XX0-000, with respect to
amounts payable by Titan to InterWorld under Section 3.3 of the Master
Alliance Agreement. InterWorld hereby authorizes J Net and its assigns to
collect any such amounts payable under Section 3.3 the Master Alliance
Agreement directly from Titan, and, upon request of J Net, to so instruct
Titan to make payments as directed by J Net. InterWorld hereby expressly
authorizes J Net to instruct Titan to make payments as directed by J Net, in
the event InterWorld fails to so instruct Titan. InterWorld hereby expressly
agrees that J Net may enforce the obligations of Titan with respect to
Section 3.3 of the Master Alliance Agreement and exercise the rights of
InterWorld with respect to the obligations of Titan. The exercise of this
right, power and remedy with respect to amounts payable under Section 3.3 of
the Master Alliance Agreement shall not preclude the simultaneous or later
exercise of any or all other such rights, powers or remedies with respect to
other amounts payable under the Master Alliance Agreement, or any other
agreement with respect to the secured collateral.
(b) Interworld hereby expressly waives all rights it may have
or may have to receive notices under the Security Agreements, UCC SS 9-611
and UCC SS 9-620.
3. No Waiver. InterWorld hereby acknowledges that this Agreement
shall not be deemed a waiver by J Net of any default by InterWorld or be
deemed to have released InterWorld from any of their obligations under the
Credit Facility and/or the Security Agreements. Each of the rights, powers,
and remedies provided herein now or hereafter existing at law or in equity or
by statute or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power or remedy provided for herein or therein
or now or hereafter existing at law or in equity or by statute or otherwise.
The exercise of any such right, power or remedy shall not preclude the
simultaneous or later exercise of any or all other such rights, powers or
remedies. No notice to or demand on InterWorld in any case shall entitle
InterWorld to any other notice or demand in similar or other circumstances.
4. InterWorld's Covenants. InterWorld hereby covenants with J Net
that during the term of this Agreement: (a) InterWorld shall fulfill and
perform each and every term, covenant and provision of the Master Alliance
Agreement to be fulfilled or performed by InterWorld thereunder, (b)
InterWorld shall, in the manner provided for in this Agreement, give prompt
notice to J Net of any notice received by InterWorld under the Master
Alliance Agreement, together with a complete copy of any such notice, (c)
Interworld shall enforce, short of termination thereof, the performance and
observance of each and every term, covenant and provision of the Master
Alliance Agreement to be performed or observed, and (d) InterWorld shall not
terminate or amend any of the terms or provisions of the Master Alliance
Agreement, except as may be permitted pursuant to the terms of the Master
Alliance Agreement and done in the ordinary course of business, without the
prior written consent of J Net which consent may be withheld by J Net in J
Net's sole discretion.
5. Governing Law. This Agreement shall be deemed to be a contract
entered into pursuant to the laws of the State of New York and shall in all
respects be governed, construed, applied and enforced in accordance with the
laws of the State of New York.
6. Notices. All notices or other written communications to
InterWorld or J Net hereunder shall be deemed to have been properly given (i)
upon delivery, if delivered in person with receipt acknowledged by the
recipient thereof, (ii) one (1) Business Day (hereinafter defined) after
having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been deposited
in any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed to InterWorld or J Net at their addresses set
forth in the Security Agreements or addressed as such party may from time to
time designate by written notice to the other parties. For purposes of this
Agreement, the term "Business Day" shall mean any day other than Saturday,
Sunday or any other day on which banks are required or authorized to close in
New York, New York.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communication.
7. No Oral Change. This Agreement, and any provisions hereof, may
not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of InterWorld or J Net,
but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change,
discharge or termination is sought.
8. Liability. This Agreement shall be binding upon and inure to
the benefit of InterWorld and J Net and their respective successors and
assigns forever.
9. Inapplicable Provisions. If any term, covenant or condition of
this Agreement is held to be invalid, illegal or unenforceable in any
respect, this Agreement shall be construed without such provision.
10. Headings, etc. The headings and captions of various paragraphs
of this Agreement are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
11. Duplicate Originals; Counterparts. This Agreement may be
executed in any number of duplicate originals and each duplicate original
shall be deemed to be an original. This Agreement may be executed in several
counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Agreement.
The failure of any party hereto to execute this Agreement, or any counterpart
hereof, shall not relieve the other signatories from their obligations
hereunder.
12. Number and Gender. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
13. Miscellaneous. (a) Wherever pursuant to this Agreement (i) J
Net exercises any right given to it to approve or disapprove, (ii) any
arrangement or term is to be satisfactory to J Net, or (iii) any other
decision or determination is to be made by J Net, the decision of J Net to
approve or disapprove, all decisions that arrangements or terms are
satisfactory or not satisfactory and all other decisions and determinations
made by J Net, shall be in the sole and absolute discretion of J Net and
shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
(b) Wherever pursuant to this Agreement it is provided that
InterWorld pay any costs and expenses, such costs and expenses shall include,
but not be limited to, legal fees and disbursements of InterWorld, whether
retained firms, the reimbursement for the expenses of in-house staff or
otherwise.
IN WITNESS WHEREOF the undersigned have executed this Agreement as
of the date and year first written above.
J NET ENTERPRISES, INC.
By: /s/ Xxxx X. Xxxxx
____________________________________________
Name: Xxxx X. Xxxxx
Title: President and Chief Operating Officer
INTERWORLD CORPORATION
By: /s/ Xxxxxx X. Xxxxx
_____________________________________________
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President and
Chief Financial Officer
