ASSET PURCHASE AND SALE AGREEMENT
This Asset Purchase and Sale Agreement ("Agreement") is made and entered
into as of October 1, 1997, by and between NeTTaxi Online Communities, Inc., a
Delaware corporation ("Buyer"), and SSN Properties, LLC, a California Limited
Company ("Seller").
RECITALS
WHEREAS, Seller acquired all right, title and interest in and to the
Software and Domain Names (ass such terms are defined below), from Simply
Interactive, Inc., a California corporation ("SII"), pursuant to the default
provisions contained in that certain security agreement entered into by and
between SII and Seller, and,
WHEREAS, Seller owns all right, title and interest in and to the F.F.&E.
(as such term is defined below); and,
WHEREAS, Seller desires to forever sell, assign, grant, convey and transfer
to Buyer, and Buyer desires to acquired from Seller, all right, title and
interest in, to and under the Software, the Domain Names, and the F.F.&E., under
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereafter set forth, and
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. For the purposes of this Agreement, the following terms
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shall have the following meanings:
1.1 "Affiliates" means any past, present or future subsidiaries,
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officers, directors, control persons, employees, shareholders, agents,
representatives, attorneys, heirs, successors, beneficiaries, assign, executors,
administrators or any other affiliated individual, corporation, limited
liability company, association, partnership, joint venture, trust or other
entity or organization.
1.2 "Assets" means the Software, the Domain names, the F.F.&E., and all
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other similar assets owned by the Seller as of the date hereof, or acquired by
the Seller prior to the Closing Date.
1.3 "Xxxx of Sale" means the Xxxx of Sale, to be duly executed and
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delivered by Seller in accordance with this Agreement, conveying to the Buyer
all of the Seller's right, title and interest in and to the F.F.&E. The Xxxx of
Sale shall be substantially in the form of, and upon the terms contained in,
Exhibit "A", attached hereto and incorporated herein by this reference.
1.4 "Closing" means the closing of the purchase and sale of the Assets
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in accordance with the terms of this Agreement on the Closing Date.
1.5 "Closing Date" means the date which is five (5) business days after
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all of the following have occurred: (i) the date that all conditions hereunder
have been satisfied or waived in accordance with this Agreement; (ii) the date
that all applicable periods have run under applicable Bulk Sales Notice laws;
(iii) the date that Seller delivers the Tax Clearance Certificates to the Escrow
Holder, if required; provided, however, the Closing Date shall occur within
thirty (30) calendar days from the execution hereof.
1.6 "Convertible Secured Promissory Note" means the Convertible
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Secured Promissory Note in favor of Seller, to be duly executed and delivered by
Buyer in accordance with this Agreement, in the principal amount of One Million
Twenty Thousand Dollars (US$1,020,000). The Convertible Secured Promissory Note
shall be substantially in the form of, and upon the terms contained in, Exhibit
"D", attached hereto and incorporated herein by this reference.
1.7 "Domain Names" means the proprietary right to the following names,
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and the Goodwill therein, corresponding to numeric addresses on the WWW,
registered in the name of the Seller with the Network Information Center
(Internic): (i) "xxxxxx.xxx"; (ii) "xxxxxxxxxxxxxxx.xxx"; (iii) "xxxxxxxx.xxx";
(iv) "xxxxxx.xxx"; (v) "xxxxxx.xxx".
1.8 "Inventory" means the written inventory of the F.F.& E. Prepared
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and approved by the Buyer and Seller, attached hereto as Exhibit "B", and
incorporated herein by this reference.
1.9 "Escrow" means that certain escrow established hereunder with
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Escrow Holder for the purpose of completing the purchase and sale of the Assets
in accordance with the terms and conditions contained herein and pursuant to the
applicable provisions of the California Commercial Code and the California
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Business and Professions Code. Any and all fees, costs and expenses associated
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with the Escrow shall be borne equally between the parties.
1.10 "Escrow Instructions" means the escrow instructions to be prepared
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by Escrow Holder and duly executed by Buyer and Seller. The Escrow instructions
shall be consistent with the terms and conditions contained herein. In the
event of any inconsistency between the Escrow instructions and this Agreement,
this Agreement shall prevail.
1.11 "Escrow Holder" means a licensed escrow company to be approved by
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both parties.
1.12 "F.F.&E"means all the Seller's right, title and interest in and to
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any and all furniture, fixtures and equipment owned or leased by the Seller, as
set forth in the Inventory.
1.13 "Goodwill" means the Seller's right, title and interest in and to
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the goodwill of the Software and the Domain Names, including, without
limitation, any and all tradenames, servicemarks, trademarks, logs, copyrights
and all other rights of intellectual property, whether or not claimed or
asserted by Seller, and the use, application and exclusive right to exploit such
rights of intellectual property, and all other similar assets, owned by the
Seller as of the date hereof, or acquired by the Seller prior to the Closing
Date.
1.14 "Internet The City"means that certain proprietary software program
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owned by the Seller, in source code and object code form, which functions as a
connected CD ROM allowing access to, and tutorials on the use of, key internet
components (including e-mail, FTP, Usenet, Gopher, Telnet, IRC and the WWW)
through internet The City Online, incorporating live action characters, 3-D
animation and digital movies, the functional specifications of which are set
forth in Exhibit "C", attached hereto and incorporated herein by this reference.
1.15 "Internet The City Online" means that certain proprietary software
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program owned by the Seller, in source code and object code form, which
functions to establish and maintain the on-line "community" which is accessible
through the domain name "xxxxxxx.xxx" and launched through Internet The City,
the functional specifications of which are set forth in Exhibit "C".
1.16 "Liabilities" means any and all of Seller's past, present and
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future debts, obligations, claims, demands, liens, costs, expenses, penalties,
judgments, damages, accounts payable, agreements, arrangements, understandings
and all other encumbrances whatsoever, whether absolute, accrued, fixed,
contingent, known, unknown, matured or unmatured.
1.17 "Purchase Price" means the cash amount of One Million Twenty
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Thousand Dollars (US$1,020,000) payable pursuant to the terms and conditions of
the Convertible Secured Promissory Note; and Nine Hundred Eighty Thousand
(980,000) shares in Buyer, delivered to Seller on the Closing Date.
1.18 "Security Agreement" means the Security Agreement in favor of
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Seller, to be duly executed and delivered by Buyer in accordance with this
Agreement, securing the obligations of Buyer under the Convertible Secured
Promissory Note by the recording of first priority UCC-1 Financing Statement in
the State of California in favor of Seller. The Security Agreement shall be
substantially in the form of, and upon the terms contained in, Exhibit "E",
attached hereto and incorporated herein by this reference.
1.19 "Software" means, collectively, the full retail version of
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Internet The City, Internet The City Online and Web Activator, including any and
all improvements, corrections, modifications, updates, enhancements or other
changes thereto, whether or not included in the current retail version, plus all
System Documentation, User Documentation and Goodwill related thereto.
1.20 "System Documentation" means all documentation used in the
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development and updating of the Software, including, without limitation, design
or development specifications, error reports and related correspondence and
memoranda.
1.21 "Software Trade Secrets" means any scientific or technical
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information, design, process, procedure, formula, or improvement included in the
Software that is valuable, not generally known in the industry, and gives the
owner of the Software a competitive advantage over those competitors who do not
know or use such information.
1.22 "Tax Clearance Certificates" means tax clearance certificates
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issued by The State Board of Equalization and the Employment Development
Department certifying that all sales and use taxes and employment taxes,
respectively, resulting to the operation of Seller's business activities through
the Closing Date, have been properly withheld and paid over to such governmental
agencies in accordance with applicable laws.
1.23 "User Documentation" means the end-user instruction manual that
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usually accompanies the Software instructing end users in the use of the
Software in both printed and electronic form.
1.24 "Web Activator" means that certain proprietary software program
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owned by the Seller, in source code and object code form, which functions as the
system server software, providing the architecture, behind Internet The City
Online, the functional specifications of which are set forth in Exhibit "C".
1.25 "WWW" means the World Wide Web.
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2. Purchase and Sale; Closing.
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2.1 Conveyance of Assets. On the Closing Date and subject to the terms
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and conditions as set forth in this Agreement, Seller shall forever sell,
assign, grant, convey and transfer to the Buyer, free and clear of any and all
Liabilities, and the Buyer shall purchase and acquire from the Seller, all of
the exclusive right, title and interest in, to and under all of the Assets,
including, without limitation, the following corporeal and incorporeal incidents
to the Software:
(a) Title to and possession of the media, devices, and
documentation that constitute all copies of the Software, its component parts,
and all documentation relating thereto, possessed or controlled by Seller, which
are to be delivered to Buyer pursuant to Section 3 of this Agreement;
(b) All Goodwill therein, including, without limitation, all
copyright interests, trademarks and any other intellectual property interests
owned or claimed by Seller in the Software, including, without limitation, the
U.S. Copyright Registrations together with all other copyright interests
accruing by reason of international copyright laws or conventions, as set forth
on the schedule attached as Exhibit "F", attached hereto and incorporated herein
by this reference;
(c) All right, title, and interest of Seller in and to the
Software Trade Secrets and any and all inventions, discoveries, improvements,
ideas, trade secrets, know-how, confidential information, and all other
intellectual property owned or claimed by Seller in the Software;
(d) The exclusive right to exploit the Software in any and all
media now in existence and hereafter devised; and
(e) All right, title, interest and benefit of Seller in, to, and
under all agreements, contracts and licenses, entered into by Seller, or having
Seller as a beneficiary, and pertaining to the Software, as set forth on the
schedule attached as Exhibit "H".
2.2 Possession. Simultaneously with the Closing, Seller shall deliver
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possession and enjoyment of the Assets to Buyer and Buyer shall thereupon have
the immediate right to possess, develop, use, sell, encumber and/or transfer the
Assets, or any part thereof for its own account to the total exclusion of
Seller, subject to the requirements of the Security Agreement.
