EXHIBIT 10.2
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this "Agreement") is entered into as of
May 2, 2001 by and among Xxxxxx.xxx, Inc., a Delaware corporation (the
"Company"), Xxxx Interactive Services, Inc., the Company's parent ("Xxxx") and
France Telecom Technologies, a French corporation (the "Investor").
Background
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The Company wishes to obtain, and the Investor is prepared to make, a
US$2,500,000 convertible loan to the Company, with the proceeds of such loan to
be used by the Company for general working capital purposes. The Investor will
have the option of converting all or a portion of the loan contemplated hereby
into Series B Preferred Stock of the Company, and the loan contemplated hereby
shall automatically convert into Series B Preferred Stock of the Company upon
the execution and delivery by the Company and the Investor of a Stock Purchase
Agreement pursuant to which the Investor will acquire not less than $5,000,000
of equity securities of the Company. Until the loan is repaid or converted into
Series B Preferred Stock of the Company, the loan will be secured by a security
agreement from the Company and guaranteed by a guaranty from Xxxx.
Agreement
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Section 1 - Purchase and Sale of Note
1.1 Agreement to Purchase and Sell Note. The Company agrees to issue and sell
to the Investor, and the Investor agrees to purchase from the Company, a
Convertible Promissory Note (the "Note"), in the principal amount of $2,500,000
in the form attached as Exhibit A, the repayment of which shall be secured
pursuant to a Security Agreement (the "Security Agreement"), attached hereto as
Exhibit B and guaranteed pursuant to a Guaranty (the "Guaranty") by Xxxx, in the
form attached hereto as Exhibit C, which Guaranty shall be secured by a pledge
to Investor of all of the capital stock of the Company. The Note and any shares
of the Company's preferred stock, common stock or any other equity securities
issuable upon conversion of the Note and any convertible securities of the
Company acquired upon conversion of the Note are referred to as "Securities."
Section 2 - Representations and Warranties
of the Company
The Company represents and warrants to the Investor:
2.1 Organization, Good Standing and Qualification. The Company is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or
organization and has all requisite corporate power and authority to carry on its
business as now conducted. The Company is duly qualified to transact business
and is in good standing in each jurisdiction in which the failure so to qualify
would have a material adverse effect on the business or financial condition of
the Company taken as a whole.
2.2 Authorization; Consents. The Company has the requisite corporate power and
authority to enter into and perform its obligations under (i) this Agreement,
(ii) the Note, (iii) the Security Agreement, and (iv) all other agreements,
documents or other instruments executed and delivered by or on behalf of the
Company in connection with the transaction contemplated herein (the instruments
described in (i) and (ii) being collectively referred to herein as the
"Transaction Documents"). All corporate action on the part of the Company by
its officers, directors and stockholders necessary for the authorization,
execution and delivery of, and the performance by the Company of its obligations
under, the Transaction Documents has been taken, and no further consent or
authorization of the Company, its Board of Directors, its stockholders, any
governmental agency or organization (other than such approval as may be required
under the U.S. Securities Act of 1933, as amended (the "Act") and applicable
state securities laws), or any other person or entity is required.
2.3 Enforcement. Each of the Transaction Documents constitutes a valid and
legally binding obligation of the Company, enforceable in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency or other laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity) or public policy.
2.4 Disclosure Documents; Agreements; Financial Statements; Other Information.
Xxxx has filed with the U.S. Securities and Exchange Commission (the "SEC"): (i)
Xxxx'x Annual Report on Form 10-KSB for the year ended December 31, 2000 and
(ii) all reports required to be filed with the SEC since December 31, 2000 and
prior to the date hereof (collectively, the "Disclosure Documents"). Each
Disclosure Document, as of the date of the filing thereof with the SEC,
conformed in all material respects to the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act") and, as of the date of such filing, such Disclosure Document did
not contain an untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Neither the Company nor Xxxx is in breach of any agreement to which it is a
party or by which it is bound where such breach could have a material adverse
effect on (i) the business, operations, properties, financial condition,
prospects or results of operations of the Company or Xxxx (ii) the transactions
contemplated hereby, or by the other Transaction Documents, (iii) the Securities
or (iv) the ability of the Company or Xxxx to perform its obligations under this
Agreement or the other Transaction Documents (collectively, a "Material Adverse
Effect"). Except as set forth in the Disclosure Documents, neither the Company
nor Xxxx has liabilities, contingent or otherwise, other than liabilities
incurred in the ordinary course of business which, under generally accepted
accounting principles, are required to be reflected in such financial statements
(including the footnotes to such financial statements) and which, individually
or in the aggregate are material to the business or financial condition of the
Company. As of their respective dates, the financial statements of Xxxx
included in the Disclosure Documents have
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been prepared in accordance with generally accepted accounting principles
consistently applied at the times and during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of Xxxx and its consolidated
subsidiaries, including the Company, as of the dates thereof and the results of
its operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end adjustments).
