EXHIBIT 10.39
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SECURED PROMISSORY NOTE
$_________ May 15, 2000
The undersigned ("Maker"), ENTRADE INC., a Pennsylvania corporation
for value received, and intending to be legally bound hereby, promises to
pay to the order of ___________________________________, ("Payee"), at
_____________________, or at such other place or places as Payee may
designate in writing, the principal sum of _____________ Dollars and No/100
($___________), plus interest from the date hereof on the unpaid principal
amount from time to time outstanding hereunder, at fifteen percent (15%)
per annum, with all principal and interest owed hereunder payable in full
on July 15, 2001 (the "Maturity Date").
Interest shall be payable in arrears commencing on August 15, 2000,
and continuing on the fifteenth (15th) day of November, 2000 and the
fifteenth (15th) day of February, 2001 and including May 15, 2001, with a
final payment of all interest due on the Maturity Date. Interest shall be
calculated based upon a year consisting of 365 days and charged for the
actual number of days elapsed.
This Note may be prepaid by Maker at any time provided however that
such prepayment shall include an amount equivalent to interest through the
Maturity Date on the outstanding principal balance of the Note but not less
than one year's interest, less any amount of interest previously paid, plus
an amount equal to five percent (5%) of the initial principal balance of
the Note on the date of prepayment, provided, however, that if prepayment
is made after the last day of the twelfth month of the term of this Note,
the prepayment charge shall be the amount of accrued but unpaid interest
through the Maturity Date, plus five percent (5%) of the outstanding
principal balance of the Note. Maker acknowledges and agrees that the
aforesaid prepayment charge is a reasonable estimate of the Payee's loss in
the event of any prepayment of this Note, and that any prepayment charge is
not a penalty. In the event that Maker enters into a private placement or
a public offering of its securities which yield to Maker gross proceeds of
not less than Thirty Million Dollars and No/100 ($30,000,000), then
notwithstanding anything to the contrary contained herein, the Payee shall
have the right to demand prepayment of this Note, which amount shall be the
outstanding principal balance of the Note, plus all interest accrued but
unpaid up to the date of prepayment. If the Payee exercises this option,
the Payee shall have no right to exchange any warrant issued by Maker
pursuant to the Agreement (as defined below) for a cash payment.
This Note is one of a series of Secured Promissory Notes referred to
in that certain Note and Warrant Purchase Agreement dated even date
herewith by and between Maker and Payee and other Payees (the "Agreement")
under the terms of which each Payee shall receive a warrant which will
allow the Payee to purchase common stock of the Maker equal to the face
amount of the Note divided by twenty five (25) (the "Warrant"), and that
certain Pledge Agreement dated even date herewith by and between Maker and
Xxxxxx Capital Management, Inc., a division of Xxxxx, Xxxxxxxx & Xxxxxxx
("Pledgee") (the "Pledge Agreement"), under the terms of which Maker has
pledged, as pledgor, to Pledgee, as pledgee, for the benefit of each Payee
one hundred percent (100%) of the issued and outstanding stock of Asset
Liquidation Group, Inc., a Nevada corporation and Public Liquidation
Systems, Inc., a Nevada corporation each doing business as Nationwide
Auction Systems. This Note is subject to all of the terms and conditions
of the Agreement, which terms and conditions are hereby made a part of this
Note to the same extent and with the same force and effect as if they were
fully set forth herein, and this Note is secured pursuant to the terms of
the Pledge Agreement.
It is expressly agreed by Maker that time is of the essence hereof,
and it shall be an Event of Default" hereunder if:
(i) Maker shall fail to pay any amount of principal or
interest due hereunder and such failure shall continue for seven (7) days
after Payee notifies Maker thereof in writing; or
(ii) Maker is or becomes insolvent or generally fails to pay,
or admits in writing its inability to pay, debts as they become due, or
Maker applies for, consents to or acquiesces in the appointment of a
trustee, receiver or other custodian for Maker or any of its property, or
makes a general assignment for the benefit of creditors, or, in the absence
of such application, consent or acquiescence, a trustee, receiver or other
custodian is appointed for Maker or for a substantial part of Maker's
property and is not discharged within ninety (90) days, or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law is commenced in respect of Maker, and if such
case or proceeding is not commenced in respect of Maker, it is consented
to or acquiesced in by Maker or remains for ninety (90) days undismissed,
or Maker takes any action to authorize, or in the furtherance of, any of
the foregoing; or
(iii) There shall be an Event of Default pursuant to any other
Note issued in conjunction with this Note, or any other document executed
in conjunction therewith including but not limited to the Pledge Agreement
Upon the occurrence and during the continuation of an Event of
Default hereunder, the interest rate hereunder shall be increased to twenty
percent (20%) per annum and at the option of Xxxxx, the entire unpaid
principal balance hereunder, together with all accrued interest thereon,
shall become immediately due and payable. In addition, Xxxxx shall be
entitled to exercise all rights of Payee hereunder and under applicable
law, including the right to collect from Maker all sums due under this
Note. In addition, upon an Event of Default, the Payee may exchange the
Warrant for an amount equal to five percent (5%) of the initial principal
amount of this Note.
In addition to the other sums payable hereunder, Xxxxx agrees to pay
to the holder, within fifteen (15) days of demand, all reasonable
attorneys' fees and costs that may be incurred by the holder of this Note
in enforcing any of the terms hereof after an Event of Default.
Except as otherwise provided in this Note or the Agreement, Maker
hereby waives notice of non-payment, notice of dishonor, and protest of any
dishonor, and agrees that its liabilities shall be unconditional without
regard to the liability of any other party and shall not in any manner be
affected by any indulgence, extension of time, renewal, waiver or
modification granted or consented to by the holder hereof. Further, Maker
consents to any and all extensions of time, renewals, waivers, or
modifications that may be granted by the holder hereof with respect to the
payment or other provisions of this Note, and agrees that additional
makers, endorsers, guarantors or sureties may become parties hereto without
notice to Maker and without affecting its liability hereunder.
The holder hereof shall not by any act of omission or commission be
deemed to waive any of its right or remedies hereunder unless such waiver
is in writing and signed by the holder hereof, and then only to the extent
specifically set forth therein. The waiver of any event shall not be
construed as a waiver of any other right or remedy, nor shall any single or
partial exercise of any right or remedy preclude any other or further
exercise thereof or of any other right or remedy.
Whenever possible, each provision of this Note shall be interpreted
in such manner as to be effective and valid under applicable law, but if
any provision of this Note is deemed to be invalid or unenforceable under
such law, such provision shall be ineffective only to the extent of such
invalidity or unenforceability without affecting the validity or
enforceability of any other provision of this Note.
Maker (and the undersigned representative of Maker, if any)
represents that Maker has full power and authority and legal right to
execute and deliver this Note and this Note shall be binding on Maker and
its respective successors and assigns.
This Note shall be governed by and construed according to the
internal laws of the State of Illinois without regard to principals of
conflicts of law.
IN WITNESS WHEREOF, Xxxxx has duly executed this Secured Promissory
Note as of the date first above written.
ENTRADE INC.
By:
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, President