2.3 Closing Date. The Closing Date for the consummation of the
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transaction contemplated by this Agreement shall be established by the Escrow
Holder in accordance with applicable Bulk Sales laws and the terms and
conditions contained herein. Such Closing shall take place at the office of the
Escrow Holder, or such other place as mutually agreeable between the parties, at
a time to be designated between the parties.
3. Deliveries at Closing.
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3.1 Deliveries by Seller. At the Closing, Seller shall deliver into
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Escrow the following:
(a) The original Xxxx of Sale duly executed by Seller; and
(b) Possession of the F.F.&E.; and
(c) Possession of the physical objects relating to the Software,
including (i) Seller's entire inventory of copies of the Software in object code
form; (ii) a master copy of the software (in both source and object code format)
which shall be in a form suitable for copying; and (iii) all System
Documentation and User Documentation pertaining to the Software; and
(d) Possession of the documents evidencing the chain of title in
the software; and
(e) Possession of the documents evidencing the registration
transfer of the Domain Names; and
(f) Such resolutions, authorizations, certificates of good
standing and/o other corporate documents relating to Seller as are reasonably
required by Buyer in connection with the transactions contemplated under this
Agreement.
3.2 Deliveries by Buyer. At the Closing, Buyer shall deliver into
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Escrow the following original documents, duly executed by the Buyer.
(a) Such resolutions, authorizations, certificates of good
standing and/or other corporate documents relating to Buyer as are reasonably
required by Seller in connection with the transactions contemplated under this
Agreement; and
(b) The Stock (as such term is defined below); and
(c) The Convertible Secured Promissory Note; and
(d) The Security Agreement; and
(e) Minutes of the special Meeting of Shareholders electing one
member to the Board of Directors of the Company nominated by the Seller.
3.3 Deliveries by Buyer and Seller. Buyer and Seller will each deposit
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such other instruments consistent with this Agreement as are reasonably required
to effectuate the transactions contemplated under this Agreement.
4. Payment of Purchase Price.
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4.1 Purchase Price. Buyer agrees to pay Seller the total purchase
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price, consisting of:
(a) Nine Hundred Eighty Thousand (980,000) shares of Common Stock
of Buyer, authorized and issued by Buyer and evidenced by a stock certificate
("Stock"), delivered to Seller on the Closing Date; and
(b) A Convertible Secured Promissory Note in the amount of One
Million Twenty Thousand Dollars (US$1,020,000) ("Principal Amount"), delivered
to Seller on the Closing Date, under the following terms and conditions:
(i) no payment of principal or interest shall be due or
payable by Buyer on the Convertible Secured Promissory Note, but shall accrue
from the execution date of this Agreement;
(ii) thereafter, twenty (20) installments of Fifty-One
Thousand Dollars (US$51,000) each, plus interest accrued on the Principal Amount
from the date of execution at a rate of ten percent (10% per annum (such
interest to be paid commencing one (1) year following the execution date of
this Agreement) payable within fifteen (15) calendar days following the end of
each fiscal quarter of Buyer, it being recognized that Buyer's fiscal quarters
end on the final day of March, June, September and December of each year,
(iii) throughout the term of the Convertible Secured
Promissory Note, the Seller shall have the right, but not the obligation, to
convert up to fifty percent (50%) of the Principal Amount owing at the time of
such conversion, into Common Stock of the Buyer, valued at One Dollar ($1) per
share, to be exercised at Seller's exclusive discretion;
(1) such conversion shall be exercisable by delivery of
written notice from the Seller to the Buyer no less than thirty (30) calendar
days prior to any Payment Date (as such term is defined in the Convertible
Secured Promissory Note), which notice shall specify the amount of the Principal
Amount to be so converted (such conversion amount shall apply against the most
recent installment Payments in the Payment Schedule, as such terms are defined
in the Convertible Secured Promissory Note), until expended, and the Payment
Schedule (as such term is defined in the Convertible Secured Promissory Note)
shall be offset and adjusted accordingly (for example, if the Seller elects to
convert $100,000 of the Principal Amount to 100,000 shares of Common Stock in
the Buyer, and gives notice as required above, then the next two (2) Installment
Payments required under the Payment Schedule shall be offset by such amount, and
only the balance shall be payable on such second (2nd) Payment Date following
the conversion);
(2) in no event may the Seller or its Affiliates, by
such conversion, be or become the owner of record, or beneficial owner, of more
than a total of forty-nine percent (49%) of the issued and outstanding Common
Stock in Buyer, it being recognized that the Seller is acquiring the Stock under
the terms hereof;
(3) in the event of any conversion, all of the shares
issued shall be subject to the same restrictions on sale as shall be required of
the principal shareholders of the Company by any underwriter committed to effect
a public offering of the common stock of the Company;
(iv) the Convertible Secured Promissory Note shall be secured
pursuant to the terms and conditions of the Security Agreement;
(v) all payments required under the Convertible Secured
Promissory Note shall be made to the Seller, in the form of a check drawn on the
back account of the Buyer, and delivered to the address as specified below.
4.2. Appraisal. The Purchase Price for the Assets is partially based
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upon the fair market value of the Software pursuant to the written appraisal of
the fair market value of the Software, prepared by Xxxxxxxxx & Ostrick,
C.P.A.'s, a copy of which is attached hereto as Exhibit "G", and incorporated
herein by this reference ("Appraisal"). The Appraisal is hereby approved by
Buyer and Seller,
4.3. Taxes. The amount payable to Seller by Buyer under this Section 4
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is inclusive of any national, state or local sales, use, value-added or other
taxes, customs duties, or similar tariffs and fees which Seller may be required
to pay or collect upon the delivery of the Assets.
5. Representations and Warranties.
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5.1. Seller's Representations and Warranties. Seller hereby represents
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and warrants to Buyer that:
(a) to the best knowledge and belief the Buyer shall receive,
pursuant to this Agreement as of the Closing Date, complete and exclusive right,
title, and interest in and to the F.F.&E. And all tangible and intangible
property rights existing in the Software and Domain Names, free and clear of any
and all Liabilities, including, without limitation, any claims asserted by SII,
Shareholders or its Affiliates, except for those interests of third parties
pursuant to existing agreements as set forth in Section 6 of this Agreement;
(b) the Seller has acquired, through a proceeding under Article 9
of the Uniform Commercial Code of the State of California, the property listed
in Exhibit B hereof from SII. The Seller has not conducted any investigation of
the property and can only warrant that to the best of its knowledge and belief,
the proceeding under Article 9 was properly held and Seller has acquired
whatever interest SII held in the property described in Exhibit B hereof.
Subject to the limitations of the above, Seller hereby represents
and warrants to the best of Seller's knowledge and belief that Buyer shall
receive pursuant to this Agreement as of the Closing Date, all of Seller's
right, title and interest in and to the F.F.&E. And all of Seller's tangible and
intangible property rights existing in the software and Domain Names.
(c) to the best knowledge and belief of Seller, all personnel,
including employees, agents, consultants, and contractors, who have contributed
to, or participated in, the conception and development of the software either
(1) have been party to a formal, written, work-for-hire agreement with the
developer of the Software that has accorded the developer of the Software full,
effective, and exclusive original ownership of all tangible and intangible
property arising with respect to the Software, notwithstanding the contribution
of any such third parties, or (2) have executed appropriate instruments of
assignment in favor of the developer of the Software as assignee that have
conveyed to the developer of the Software full, effective, and exclusive
ownership of all tangible and intangible property thereby arising with respect
to the Software, notwithstanding the contribution of any such third parties;
(d) except as identified in the schedules set forth in Exhibit
"H", attached hereto and incorporated herein by this reference, Seller has made
no agreements or arrangements in effect with respect to the marketing,
distribution, licensing, or promotion of the Software by any independent
salesperson, distributor, sublicensor, or other remarketer or sales
organization.
(e) Seller, as a shareholder in Buyer, shall be subject to the
terms and
conditions applicable to the shareholders of the Buyer, pursuant to its Articles
of Incorporation, By- Laws, Shareholder Agreement, or any other such
instruments, now promulgated, or as may be promulgated in the future, relating
to the ownership of such equity interests in Buyer.
(f) Seller is duly organized, validly existing and in good
standing
under the laws of the State of California and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted or contemplated. Seller has all requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transaction contemplated hereby.
(g) The execution, delivery and performance by Seller, and the
consummation of the transactions contemplated hereby, have been duly and
validly authorized b all necessary action on the part of Seller. This Agreement
has been duly and validly executed and delivered by Seller and, when executed
and delivered in accordance with its terms, shall constitute the valid and
binding obligations of Seller, enforceable in accordance with the terms thereof.
Neither the execution, delivery or performance by Seller of this Agreement nor
the consummation by Seller of the transactions contemplated hereby, nor
compliance by Seller with any provision hereof will (i) violate or result in a
breach of any provision of the Articles of Organization and Operating Agreement
of Seller, in each case as in effect of the date hereof, (ii) conflict with any
law, statute, ordinance, rule, regulation, order, writ, judgment, injunction,
award, decree, concession, grant, franchise, restriction or agreement of, form
or with any governmental authority applicable to Seller. No permit, consent or
approval of or by, or any notification of or filing with, any person or entity
is required in connection with the execution, delivery or performance by Seller,
or the consummation of the transactions contemplated hereby.
(h) There are no outstanding orders, judgments, injunctions,
awards or decrees of any court or other governmental authority or arbitration
tribunal against Seller. Seller is not in default of any such order, judgment,
injunction, award or decree. There are no action, suits, claims, investigations
or legal, administrative or arbitration proceedings pending or threatened
against Seller, whether at law or in equity, whether civil or criminal in
nature, or whether before or by any court or other governmental authority.
(i) To the best knowledge and belief of Seller, Seller has no
Liabilities or obligations of any nature, whether absolute, accrued, contingent
or otherwise, and whether due or to become due (including, without limitation,
any liability for taxes and interest, penalties and other charges payable with
respect to any such liability or obligation) which would affect the Buyer or the
Assets or become the obligation of the Buyer as a result of the transactions
consummated hereby.