2.5 Disclosure. All information relating to or concerning the Company and Xxxx
set forth in this Agreement or provided to the Investor pursuant to paragraph
3.3 hereof and otherwise in connection with the transactions contemplated hereby
is true and correct in all material respects and neither the Company nor Xxxx
has omitted to state any material fact necessary in order to make the statements
made herein or therein, in light of the circumstances under which they were
made, not misleading.
2.6 Capitalization. The capitalization of the Company, including its
authorized capital stock, the number of shares issued and outstanding, the
number of shares reserved for issuance pursuant to the Company's stock option
plans and the number of shares issuable and reserved for issuance pursuant to
securities exercisable for, or convertible into or exchangeable for any shares
of its Common Stock is set forth on Schedule 2.6 hereto. All of such
outstanding shares of capital stock have been, or upon issuance will be, validly
issued, fully paid and non-assessable. Except as set forth on Schedule 2.6, no
shares of the capital stock of the Company are subject to preemptive rights or
any other similar rights of the stockholders of the Company or any liens or
encumbrances created by or through the Company. Except as disclosed on Schedule
2.6, or as contemplated herein, there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock of the Company or arrangements by
which the Company or Xxxx is or may become bound to issue additional shares of
capital stock of the Company or any of its subsidiaries.
2.7 Valid Issuance. Note, the Series B Convertible Preferred Stock (the
"Series B Preferred Shares") which may be issued in connection with the
conversion of the Note and the Common Stock which may be issued upon conversion
of the Series B Preferred Shares are duly authorized and, when issued, sold and
delivered in accordance with the terms hereof, (i) will be duly and validly
issued, fully paid and nonassessable, free and clear of any taxes, liens,
claims, preemptive or similar rights or encumbrances imposed by or through the
Company (collectively, "Encumbrances"), (ii) based in part upon the
representations of the Investor in this Agreement, will be issued, sold and
delivered in compliance with all applicable U.S. Federal and state securities
laws and (iii) the Series B Preferred Shares, if issued upon conversion of the
Note, would be entitled to all of the rights, preferences and privileges set
forth in the Certificate of Designations for the Series B Preferred Shares(the
"Certificate of Designations").
2.8 No Conflict with Other Instruments. The Company is not in violation of
any provisions of its charter, bylaws or any other governing document as amended
and in effect on and as of the date hereof or in default (and no event has
occurred which, with notice or lapse of time or both,
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would constitute a default) under any provision of any instrument or contract to
which it is a party or by which it is bound, or of any provision of any U.S.
Federal, state or foreign judgment, writ, decree, order, statute, rule or
governmental regulation applicable to the Company, which violation or default
could reasonably be expected to have a Material Adverse Effect. The (i)
execution, delivery and performance of this Agreement and the other Transaction
Documents, (ii) execution and filing of the Certificate of Designations and
(iii) consummation of the transactions contemplated hereby and thereby will not,
in any such case, result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument or contract or an event which
results in the creation of any lien, charge or encumbrance upon any assets of
the Company or the triggering of any preemptive or anti-dilution rights or
rights of first refusal or first offer, or any similar rights on the part of
holders of the Company's securities.
2.9 Financial Condition; Taxes; Litigation.
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2.9.1 The financial condition of Xxxx and the Company is, in all material
respects, as described in the Disclosure Documents, except for changes in the
ordinary course of business and normal year-end adjustments that are not, in the
aggregate, materially adverse to the consolidated business or financial
condition of Xxxx or the Company. There has been no material adverse change to
the Company's or Xxxx'x business, operations, properties, financial condition,
prospects or results of operations since the date of Xxxx'x most recent audited
financial statements contained in the Disclosure Documents.
2.9.2 The Company and Xxxx have filed all tax returns required to be filed
by them and paid all taxes which are due, except for taxes which it reasonably
disputes or which could not have a Material Adverse Effect.
2.9.3 Neither the Company nor Xxxx is the subject of any pending or, to
the Company's or Xxxx'x knowledge, threatened inquiry, investigation or
administrative or legal proceeding by the Internal Revenue Service, the taxing
authorities of any state or local jurisdiction, the SEC or any state securities
commission or other governmental or regulatory entity which could have a
Material Adverse Effect.
2.9.4 Except as described in the Disclosure Documents, there is no claim,
litigation or administrative proceeding pending, or, to the Company's knowledge,
threatened or contemplated, against the Company, or against any officer,
director or employee of the Company in connection with such person's employment
therewith that, individually or in the aggregate, could have a Material Adverse
Effect. Neither the Company nor Xxxx is a party to or subject to the provisions
of, any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality which could have a Material Adverse Effect.