5.2. Buyer's Representations and Warranties. Buyer hereby represents
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and warrants to Seller that:
(a) Buyer is, or will be on the Closing Date, duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted or contemplated,
Buyer has all requisite power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
(b) The execution, delivery and performance by Buyer, and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of Buyer. This
Agreement has been duly and validly executed and delivered by Buyer and, when
executed and delivered in accordance with its terms, shall constitute the valid
and binding obligations of Buyer, enforceable in accordance with the terms
thereof. Neither the execution, delivery or performance by Buyer of this
Agreement nor the consummation by Buyer of the transactions contemplated
hereby, nor compliance by Buyer with any provision hereof will (i) violate or
result in a breach of any provision of the Articles of Incorporation or Bylaws
of Buyer, in each case as in effect of the date hereof, (ii) conflict with any
law, statute, ordinance, rule, regulation, order, writ, judgment, injunction,
award, decree, concession, grant, franchise, restriction or agreement of, from
or with any governmental authority applicable to Buyer. No permit, consent or
approvals of or by, or any notification of or filing with, any person or entity
is required in connection with the execution, delivery or performance by Buyer,
or the consummation of the transactions contemplated hereby.
6. Existing Agreements.
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6.1. No Third Party Rights. Seller hereby represents and warrants to
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Buyer that the only rights in the Software it has granted to third parties were
granted pursuant to the agreements identified inn Exhibit "H".
6.2. Representations and Warranties. Seller hereby represents and
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warrants to Buyer that each agreement is in full force and effect in accordance
with its terms, without modification or amendment and without default by either
party thereto; that each End-User Agreement grants the licensee thereunder
solely the nonexclusive right and license to use the Software, for internal
purposes only, on a single central processing unit; that each End-User Agreement
provides only for rendering of services (including warranty coverage,
maintenance, and support) that, to the extent required to have been performed as
of the Closing Date, have been performed in full; and that each End-User
Agreement is freely assignable to and assumable by Buyer pursuant to this
Agreement, without the requirement of obtaining any consent or approval, giving
any prior or subsequent notice, paying any further royalty or fee to any party
thereto or to any other third party,. Or performing any duty that has not
already been fully performed by Seller.
6.3. Assignment of Existing Agreements. Seller hereby assigns,
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transfers, and conveys all of the agreements identified in Exhibit "H" to Buyer,
and Buyer hereby assumes the obligations set forth in such Agreements and agrees
to indemnify and hold harmless Seller and its Affiliates from and against any
failure of Buyer to perform its obligations under the agreements in accordance
with their terms. Seller and Buyer shall jointly notify all parties to the
agreements of the foregoing assignment and assumption. It is mutually agreed
that Seller shall retain all amounts previously paid to Seller under the
agreements and that, to the extent further payments may be made thereunder,
Buyer shall be entitled to receive them directly from such contracting parties,
and, if such payments nonetheless are made to Seller, Seller shall remit such
payments to Buyer immediately.
6.4. Liabilities Not Assumed. Anything contained in this Agreement to
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the contrary notwithstanding, the Buyer is not assuming, and shall not be
responsible for, any liability, cost or expense of the Buyer of its Affiliates,
whether or not such liability, cost or expense relates to the Software or the
agreements identified inn Exhibit "H," which were incurred prior to the Closing
Date, all of which liabilities, costs and expenses shall, at and after the
Closing Date, remain the exclusive responsibility of the Seller and Seller shall
indemnify and hold Buyer and its Affiliates harmless from and against any
liability, claim, cost or expense, including reasonable attorneys' fees (whether
incurred before or after the entry of judgment) arising therefrom.
7. Further Assurances.
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7.1. Execution of Documents. Seller shall execute and deliver such
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further conveyance instruments and take such further actions as may be necessary
or desirable to evidence more fully the transfer of ownership of the Assets to
Buyer, Seller therefore agrees:
(a) To execute, acknowledge and deliver any affidavits or
documents of assignment and conveyance regarding the Assets;
(b) To provide testimony in connection with any proceeding
affecting the right, title, or interest of Buyer in the Assets; and
(c) To perform any other acts deemed necessary by Buyer to carry
out the intent of this Agreement.
7.2. Power of Attorney. Seller hereby appoints Buyer as its
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attorney-in-fact, irrevocably and coupled with an interest, with all right of
substitution and delegation to execute or file any documents, or take any
actions to perfect, protect or assert the right in and to the Assets conveyed
hereunder to Buyer by Seller.
8. Protection of Trade Secrets/Non-Competition.
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8.1. Confidentiality. The parties agree to hold each other's
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Confidential Information confidential for a period of five (5) years following
the Closing Date of this Agreement. The parties agree, that unless required by
law, they shall not make each other's Confidential Information available in
any form to any third party or to use each other's Confidential Information for
any purpose other than the implementation of this Agreement. Each party agrees
to take all reasonable steps to ensure that Confidential Information is not
disclosed or distributed by its Affiliates in violation of the terms of this
Agreement. A party's "Confidential Information" shall not include information
that (a) is or becomes a part of the public domain through no act or omission of
the other party; (b) was in the other party's lawful possession prior to the
disclosure and had not been obtained by the other party either directly or
indirectly from the disclosing party; (c) is lawfully disclosed to the other
party by a third party without restriction on disclosure; (d) is independently
developed by the other party; or (e) is required to be disclosed by any judicial
or governmental requirement or order (provided that recipient timely advises
the disclosing party of the governmental demand for disclosure).
8.2. Trade Secrets. Seller hereby agrees that from and after the
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Closing Date, and for so long thereafter as the data or information remains
Software Trade Secrets, Seller shall not use, disclose, or permit any person not
authorized by Buyer to obtain any Software Trade Secrets (whether or not the
Software Trade Secrets are in written or tangible form), except as specifically
authorized by Buyer.
8.3. Non-Competition. Seller hereby expressly acknowledges and
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recognizes the highly competitive nature of the internet access software
development, marketing and distribution industry in general, or related
industries, and the goodwill in the Software and Domain Names which has been
developed through and by the Seller. Accordingly, in consideration of the
premises contained herein, and as a material inducement to the Buyer to enter
into this Agreement, without which the Buyer would not have entered into this
Agreement, Seller expressly agrees, for itself, and its Affiliates (which
Affiliates the Seller represents and warrants shall be bound under this
paragraph), that it will not, for a period of five (5) years following the
Closing Date, and throughout the universe, (i) directly or indirectly engage in,
represent, or in any way be connected with, any business or activity which is in
direct or indirect competition with the business of the Buyer as it relates, in
any manner, to the Software or Domain Name ("Competing Business"), whether such
engagement shall be as a sales broker or agent, independent contractor, officer,
director, shareholder, owner, employee, consultant, partner, affiliate or other
participant, (ii) assist others in engaging in any Competing Business in the
manner described in the foregoing clauses, (iii) directly or indirectly induce
the customers or suppliers of the Seller (prior to the consummation hereof) to
change or alter in any manner their business dealings with the Buyer (following
the consummation hereof), (iv) directly or indirectly interfere with the
business of the Buyer or the Software or the Domain Names, or (v) induce any
employees, officers, sub-brokers or agents or independent contractors of the
Seller to terminate or discontinue their relationship with the Buyer following
the consummation hereof, or engage in any Competing Business. Seller expressly
understands that the foregoing restrictions may limit its ability to earn a
livelihood in the internet access software development, marketing and
distribution industry, or related industries, but it nevertheless believes that
it has received sufficient consideration and other benefits, as provided
hereunder, to clearly justify such restrictions.
9. Acknowledgment of Rights. In furtherance of this Agreement, Seller
---------------------------
hereby acknowledges that, from and after the Closing Date, Buyer has acceded to
all of Seller's right, title, and standing to:
(a) Receive all rights and benefits pertaining to the Assets and
the agreements identified in Exhibit "H;"
(b) Institute and prosecute all suits and proceedings and take all
actions that Buyer, in its sole discretion, may deem necessary or proper to
collect, assert, or enforce any claim, right, or title of any kind in and to any
and all of the Assets, and the agreements identified in Exhibit "H."
(c) Defend and compromise any and all such action, suits, or
proceedings relating to such transferred and assigned rights, title, interest,
and benefits, and perform all other such acts in relation thereto as Buyer, in
its sole discretion, deems advisable.
10. As Is Warranty. SELLER ASSIGNS THE SOFTWARE TO BUYER "AS IS," AND
-----------------
SELLER DISCLAIMS ALL WARRANTIES EXPRESS OR IMPLIED WITH RESPECT TO THE SOFTWARE,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCCHANTABILITY OR FITNESS FOR A
PARTICULAR PUPOSE.
11. Indemnity.
----------
11.1. Indemnification. Seller will hold Buyer harmless and defend
----------------
Buyer, at Seller's sole cost and expense, any claim, suit or proceeding brought
against Buyer or its Affiliates (or appeal following the entry of any judgment)
which is based upon a claim that (i) the Software or the Domain Names infringe
any patent, copyright, or trade secret of any third party in the Software or
Domain Names (including, without limitation, any right asserted by SII or its
Affiliates, provided Buyer gives Seller written notice within thirty (30)
calendar days of receiving notice of such claim, suit or proceeding. Buyer
shall reasonably cooperate with Seller in the defense of any such claim, suit or
proceeding. Seller will pay any damages and costs assessed against Buyer (or
payable by Buyer pursuant to a settlement agreement) in connection with such
proceeding.
11.2. Remedies of Buyer. In the event that the Buyer is directed to
--------------------
cease distribution of the Software by any tribunal or court, Seller will either
(i) modify the Software so that it is no longer infringing, or (ii) procure for
the Buyer the rights necessary for Buyer to exploit the Software at no expense
to Buyer. If Seller is unable to comply with either subsection (i) or (ii),
within thirty (30) days of any such direction to cease distribution of the
Software, Buyer, at its exclusive option, may either replace the infringing
portions of the Software with non-infringing software at Seller's sole cost and
expense, to the satisfaction of Buyer, or terminate this Agreement and receive a
complete refund of the Purchase Price, together with any and all unrecouped
costs and expenses relation to the Software incurred by the Buyer as of such
repayment date.
12. Miscellaneous.
--------------
12.1. Binding. This Agreement shall inure to the benefit of, and be
--------
binding upon, the parties hereto, together with their respective legal
representatives, successors and assigns.
12.2. Choice of Law. This Agreement shall be governed by, and
----------------
construed in accordance with, the laws of the United States and the State of
California, as applied to agreements entered into and to be performed entirely
within California between California residents.
12.3. Notices. Any notices given by either party hereunder will be in
--------
writing and will be given by personal delivery, national overnight courier
service, or by U.S. mail, certified or registered, postage prepaid, return
receipt requested, to Seller or Buyer at the following addresses:
If to Buyer, to: with a copy to:
------------------- ------------------
Nettaxi Online Communities, Inc. Xxxx Xxxx Xxxxx, Esq.
0000 Xxxxx Xxxxxx Xxxxxx Xxxxx & Associates
Xxxxxxxx, Xxxxxxxxxx 00000 1901 Avenue of the Stars #1800
Facsimile: 408.879.9907 Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxx, Xx. Facsimile: 310.286.1816
If to Seller, to: with a copy to:
-------------------- ------------------
SSN Properties, LLC R. Xxxxxx XxXxxx, Esq.
00000 Xxxxx Xxxx Xxxxx Liccardo, Rossi, Xxxxxxx & XxXxxx
Xxxxxxxx, XX 00000 1960 The Alameda #200
Facsimile: 408.741.8067 Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxx, Xx. Facsimile: 408.244.3294
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. All notices
will be deemed effective upon personal delivery, or five (5) days following
deposit in the U.S. mail, or two (2) business days following deposit with any
national overnight courier service.
12.4. Entirety and Amendment. This Agreement and all exhibits hereto
------------------------
which are incorporated herein constitute the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersede all
prior or contemporaneous agreements, any representations or communications,
whether written or oral, between the parties. The terms of this Agreement may
not be amended except by a writing executed by both parties.
12.5. Assignment. This Agreement may not be assigned by either part
-----------
hereto without the prior written consent of the other party to this Agreement.
12.6. Severability. It is the desire and intent of the parties hereto
-------------
that the provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any provision of this Agreement
shall be adjudicated to be invalid, illegal or unenforceable in any respect in
any jurisdiction, such provision shall be automatically deemed amended, but only
to the extent necessary to render such provision valid, legal and enforceable in
such jurisdiction, such amendment to apply only with respect to the operation of
such provision in such jurisdiction, and the validly, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
12.7. Construction. The provisions of this Agreement shall be
-------------
construed according to their fair meaning and neither for nor against any party
hereto irrespective of which party caused such provisions, or the Agreement in
its entirety, to be drafted.
12.8. Headings; Gender; Number. The headings of paragraphs and
---------------------------
sections of this Agreement are for convenience and reference only, do not
constitute a part of this Agreement, and shall not in any way affect the
meaning, construction or effect of any provision of this Agreement. Unless the
context otherwise requires, words expressed in the singular shall include the
plural and vice-versa, and the use of the neuter, masculine or feminine gender
is for convenience only and shall be deemed to mean and include the neuter,
masculine or feminine gender, as appropriate.
12.9. Survival. All agreements, statements, representations,
---------
warranties and covenants made by the parties hereto, and all other agreements
and instruments to be executed in connection therewith, shall survive the
execution and delivery to this Agreement.
12.10. Counterparts. This Agreement may be executed in any number of
-------------
counterparts, and each such counterparts shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement; provided, however, that in proving this Agreement, it shall not be
necessary to produce or account for more than one counterpart hereof.
12.11. Counsel. All parties hereto represent that, prior to execution
-------
hereof, they have had the benefit of independent and separate legal counsel in
reviewing this Agreement and have not, in whole or in part, relied upon the
advise or counsel of any attorney, agent or other representative of any other
party hereto.
12.12. Arbitration. Any dispute or claim arising out of this Agreement
-----------
shall be submitted to the American Arbitration Association for binding
arbitration in the City of San Jose, California, under its Commercial
Arbitration rules. The decision of the arbitrator shall be final and binding
upon both parties hereto and judgment on the award rendered by the arbitrator
may be entered in any court of competent jurisdiction. The prevailing party in
such arbitration shall be entitled to recover the costs of arbitration and its
reasonable attorneys' fees (whether incurred before or after the decision of the
arbitrator) from the losing party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
"BUYER:" NeTTaxi ONLINE COMMUNITIES, INC.
A Delaware corporation
By: By:
-------------------------- -------------------------
Name: Name: /s/ XXXX XXXXXXXX
-------------------------- -------------------------
Its: Its: PRESIDENT & CEO
-------------------------- -------------------------
Dated: Dated: 11/01/97
-------------------------- -------------------------
Dated:
-------------------------- -------------------------
"SELLER:" SSN PROPERTIES, LLC
a California limited liability company
By: /S/ XXXXXX X. XXXXXXXX
-------------------------
Its: MANAGER
-------------------------
Dated: 11/01/97
-------------------------
EXHIBIT A
Xxxx of Sale
The undersigned, SSN Properties, LLC, a California limited liability
company ("Seller"), for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, does hereby sell, assign, transfer and convey to
NeTTaxi Online Communities, Inc., a Delaware corporation ("Buyer"), all Seller's
right, title and interest in and to the F.F.&E., as set forth in the Inventory
(as such terms are defined in the Asset Purchase and Sale Agreement, dated as of
October , 1997 by and between
Seller and Buyer).
DATED: 11 / 01, 1997
-------
"Seller" SSN PROPERTIES, LLC,
a California limited liability company
By: XXXXXX X. XXXXXXXX
Its: MANAGER
EXHIBIT B
Inventory of F.F.& E.
All right, title and interest in any and all of the property and assets of
Simply Interactive, Inc. (hereinafter "SII"), whether now owned or hereafter
acquired, whether now existing or hereafter arising, and wherever located,
including without limitation, the following:
(i) All equipment and fixtures, including, without limitation, furniture,
vehicles and other machinery and office equipment, together with all additions
and accessions thereto and replacements therefor.
(ii) All inventory, including, without limitation (a) all raw materials,
work in process and finished goods, and (b) all such goods which are returned to
or repossessed by SII, together with all additions and accessions thereto,
replacements therefor, products thereof and documents therefor.
(iii) All (a) customer and supplier lists and contracts, books and records
and insurance policies, and (b) all goodwill of SII.
(iv) All copyrights, including (a) all original works of authorship fixed in
any tangible medium of expression, all right, title and interest therein and
thereto, and all registrations and recordings thereof, including all
applications, registrations and recordings in the Copyright Office or in any
similar office or agency of the United States, any state thereof, or any foreign
country or any political subdivision thereof, all whether now or owned or
hereafter acquired by SII and (b) all extensions or renewals thereof and all
licenses thereof (collectively, the "Copyrights").
(v) All patentable inventions, patent rights, shop rights, letters patent of
the United States or any other country, all right, title and interest therein
and thereto, and all registrations and recordings thereof, including (a) all
Patent registrations and recordings in the Patent and Trademark Office or in any
similar officer or agency of the United States, any state thereof or any foreign
country or political subdivision thereof, all whether now owned or hereafter
acquired by SII, and (b) all reissues, continuations-in-part or extensions
thereof and all licenses thereof ( collectively, the "Patents").
(vi) All trademarks, tradenames, trade styles and service marks, and all
prints and labels on which said trademarks, tradenames, trade styles and service
marks have appeared or appear, and all designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all right, title and
interest therein and thereto, all registrations and recordings thereof,
including (a) all applications, registrations and recordings in the Patent and
Trademark Office or in any similar office or agency of the United States, any
state thereof, or any foreign country or any political subdivision thereof, all
whether now owned or hereafter acquired by Debtor, and (b) all reissues,
extensions or renewals thereof and all licenses thereof (collectively, the
"Trademarks").
(vii) All goodwill of SII's business symbolized by the Trademarks and all
customer lists and other records of SII relating to the distribution of products
or provision of services bearing or covered by the Trademarks.
(viii) All information, including formulas, patterns, compilations,
programs, devices, methods, techniques or processes, that derives independent
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by other persons who can obtain
economic value from its disclosure or use, all whether now owned or hereafter
acquired by SII (collectively, the "Trade Secrets").
(ix) All claims by SII against any person for past, present or future
infringement of the Patents, Trademarks, Copyrights, or Trade Secrets.
In addition, the property covered hereby shall include, without limitation,
all the following, whether now owned or hereafter acquired, whether now existing
or hereafter arising and wherever located:
(a) All attachments, accessions, accessories, tools, parts, supplies,
increases and additions to and all replacements of and substitutions for any
property described.
(b) All products of any of the property described herein.
(c) All accounts, contract rights, general intangibles, instruments, rents,
monies, payments and all other rights, arising out of a sale, lease or other
disposition of any of the property described herein.
(d) All proceeds, including insurance proceeds, from the sale, license,
destruction, loss or other disposition of any of the property described above.
(e) All records and data relating to any of the property described herein,
whether in the form of a writing, photograph, microfilm, microfiche or
electronic media, together with all of SII's right, title and interest in and to
all computer software acquired to utilize, create, maintain and process and such
records or data on electronic media.
EXHIBIT C
Functional Specifications of Software
EXHIBIT D
CONVERTIBLE SECURED PROMISSORY NOTE
This Convertible Secured Promissory Note ("Convertible Secured Promissory
Note," herein), dated November 1st 1997, is made and entered into by and between
NeTTaxi Online Communities, Inc., a Delaware corporation ("Maker," herein) and
SSN Properties, LLC, a California limited liability company ("Holder," herein).
RECITALS
WHEREAS, Maker and Holder have entered into that certain Asset Purchase
Agreement dated as of November 1, 1997 ("Asset Purchase Agreement," herein)
under the terms of which the Maker has agreed to purchase, and Holder has agreed
to convey, certain assets, including the Software (as such term is defied in the
Asset Purchase Agreement);
WHEREAS, the Asset Purchase Agreement requires the parties to enter into a
convertible secured promissory note in connection with the payment of One
Million and Twenty Thousand Dollars (US$1,020,000) by Maker to Holder.