2.10 Intellectual Property. The Company owns or possesses sufficient legal
rights to all patents, trademarks, service marks, trade names, copyrights, trade
secrets, information and other proprietary rights and processes necessary for
its business as now conducted and as proposed to be conducted, without any known
infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is the Company
bound
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by or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes of any other
person or entity other than such licenses or agreements arising from the
purchase of "off the shelf" or standard products. The Company has not received
any communications alleging that the company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. The Company is not aware that any of its employees
is obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with their duties to
the company or that would conflict with the Company's business as proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the Company, nor the
conduct of the Company's business as proposed, will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any employee is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions, trade secrets or proprietary information of
any of its employees made prior to their employment by the Company, except for
inventions, trade secrets or proprietary information that have been assigned to
the Company.
2.11 Fees. The Company is not obligated to pay any compensation or other fee,
cost or related expenditure to any underwriter, broker, agent or other
representative or entity in connection with the transactions contemplated
hereby. The Company will indemnify and hold harmless the Investor from and
against any claim by any person or entity alleging that the Investor is
obligated to pay any such compensation, fee, cost or related expenditure in
connection with the transactions contemplated hereby.
2.12 Regulatory Permits. The Company possesses all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct its business, except where the
failure to so possess such certificates, authorizations or permits could not
have a Material Adverse Effect, and neither Xxxx nor the Company has received
any notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which revocation or modification could have
a Material Adverse Effect.
2.13 Environment. There are no environmental liabilities, nor factors likely
to give rise to any environmental liability, affecting any of the properties of
the Company that, individually or in the aggregate, would have a Material
Adverse Effect and the Company has not violated any environmental laws
applicable to it now or previously in effect ("Environmental Laws"), other than
such violations or infringements that, individually or in the aggregate, have
not had and will not have a Material Adverse Effect.
2.14 Proprietary Information and Inventions Agreements. Each employee, officer
and consultant of the Company has entered into a proprietary rights agreement
with the Company.
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Section 3 - Representations and Warranties
of the Investor
The Investor represents and warrants to the Company:
3.1 Authorization; Enforceability. The Investor is duly and validly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization with full corporate power and authority to
purchase the Securities and to execute and deliver this Agreement. This
Agreement constitutes the Investor's valid and legally binding obligation,
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency or other laws affecting creditors'
rights generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) or public policy.
3.2 Accredited Investor; Purchase as Principal. The Investor is an accredited
investor as that term is defined in Rule 501 of Regulation D promulgated by the
SEC, and is acquiring or will acquire the Securities solely for its own account
as a principal and not with a present view to the public resale or distribution
of all or any part thereof.
3.3 Information. The Company has provided the Investor with information
regarding the business, operations and financial condition of the Company, and
has granted to the Investor the opportunity to ask questions of and receive
answers from representatives of the Company, its officers, directors, employees
and agents concerning the Company and materials relating to the terms and
conditions of the purchase and sale of the Securities. Neither such information
nor any other investigation conducted by the Investor or any of its
representatives shall modify, amend or otherwise affect the Investor's right to
rely on the Company's representations and warranties contained in this
Agreement.
3.4 Limitations on Disposition. The Investor acknowledges that the Securities
have not been and are not being registered under the Act and may not be
transferred or resold without registration under the Act or unless pursuant to
an exemption therefrom.
3.5 Legend. The Investor understands that the certificates representing the
Securities may bear at issuance a restrictive legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE, AND MAY NOT BE OFFERED OR SOLD UNLESS A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR AN EXEMPTION FROM REGISTRATION
UNDER SUCH LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER OR SALE."
Notwithstanding the foregoing, it is agreed that, as long as (A) such
Securities have been sold pursuant to SEC Rule 144 ("Rule 144") and the Investor
has delivered to the Company
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customary Rule 144 broker's and seller's representation letters, or (B) such
Securities can be sold pursuant to Rule 144(k) under the Act, such Securities
shall be issued without any legend or other restrictive language and, with
respect to Securities upon which such legend is stamped, the Company shall issue
new certificates without such legend to the holder promptly upon request.
3.6 No Conflict. The execution, delivery and performance by the Investor of
this Agreement and Transaction Documents to which Investor is a party (A) have
been approved by all necessary action (corporate or other) on the part of the
Investor and (B) will not result in (i) any material violation of any provisions
of its charter, bylaws or any other governing document in effect on the date
hereof, or (ii) any material violation of any instrument or contract to which it
is a party or by which it is bound.
Section 4 - Covenants of the Company
4.1 Corporate Existence. The Company shall, so long as the Investor or any
affiliate of the Investor beneficially owns any Securities, maintain its
corporate existence in good standing under the jurisdiction of its incorporation
and maintain its good standing in each jurisdiction where it conducts business
and shall pay all taxes owed by it when due except for taxes which the Company
reasonably disputes.