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties, covenants and agreements hereinafter set forth, and
for good and valuable consideration, the receipt and sufficiency of which hereby
are acknowledged, the parties hereto agree as follows:
1. Definitions. For the purposes of this Convertible Secured Promissory
Note, the following terms shall have the following meanings:
1.1 "Grace Period" means the period which commences on the business day
in which a payment is due hereunder (or, if such day falls on a weekend or
holiday, then the business day following immediately thereafter), and completes
at the close of business on the thirtieth (30th) calendar day thereafter (by way
of example only, if a payment is due under the terms hereof on Wednesday April
15th, 1998, such grace period would end at the close of business on Friday April
30th, 1998).
1.2 "Installment Payment" means the payment of Fifty-One Thousand
Dollars (US$51,000), plus Interest, in twenty (20) installments, payable by
Holder to Maker on each Payment Date in accordance with the Payment Schedule.
1.3 "Interest" means interest on the unpaid Principal Amount,
calculated as simple interest at the rate of ten percent (10%) per annum, which
shall accrue commencing as of the execution of this Convertible Secured
Promissory Note, payable after the first twelve (12) months thereafter, in
accordance with the terms hereof (such interest accrued on the Principal Amount,
but unpaid in the first twelve (12) months, shall be paid in twenty (20) equal
installments on each Payment Date in addition to the Installment Payment).
1.4 "Payment Date" means each date upon which each Installment Payment
is due hereunder in accordance with the Payment Schedule. Should the Payment
Date fall on a day other than a business day (i.e. Saturday, Sunday or legal
holiday in the State of California), the Payment Date shall be extended to the
next succeeding business day.
1.5 "Payment Schedule" means the payment of each Installment Payment on
or before the fifteenth (15) day of month following each fiscal quarter, for
five (5) consecutive years, commencing at the end of the first (1st) quarter
immediately following the anniversary date of the execution hereof and
continuing until the final payment to be paid after the last fiscal quarter in
such five (5) year term, or until such earlier date that this Convertible
Secured Promissory Note is paid in full by Maker in accordance to the terms
hereof.
1.6 "Principal Amount" means the total amount of One Million and Twenty
Thousand Dollars (US$1,020,000).
1.7 "Security Agreement" means the Security Agreement dated November 1,
1997, to be duly executed by Maker and delivered to Holder, securing thereby the
obligations of the Maker to pay the Holder as required under this Convertible
Secured Promissory Note, the terms and conditions of which are incorporated
herein by this reference. The Security Agreement shall be substantially in the
form of, and upon the terms and conditions contained in, Exhibit "D" to the
Asset Purchase Agreement.
2. Payment of Principal Amount to Holder. Following the anniversary date of
the execution hereof, and on each Payment Date, and in accordance with the
Payment Schedule, the Maker hereby agrees to pay to the Holder, and the Holder
agrees to accept, the Installment Amount, plus Interest, until the Principal
Amount, and the Interest, is satisfied inn full. All payments to Holder
hereunder shall be in such coin or currency of the United States of America as
shall be legal tender for the payment of public and private debts on the date of
each such payment, or pursuant to sub-paragraph 2.3, below.
2.1 The Maker may, at its exclusive option and at any time following
the execution hereof, prepay all or a portion of the balance of the Principal
Amount, without penalty or premium. Any prepayment hereunder shall first be
applied to interest and then to the unpaid Principal Amount.
2.2 All payments made by Maker under this Convertible Secured
Promissory Note to Holder shall be made at the office of the Holder at the
address set forth below, or at such other address as the Holder may designate in
writing to the Maker.
2.3 Throughout the term of this Convertible Secured Promissory Note,
the Seller shall have the right, but not the obligation, to convert up to fifty
percent (50%) of the Principal Amount owing at the time of such conversion, into
Common Stock of the Buyer, valued at one dollar ($1) per share, to be exercised
at Seller's exclusive discretion, as follows:
(i) such conversion shall be exercisable by delivery of
written notice from the Seller to the Buyer no less than thirty (30) calendar
days prior to any Payment Date, which notice shall specify the amount of the
Principal Amount to be so converted (such conversion amount shall apply against
the most recent Installment Payments in the Payment Schedule, until expended,
and the Payment Schedule shall be offset and adjusted accordingly [for example,
if the seller elects to convert $100,00 of the Principal Amount to 100,000
shares of Common Stock in the Buyer, and gives notice as required above, then
the next two (2) Installment Payments required under the Payment Schedule shall
be offset by such amount, and only the balance shall be payable on such second
(2nd) Payment Date following the conversion];
(ii) in no event may the Seller or its Affiliates, by such
conversion, be or become the owner of record, or beneficial owner, of more than
a total of forty-nine percent (49%) of the issued and outstanding Common Stock
in Buyer.
2.4 The parties hereto have made a reasonable effort to estimate the
actual damages which Holder would sustain as a result of a late payment of any
amount due hereunder, said reasonable estimate being equal to three percent (3%)
of the amount of said late payment. Any payment made by Maker after the Grace
Period has expired, shall be accompanied by a late charge payment equal to three
percent (3%) of the amount of said late payment. The right to receive this late
charge payment shall be in addition to, and not in lieu of, any other remedies
available to Holder under this Convertible Secured Promissory Note, the Security
Agreement, or at law or equity.
3. Default. In case of the occurrence of any of the following events (each
an "Event of Default," herein):
3.1 default shall be made in the payment of any Installment Amount on
each Payment Date, in accordance with the Payment Schedule, pursuant to this
Convertible Secured Promissory Note, as and when the same shall become due and
payable;
3.2 the Maker shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator, (ii) admit in writing its inability to pay his
debts as they mature, (iii) make a general assignment for the benefit of
creditors, (iv) be adjudicated a bankrupt or insolvent, (v) file a voluntary
petition in bankruptcy or petition or answer seeking a reorganization or an
arrangement with its creditors, or (vi) take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation law
or statute or file an answer admitting the material allegations of a petition
filed against it in any proceeding under any such law; or
3.3 an order, judgment or decree shall be entered, without the
application, approval or consent of the Maker, by any court of competent
jurisdiction, approving a petition seeking reorganization of the Maker, or
appointing a receiver, trustee or liquidator for the Maker, and such order,
judgment or decree shall continue unstayed and in effect for any period of 60
days; then the Holder may, after the expiration of the Grace Period notify the
Maker, in writing, of such default and, if such default is left uncured by Maker
for sixty (60) calendar days after the receipt of such notice by Maker, then
Holder may, at its discretion, declare this Convertible Secured Promissory Note
to be forthwith due and payable, whereupon this Convertible Secured Promissory
Note shall become forthwith due and payable without presentment, demand,
protest, or other notice of any kind, all of which are hereby expressly waived.
4. Representations and Warranties.
4.1 Maker hereby represents and warrants to Holder as follows:
(i) Organization; Corporate Authority; Good Standing. Maker is
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted or
contemplated. Maker has all requisite power and authority to execute and
deliver this Convertible Secured Promissory Note, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
(ii) Corporate Actions; No Conflict. The execution, delivery and
performance by Maker and the consummation of the transactions contemplated
hereby have been duly and validity authorized by all necessary corporate action
on the part of Maker. This Convertible Secured Promissory Note has been duly
and validly executed and delivered by Maker and, when executed and delivered in
accordance with its terms, shall constitute the valid and binding obligations of
Maker, enforceable in accordance with the terms thereof. Neither the execution,
delivery or performance by Maker of this Convertible Secured Promissory Note nor
the consummation by Maker of the transactions contemplated hereby, nor
compliance by Maker with any provision hereof will (i) violate or result in a
breach of any provision of the Articles of Incorporation or Bylaws of Maker, in
each case as in effect of the date hereof, (ii) conflict with any law, statute,
ordinance, rule, regulation, order, writ, judgment, injunction, award, decree,
concession, grant, franchise, restriction or agreement of, from or with any
notification of or filing with, any person or entity is required in connection
with the execution, delivery or performance by Maker, or the consummation of the
transaction contemplated hereby.
4.2. Representations and Warranties of Holder. Holder hereby
represents and warrants to Maker as follows:
(i) Organization; Corporate Authority; Good Standing. Holder is
duly organized, validly existing and in good standing under the laws of the
State of California and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted or
contemplated. Holder has all requisite power and authority to execute and
deliver this Convertible Secured Promissory Note, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
(ii) Company Actions; No Conflict. The execution, delivery and
performance by Holder and the consummation of the transactions contemplated
hereby have been duly and validity authorized by all necessary company action on
the part of Holder. This Convertible Secured Promissory Note has been duly and
validly executed and delivered by Holder and, when executed and delivered in
accordance with its terms, shall constitute the valid and binding obligations of
Holder, enforceable in accordance with the terms thereof. Neither the
execution, delivery or performance by Holder of this Convertible Secured
Promissory Note nor the consummation by Holder of the transactions contemplated
hereby, nor compliance by Holder with any provision hereof will (i) violate or
result in a breach of any provision of the Articles of Organization or Operating
Agreement of Holder, in each case as in effect of the date hereof, (ii) conflict
with any law, statute, ordinance, rule, regulation, order, writ, judgment,
injunction, award, decree, concession, grant, franchise, restriction or
agreement of, from or with any governmental authority applicable to Holder. No
permit, consent or approval of or by, or any notification of or filing with, any
person or entity is required in connection with the execution, delivery or
performance by Holder, or the consummation of the transaction contemplated
hereby.
5. Miscellaneous.
5.1. Notices. All payments, notices or other communications which are
required or permitted hereunder shall be in writing and shall be deemed to have
been given if (i) personally delivered or sent by telecopier, (ii) sent by
nationally-recognized overnight courier or (iii) sent by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
If to Maker, to: with a second copy to:
------------------- --------------------------
Nettaxi Online Communities, Inc. Xxxx Xxxx Xxxxx, Esq.
0000 Xxxxx Xxxxxx Xxxxxx Xxxxx & Associates
Xxxxxxxx, Xxxxxxxxxx 00000 1901 Avenue of the Stars #1800
Facsimile: 408.879.9907 Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxx, Xx. Facsimile: 310.286.1816
If to Holder, to: with a second copy to:
-------------------- --------------------------
SSN Properties, LLC R. Xxxxxx XxXxxx, Esq.
00000 Xxxxx Xxxx Xxxxx Liccardo, Rossi, Xxxxxxx & XxXxxx
Xxxxxxxx, XX 00000 1960 The Alameda #200
Facsimile: 408.741.8067 Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxx, Xx. Facsimile: 408.244.3294
Or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
payments, notices or other communications shall be deemed to have been received
(i) when delivered, if personally delivered or sent by telecopier, (ii) on the
business day after dispatch, if sent by nationally recognized, overnight courier
and (iii) on the third business day following the date on which the piece of
mail containing such payments, notices or other communications is posted, if
sent by mail.
5.2. Confidentiality. The provisions of this Convertible Secured
Promissory Note are deemed confidential and may not be revealed to any third
party, except to the extend that such disclosure is required by law or made to
agents or representative of each party hereto. No press release or other public
announcement may issue or be caused to be issued without the prior written
consent of the Holder and Maker.
5.3. Waiver. No waiver of any provision of or default under this
Convertible Secured Promissory Note shall affect the right of any party
thereafter to enforce such provision or to exercise any right or remedy in the
event of any other default, whether or not similar.
5.4. Successors and Assigns; Assignment. This Convertible Secured
Promissory Note shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective successors and assigns.
This Convertible Secured Promissory Note may not be assigned by either party
hereto without the prior written consent of the other party. Notwithstanding
the foregoing, Holder may assign the right to receive payments under this
Convertible Secured Promissory Note to any third party, at its exclusive
discretion.
5.5. Amendment. No modification, amendment, waiver, termination or
discharge of this Convertible Secured Promissory Note or any provisions hereof
shall be binding unless confirmed by a written instrument executed by both
parties.
5.6. Entire Agreement. This Convertible Secured Promissory Note
constitutes the full and final agreement by and between the parties,
incorporating herein all prior or contemporaneous representations or agreements,
whether oral or written, with respect to the subject matter hereof. Neither
party hereto has relied on any representation or warranty not herein contained.
5.7. Governing Law. This Convertible Secured Promissory Note and the
rights and obligations of the parties hereunder shall be construed in accordance
with, and be governed by and under, the laws of the State of California.
5.8 Severability. It is the desire and intent of the parties hereto
that the provisions of this Convertible Secured Promissory Note shall be
enforced to the fullest extend permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. Accordingly, if
any provision of this Convertible Secured Promissory Note shall be adjudicated
to be invalid, illegal or unenforceable in any respect in any jurisdiction, such
provision shall be automatically deemed amended, but only to the extent
necessary to render such provision valid, legal and enforceable in such
jurisdiction, such amendment to apply only with respect to the operation of such
provision in such jurisdiction, and the validity, legality and enforceability of
the remaining provisions of this Convertible Secured Promissory Note shall not
in any way be affected or impaired thereby.
5.9. Construction. The provisions of this Convertible Secured
Promissory Note shall be construed according to their fair meaning and neither
for nor against any party hereto irrespective of which party caused such
provisions, or the Convertible Secured Promissory Note in its entirety, to be
drafted.
5.10 Headings: Gender; Number. The headings of paragraphs and sections
of this Convertible Secured Promissory Note are for convenience and reference
only, do not constitute a part of this Convertible Secured Promissory Note, and
shall not in any way affect the meaning, construction or effect of any provision
of this Convertible Secured Promissory Note. Unless the context otherwise
requires, words expressed in the singular shall include the plural and
vice-versa, and the use of the neuter, masculine or feminine gender is for
convenience only and shall be deemed to mean and include the neuter, masculine
or feminine gender, as appropriate.
5.11. Survival. All agreements, statements, representations,
warranties and covenants made by the parties hereto, and all other agreements
and instruments to be executed in connection therewith, shall survive the
execution and delivery of this Convertible Secured Promissory Note.
5.12. Counterparts. This Convertible Secured Promissory Note may be
executed in any number of counterparts, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts together shall
constitute but one agreement; provided, however, that in proving this
Convertible Secured Promissory Note, it shall not be necessary to produce or
account for more than one counterpart hereof.
5.13. Counsel. All parties hereto represent that, prior to
execution hereof, they have had the benefit of independent and separate legal
counsel in reviewing this Convertible Secured Promissory Note and have not, in
whole or in part, relied upon the advice or counsel of any attorney, agent or
other representative of another party hereto.
5.14 Costs of Collection; Attorney's Fees. The Maker agrees to pay all
costs of collection, including reasonable attorney's fees, incurred by the
Holder of this Convertible Secured Promissory Note in collecting or enforcing
this Convertible Secured Promissory Note, whether in connection with a
reorganization, bankruptcy or other similar proceeding, or upon default.
IN WITNESS WHEREOF, the parties hereto have executed this Convertible
Secured Promissory Note as of the date first-above written:
"Holder" SSN PROPERTIES, LLC,
a California limited liability company
By: /S/ XXXXXX XXXXXXXX
Its: MANAGER
"Maker" NETTAXI ONLINE COMMUNITIES, INC.
a Delaware corporation
By: /S/ XXXXXX XXXXXXXX By: XXXX XXXXXXXX
Its: MANAGER Its: PRESIDENT & CEO
EXHIBIT E
SECURITY AGREEMENT
This Security Agreement ("Security Agreement", herein), dated October ,
--
1997, is made and entered into by and between NeTTaxi Online Communities,
Inc., a Delaware corporation ("Debtor", herein) and SSN Properties, LLC, a
California limited liability company ("Secured Party", herein).
RECITALS
WHEREAS, Maker and Holder have entered into that certain Asset Purchase
Agreement dated as of October 1, 1997 ("Asset Purchase Agreement", herein) under
the terms of which the maker has agreed to purchase, and Holder has agreed to
convey, certain assets, including the Software (as such term is defined in the
Asset Purchase Agreement);
WHEREAS, pursuant to the terms of the Asset Purchase Agreement, Debtor and
Secured Party have entered into that certain Convertible Secured Promissory
Note, dated October , 1997, in the principal amount of One Million and
Twenty Thousand Dollars (US$1,020,000) ("Principal Amount", herein)
("Convertible Secured Promissory Note", herein).
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties, covenants and agreements hereinafter set forth, and
for good and valuable consideration, the receipt and sufficiency of which hereby
are acknowledged, the parties hereto agree as follows:
ARTICLE 1
SECURED OBLIGATIONS
This Security Agreement shall secure the obligation of Debtor to pay to the
Secured Party all amounts due and payable under the terms and conditions of the
Convertible Secured Promissory Note ("Secured Obligation", herein).
ARTICLE 2
SECURITY INTEREST
2.1 Grant of Security Interest. As security for the payment and
performance of the Secured Obligation, the Debtor does hereby convey, assign and
transfer to the Secured Party, and does hereby grant to the Secured Party, a
continuing security interest of first priority, in all of the right, title and
interest of the Debtor in, to and under all of the following, wherever located
and whether now existing or hereafter acquired or created (and prior to the
termination of the Security Agreement), including, without limitation, all
products and proceeds thereto, in and to the following (the "Collateral"):
All interests in and to the proprietary internet access software known as
"Internet The City," "Internet The City Online," and "Web Activator," the
functional specifications of which are attached hereto, and incorporated herein,
as Attachment "A", owned by the Debtor, together with any real and personal
property owned or acquired by Debtor, including without limitation, furniture,
fixtures, equipment, inventory, accounts, deposit accounts, accounts receivable,
chattel paper, instruments, documents, general intangibles, or other rights of
payment, together with all renewals, and including all securities, guarantees,
warranties, indemnity agreements, insurance policies, choices of action, and
final judgments in favor of Debtor.
2.2 Power of Attorney. The Debtor hereby constitutes and appoints the
Secured Party as its true and lawful attorney, irrevocably, with the full power,
but not the obligation, exercisable upon any Event of Default, as that term is
defined in, and under the provisions of the Convertible Secured Promissory Note,
in the name of the Debtor or otherwise, to act, require, demand, receive,
compound, and give acquittance for any and all monies and claims for monies due
or to become due to the Debtor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Secured Party may deem to be necessary or advisable in the circumstances, which
appointment as attorney is coupled with an interest.
ARTICLE 3
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Debtor represents, warrants and covenants to and for the benefit of the
Secured Party:
3.1. Necessary Filings. Debtor shall make all filings, registrations
and recordings necessary or appropriate to create, preserve, protect and perfect
the Security Interest in the United State granted by the Debtor to the Secured
Party by this Security Agreement in connection with the Collateral.
3.2. Enforceable Security Interest. The security interest granted to
the Secured Party pursuant to this Security Agreement in and to the Collateral
constitutes a valid and enforceable security interest therein, superior and
prior to the rights of all other persons or entities therein and subject to no
other liens and is entitled to all the rights, priorities and benefits afforded
by the Uniform commercial Code or other relevant law as enacted in any relevant
jurisdiction to perfected security interests.
3.3. No Liens. The Debtor is, and as to Collateral acquired by it at
any time after the date hereof and prior to the termination of this Security
Agreement, the Debtor will be, the owner of the Collateral free from any lien or
the right, title or interest of any person or entity other than liens created
hereby. The Debtor shall defend the Collateral against all claims and demands
of all persons or entities at any time claiming the same or any interest therein
which is adverse to the Secured Party except as set forth herein. The Debtor
will not execute or authorize to be filed in any public office any financing
statement (or similar statement or instrument or registration under the law of
any jurisdiction) or statement relating to the Collateral, except financing
statements filed or to be filed in respect of the security interest granted
pursuant to this Security Agreement by the Debtor to the Secured Party, and will
not surrender or lose possession of, sell, encumber, lease, rent or otherwise
dispose of, or transfer, any Collateral or right therein (by way of security
interest or otherwise) except as contemplated by this Security Agreement, or
otherwise approved in writing by the Secured Party.
3.4. Executive Office; Records. The executive office of the Debtor is
located at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000. The originals of all
records relating to the Collateral and all receivables, contract rights and
items of chattel paper (as these terms are defined in the California Commercial
Code) and other Collateral are, and will continue to be, kept at such executive
office. The Debtor shall not establish a new location for such offices until
(a) it shall have given to the Secured Party not less than fifteen (15) days
prior notice of its intention to do so, which notice shall clearly describe such
new location and provide such other information in connection therewith as the
Secured Party may reasonably request, and (b) with respect to such new location,
it shall have taken all action, satisfactory to the Secured Party, to maintain
the security interest of the Secured Party in the Collateral granted by this
Security Agreement at all times fully perfected and in full force and effect.
3.5. Accounts and Contract Rights. Each account, contract right, item
of chattel paper, instrument or any other right to the payment of money
constituting Collateral and all records, papers and documents relating thereto
(if any) are genuine, and all papers and documents (if any) relating thereto
evidence true and valid obligations, enforceable in accordance with their
respective terms against the party obligated to pay the same ("Account Debtor",
herein), which terms have not been modified or waived in any respect or to any
extent.
3.6. Maintenance of Records. The Debtor will keep and maintain, at its
sole cost and expense, satisfactory and complete records of the Collateral and
the Debtor will make the same available to the Secured Party for inspection, at
the Debtor's sole cost and expense, at any and all reasonable times, upon seven
(7) days notice by the Secured Party. The Debtor will, at any reasonable time,
upon seven (7) days notice by the Secured Party, exhibit to and allow inspection
by the Secured Party (or persons designated by the Secured Party) of the
Collateral.
3.7. Direction Notice to Account Debtors; Contracting Party, Etc.
Immediately upon any uncured Event of Default, as that term is defined in, and
under the provisions of, the Convertible Secured Promissory Note, until notified
by the Secured Part, the Debtor shall collect, enforce and receive delivery and
payment of the Collateral.
3.8. Protection of the Collateral and the Secured Party's Security.
The Debtor will (a) do nothing to impair the rights of the Secured Party in the
Collateral, (b) do all acts necessary to maintain, preserve and protect the
Collateral, (c) keep the Collateral in good condition and repair, (d) not cause
or permit any waste or unusual or unreasonable depreciation of the Collateral
and (e) comply with all laws, regulations and ordinances relating to the
possession, operation, maintenance and control of the Collateral.
3.9. Further Actions. The Debtor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Secured Party from
time to time any endorsements, assignments, financing statements and other
writings, and take such further steps relating to the Collateral and other
property or rights covered by the security interest granted hereby, which the
Secured Party deems reasonably appropriate or advisable to perfect, preserve or
protect its security interest in the Collateral and the priority thereof and
will deliver promptly to the Secured Party all originals of Collateral or
proceeds thereof consisting of chattel paper or instruments.
3.10. Financing Statements. The Debtor agrees to sign and deliver to
the Secured Party such financing statements, in form and substance acceptable to
the Secured Party, as the Secured Party may from time to time reasonably request
or as are necessary or desirable in the opinion of the Secured Party to
establish and maintain a valid, enforceable first priority security interest in
the Collateral as provided herein, and the other rights and security
contemplated herein, all in accordance with the Uniform Commercial Code as
enacted in any and all relevant jurisdictions or any other relevant law. The
Debtor will pay any applicable filing fees and related expenses and authorizes
the Secured Party to file any such financing statements without the signature of
the Debtor.
ARTICLE 4
REMEDIES UPON EVENT OF DEFAULT
4.1. Remedies; Obtaining the Collateral Upon Default. The Debtor
agrees that, upon any uncured Event of Default, as that term is defined in, and
under the provisions of, the Convertible Secured Promissory Note, subject to any
mandatory requirements of applicable law then in effect, the Secured Party, in
addition to any rights now or hereafter existing under this Security Agreement
or applicable law, shall have all rights as a secured creditor under the Uniform
commercial Code in all relevant jurisdictions, and may do any one or more of the
following:
(a) Personally, or by agents or attorneys, immediately retake
possession of the Collateral or any part thereof, from the Debtor or any other
person or entity who then has possession of any part thereof, with or without
notice or process of law, and for that purpose may enter upon the Debtor's
premises where any of the Collateral is located and move the same and use in
connection with such removal any and all services, supplies, aids and other
facilities of the Debtor; and,
(b) Personally, or by agents or attorneys, immediately enter upon
the Debtor's premises for purposes of using any portion of the Collateral to, if
necessary, xxxx and invoice unbilled receivables and the Debtor hereby grants to
the Secured Party the right and license to so use its premises (whether owned or
leased by the Debtor) until the earlier to occur of either (i) payment in full
of all Secured Obligations or (ii) completion of billing and invoicing of all
unbilled receivables; provide, however, that the Debtor shall be entitled to
receive, for so long as the Secured Party shall have use of the Debtor's
premises pursuant to this Paragraph 4.1.(b), reasonable rent for such use which
shall be, (A) if the Debtor owns its premises, an amount equal to rent for
comparable space incomparable locations used for comparable purposes, or (B) if
the Debtor leases its premises, an amount equal to the rental payments due on
the Debtor's premises for the period of the Secured Party use of such premises,
pro-rated if necessary to reflect the Secured Party actual use of the premises,
such rent to become due and payable as provided in Paragraph 4.3.(c) hereof; and
(c) Instruct the obligor or obligors on any agreement, instrument
or other obligation (including, without limitation, any account receivables)
constituting the Collateral to make any payment required by the terms of such
instruments or agreements directly to the Secured Party; and,
(d) Sell, assign or otherwise liquidate, or direct the Debtor to
sell, assign or otherwise liquidate, any or all of the Collateral or any part
thereof, and take possession of the proceeds of any such sale or liquidation;
and,
(e) Take possession of the Collateral or any part thereof, by
directing the Debtor in writing to deliver the same to the Secured Party at any
place or places designated by the Secured Party, in which event the Debtor shall
at its own expense:
(i) forthwith cause the same to be moved to the place or places so
designated by the Secured Party and there delivered to the Secured Party; and,
(ii) store and keep any Collateral so delivered to the Secured Party at such
place or places pending further action by the Secured Party as provided in
Paragraph 4.2 hereof; and,
(iii) while the Collateral shall be so stored and kept, provide such
reasonable precautions as shall be necessary to protect, preserve and maintain
the Collateral in good condition.
It is expressly understood between the parties hereto that the Debtor's
obligation to deliver the Collateral under this Paragraph is of the essence to
this Security Agreement and that, accordingly, upon application to a court of
equity having jurisdiction, the Secured Party shall be entitled to a decree
requiring specific performance by the Debtor of said obligation.
4.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Secured Party under or pursuant to Paragraph 4.1 hereof, any
other Collateral whether or not so repossessed by the Secured Party, may, at the
exclusive discretion of the Secured Party, be sold, assigned, leased or
otherwise disposed of under one or more contracts or as an entirety, and without
the necessity of gathering at the place of sale the property to be sold, and in
general in such manner, at such time or times, at such place or places and on
such terms as the Secured Party may, in compliance with any mandatory
requirements or applicable law, determine to be leased or otherwise disposed of,
in the condition in which the same existed when taken by the Secured Party or
after any overhaul or repair which the Secured Party shall determine to be
commercially reasonable. Such disposition may be (i) by private sale or other
private proceeding, or (ii) by public sale, at the exclusive discretion of the
Secured Party. Any such disposition which is a private sale or other private
proceeding permitted by such requirements shall be made upon not less than ten
(10)days (which the Debtor acknowledges as being a commercially reasonable
period of time) written notice to the Debtor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefore, and shall be subject, for the ten (10) days after the giving of such
notice, to the right of the Debtor or any nominee of the Debtor to acquire the
Collateral involved at a price or for such other consideration at least equal to
the intended sale price or other consideration so specified. Any such
disposition which is a public sale permitted by such requirements shall be made
upon not less than ten (10) days (which the Debtor acknowledges as being a
commercially reasonably period of time) written notice to the Debtor specifying
the time and place of such sale and, in the absence of applicable requirements
of law, shall be by public auction (which may, at the Secured Party's option, be
subject to reserve), after publication of notice of such auction not less than
ten (10) days prior thereto in two newspapers in general circulation in the
County of Los Angeles, California. If, under mandatory requirements of
applicable law, the Secured Party shall be required to make disposition of the
Collateral within a period of time which does not permit the giving of notice to
the Debtor as hereinabove specified, the Secured Party shall be given only such
notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law. To the extend permitted by any such
requirement of law, the Secured Party may bid (which may be a credit bid) for
and become the purchaser of the Collateral or any item thereof, offered for sale
in accordance with this Paragraph 4.2 without accountability to the Debtor
(except to the extent of surplus money received as provided in Paragraph 4.3
hereof). The Secured Party may, in its discretion, postpone the date of any
public or private sale to be conducted pursuant to this Paragraph by giving the
Debtor written notice of such postponement not less than one (1) day prior to
the scheduled date.
4.3 Application of Proceeds. The proceeds of any Collateral obtained
pursuant to Paragraph 4.1 hereof, or disposed of pursuant to Paragraph 4.2
hereof, shall be applied as follows:
(a) First, to be payment of any and all expenses and fees
(including, without limitation, reasonable attorneys' fees) incurred by the
Secured Party in obtaining, taking possession of , removing, insuring,
repairing, storing and disposing of Collateral and any and all amounts incurred
by the Secured Party in connection therewith; and,
(b) Next, any surplus then remaining to the payment of the balance
of the Secured Obligations in such order as the Secured Party may determine in
its sole discretion; and,
(c) If no other Secured Obligation is outstanding, any surplus
then remaining shall be paid to the Debtor first as rent owing pursuant to
Paragraph 4.1(b) hereof, if any, and then as surplus proceeds of Collateral,
subject, however, to the rights of the holder of any then existing lien of which
the Secured Party has actual notice (without investigation);
It is expressly understood between the parties hereto that the Secured Party
shall have no recourse to the Debtor other than to the proceeds of the
Collateral for any deficiency between the amount of the proceeds of the
Collateral and the aggregate amount of the sums referred to in Subsections (a)
and (b) above with respect to the Debtor.
4.4. Remedies Cumulative. The rights, powers and remedies expressly
provided in this Security Agreement are cumulative and do not exclude the
exercise of any rights, powers or remedies otherwise available to the Secured
Party. No failure or delay by the Secured Party to exercise any right, power
or privilege under this Security Agreement shall impair any such right, power or
privilege and no course of dealing between the Debtor and the Secured Party
shall be construed to be a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege or any single or partial waiver of
breach or default under this Security Agreement shall preclude any further or
other exercise of the same or any other right, power, privilege or be deemed a
waiver of any other breach or Default hereunder. No notice to or demand on the
Debtor in any case shall entitle the Debtor to any further notice or demand in
similar or other circumstances or constitute a waiver of the right of the
Secured Party to take any action without notice or demand. Any waiver, consent
or approval under this Security Agreement must be in writing to be effective.
4.5. Discontinuance of Proceedings. In case the Secured Party shall
have instituted any proceeding to enforce any right, power or remedy under this
Security Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Secured Party, then and in every such case the
Debtor and the Secured Party shall be restored to their former positions and
rights hereunder with respect to the Collateral subject to the security interest
created under this Security Agreement, and all rights, remedies and powers of
the Secured Party shall continue as if no such proceeding had been instituted.
ARTICLE 5
MISCELLANEOUS
5.1. Notices. All payments, notices or other communications which are
required or permitted hereunder shall be in writing and shall be deemed to have
been given if (i) personally delivered or sent by telecopier, (ii) sent by
nationally-recognized overnight courier or (iii) sent by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
If to Debtor, to: with a second copy to:
-------------------- --------------------------
Nettaxi Online Communities, Inc. Xxxx Xxxx Xxxxx, Esq.
0000 Xxxxx Xxxxxx Xxxxxx Xxxxx & Associates
Xxxxxxxx, Xxxxxxxxxx 00000 1901 Avenue of the Stars #1800
Facsimile: 408.879.9907 Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxx, Xx. Facsimile: 310.286.1816
If to Secured Party, to: with a second copy to:
---------------------------- --------------------------
SSN Properties, LLC R. Xxxxxx XxXxxx, Esq.
00000 Xxxxx Xxxx Xxxxx Liccardo, Rossi, Xxxxxxx & XxXxxx
Xxxxxxxx, XX 00000 1960 The Alameda #200
Facsimile: 408.741.8067 Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxx, Xx. Facsimile: 408.244.3294
Or to such other address the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
payments, notices or other communications shall be deemed to have been received
(i) when delivered, if personally delivered or sent by telecopier, (ii) on the
business day after dispatch, if sent by nationally recognized, overnight courier
and (iii) on the third business day following the date on which the piece of
mail containing such payments, notices or other communications is posted, if
sent by mail.
5.2. Confidentiality. The provisions of this Security Agreement are
deemed confidential and may not be revealed to any third party, except to the
extent that such disclosure is required by law or made to agents or
representatives of each party hereto. No press release or other public
announcement may issue or be caused to be issued without the prior written
consent of the Secured Party and Debtor.
5.3. Secured Obligation Absolute. The obligations of Debtor under this
Security Agreement shall be absolute and unconditional and shall remain in full
force and effect, without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstances or occurrence
whatsoever, including, without limitation, (a) any renewal, extension, amendment
or modification of, or addition or supplement to or deletion from, or any
assignment or transfer of, the Convertible Secured Promissory Note or any
documents related to any transactions contemplated in connection therewith, (b)
any waiver, consent, extension, indulgence or other action or inaction under or
in respect of any such instrument or agreement or this Security Agreement or any
exercise or non-exercise of any right, remedy, power or privilege under or in
respect of this Security Agreement, the Convertible Secured Promissory Note or
any documents related to any transactions contemplated in connection therewith,
(c) the existence of or any furnishing of any additional security to the Secured
Party or any acceptance thereof or any sale, exchange, release, surrender or
realization of or upon any security by the Secured Party or (d) any invalidity,
irregularity or unenforceability of all or part of the Secured Obligations or of
any security therefor.
5.4. Termination. This Security Agreement shall terminate only upon
the full and complete performance of all of the Secured Obligations, and Secured
Party shall thereon execute and deliver such documents as Debtor may reasonably
require to evidence such termination by satisfaction of the Secured Obligations.
5.5. Continuing Security Agreement; Reliance on Security Agreement.
This Security Agreement is a continuing one and the Secured Obligations to which
it applied or may apply pursuant to its terms shall be conclusively presumed to
have been created in reliance on the representations, warranties and agreements
contained in this Security Agreement.
5.6. The Debtor's Duties. Notwithstanding anything to the contrary
contained herein, the Debtor shall remain liable to perform all of the
obligations, if any, assumed by it with respect to the Collateral and the
Secured Party shall not have any obligations or liabilities with respect to any
Collateral by reason of or arising out of this Security Agreement or any other
Document, nor shall the Secured Party be required or obligated in any manner to
perform or with respect to any Collateral.
5.7. Successors and Assigns; Assignment. This Security Agreement shall
be binding upon, inure to the benefit of, and be enforceable by the parties
hereto and their respective successors and assigns. This Security Agreement is
assignable by Debtor, at its exclusive discretion; provided, however, that the
obligations of Debtor hereunder shall be carried out by assignee. This Security
Agreement is not assignable by Secured Party without the express written consent
of Debtor, which consent shall not be unreasonably withheld.
5.8. Amendment. No modification, amendment, waiver, termination or
discharge of this Security Agreement or any provisions hereof shall be binding
unless confirmed by a written instrument executed by both parties.
5.9. Entire Agreement. This Security Agreement constitutes the full
and final agreement by and between the parties, incorporating herein all prior
or contemporaneous representations or agreements, whether oral or written, with
respect to the subject matter hereof. Neither party hereto has relied on any
representation or warranty not herein contained.
5.10. Governing Law. This Security Agreement, and the rights and
obligations of the parties hereunder, shall be construed in accordance with, and
be governed by and under, the laws of the State of California.
5.11. Severability. It is the desire and intent of the parties hereto
that the provisions of this Security Agreement shall be enforced to the fullest
extend permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any provision of
this Security Agreement shall be adjudicated to be invalid, illegal or
unenforceable in any respect in any jurisdiction, such provision shall be
automatically deemed amended, but only to the extent necessary to render such
provision valid, legal and enforceable in such jurisdiction, such amendment to
apply only with respect to the operation of such provision in such jurisdiction,
and the validity, legality and enforceability of the remaining provisions of
this Security Agreement shall not in any way be affected or impaired thereby.
5.12. Construction. The provisions of this Security Agreement shall be
construed according to their fair meaning and neither for nor against any party
hereto irrespective of which party caused such provisions, or the Security
Agreement in its entirety, to be drafted.
5.13. Headings; Gender; Number. The headings of articles and
paragraphs of this Security Agreement are for convenience and reference only, do
no constitute a part of this Security Agreement, and shall not in any way affect
the meaning, construction or effect of any provision of this Security Agreement.
Unless the context otherwise requires, words expressed in the singular shall
include the plural and vice-versa, and the xxx of the neuter, masculine or
feminine gender is for convenience only and shall be deemed to mean and include
the neuter, masculine or feminine gender, as appropriate.
5.14. Survival. All agreements, statements, representations,
warranties and covenants made by the parties hereto, and all other agreements
and instruments to be executed in connection therewith, shall survive the
execution and delivery of this Security Agreement and shall continue in full
force and effect until the full, final and indefeasible payment and performance
of all of the Secured Obligations.
5.15. Counterparts. This Security Agreement may be executed by the
parties hereto in any number of counterparts, each of which, when so executed,
shall be deemed an original and all of which shall together constitute one and
the same agreement; provided, however, that in proving this Security Agreement,
it shall not be necessary to produce or account for more than one counterpart
hereof.
5.16. Counsel. All parties hereto represent that, prior to execution
hereof, they have had the benefit of independent and separate legal counsel in
reviewing this Security Agreement and have not, in whole or in part, relied upon
the advice or counsel of any attorney, agent or other representative of another
party hereto.
5.17. Attorney's Fees. Should any dispute occur between Buyer and
Seller with respect to this Security Agreement or any document executed in
connection herewith, which results in litigation, the losing party or parties
shall pay the prevailing party or parties their reasonable attorneys' fees,
costs and expenses, whether incurred before or after the entry of judgment.
IN WITNESS WHERE OF, the parties hereto have executed this Security
Agreement as on the date first-above written:
"Secured Party" SSN PROPERTIES, LLC,
a California limited liability company
By:
Its:
"Debtor" NETTAXI ONLINE COMMUNITIES, INC.
a Delaware corporation
By: By:
Its: Its:
EXHIBIT F
Copyright Interests, Trademarks and Intellectual Property Interests
Application
Name of Trademark Owner of Trademark Number Filing Date
------------------- ------------------- ----------- -----------------
XXXXX NEWS SSN Properties, LLC 75/065,641 February 29, 1996
NETTAXI SSN Properties, LLC 75/045,731 January 18, 1996
INTERNET THE CITY SSN Properties, LLC 184499 April 1, 1996
NET TAXI SSN Properties, LLC 75/044,861 January 18, 1996
URL AND DESIGN SSN Properties, LLC 75/064,721 February 28, 1996
URL AND DESIGN SSN Properties, LLC 75/064,681 February 28, 1996
URL AND DESIGN SSN Properties, LLC 75/064,683 February 28, 1996
EXHIBIT G
Appraisal of Fair Market Value of Software