4.2 Provision of Information. The Company shall, so long as the Investor or
any affiliate of the Investor beneficially owns any Securities, provide the
Investor with copies of all materials sent to stockholders, in each such case at
the same time that it mails such materials to its stockholders.
4.3 Reservation of Preferred Shares and Common Stock. The Company shall at all
times have authorized and reserved for issuance to the Investor pursuant to the
conversion of the Note or the Series B Preferred Shares, free from any
preemptive rights, a number of shares of Series B Preferred Shares and/or Common
Stock, as the case may be, equal to the maximum number of shares issuable upon
conversion of the Note or Series B Preferred Shares, as the case may be.
4.4 Issuance of Restricted Securities. During the period beginning on the date
hereof and ending on the date which is 69 days following the date hereof (such
period, the "Financing Restriction Period"), the Company shall not issue or
agree to issue (except issuance pursuant to (i) an employee benefit plan or
program duly adopted by the Company and in effect on the date hereof, or (ii)
any options, warrant or convertible securities outstanding on the date hereof)
any equity or equity-linked securities of the Company (any such securities,
"Restricted Securities") unless the Company and the Investor have terminated
discussions in connection with the preparation of the Stock Purchase Agreement
(as defined in the LOI) or the Investor has consented in writing to such offer
or issuance.
4.5 No Adverse Action. The Company and Xxxx shall refrain, while the Note or
any Series B Preferred Shares are outstanding, from taking any action or
entering into any arrangement which in any way would materially and adversely
affect the rights, privileges or benefits available to a holder of the Note or
the Series B Preferred Shares pursuant to the terms of the Note or the
Certificate of Designations, respectively.
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4.6 Intentional Acts or Omissions. Neither the Company nor Xxxx shall perform
any act or intentionally omit to perform any act which would prevent or excuse
the performance of this Agreement or any of the transactions contemplated
hereby.
4.7 Use of Proceeds. The Company will utilize the funds advanced to the
Company by the Investor under the Note solely to fund general working capital
requirements of the Company in the normal course of business consistent with
current practice and the current business of the Company.
Section 5 - Conditions to Closing
5.1 Conditions to Investor's Obligations. The Investor's obligations to
purchase the Note is conditioned upon the satisfaction by the Company (or waiver
by the Investor) of each of the following events:
5.1.1 the representations and warranties of the Company and Xxxx set forth
in this Agreement shall be true and correct in all material respects;
5.1.2 the Company and Xxxx shall have complied with or performed in all
material respects all of the agreements, obligations and conditions set forth in
this Agreement that are required to be complied with or performed by the Company
or Xxxx, as the case may be;
5.1.3 the Company and Xxxx shall have delivered to the Investor a
certificate, signed by an officer of the Company, certifying that the conditions
specified in this paragraph 5.1 have been fulfilled, it being understood that
the Investor may rely on such certificate as though it were a representation and
warranty of the Company made herein;
5.1.4 the Company and Xxxx shall have delivered to the Investor an opinion
of counsel for the Company and Xxxx, dated as of the date hereof, in
substantially the form set forth on Exhibit C hereto, and covering such
additional matters as may reasonably be requested by the Investor;
5.1.5 the Company shall have delivered to the Investor a duly executed
Note;
5.1.6 the Company shall have authorized and reserved for issuance the
number of Preferred Shares which may be issued upon conversion of the Note and
the number of shares of Common Stock which may, in turn, be issued upon
conversion of the Preferred Shares;
5.1.7 the Company shall have duly filed the Certificate of Designations
with the Secretary of State of the State of Delaware;
5.1.8 Xxxx shall have converted its account receivable from the Company in
the amount of $7,871,099 U.S. into an aggregate of 7,871 shares of the Series C
Preferred Shares; and
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5.1.9 the Company shall have no outstanding liabilities other than the
liabilities set forth in the Disclosure Documents or on Schedule 2.6 hereto,
including, without limitation, the obligation in the amount of $680,000 U.S.
payable to Diamond Technology Partners, Inc., which obligation is to be
converted into shares of the Company's Series B Preferred Shares at the time of
and on such terms and conditions as the capital stock issued in connection with
the Company's first external financing (i.e., a financing with a party other
than Xxxx) which involves the issuance of shares of the Company's capital stock.
5.2 Conditions to Company's Obligations. The Company's obligations hereunder
are conditioned upon the satisfaction (or waiver by the Company) of each of the
following events as of the First Closing:
5.2.1 the representations and warranties of the Investor shall be true and
correct in all material respects; and
5.2.2 the Investor shall have complied with or performed in all material
respects all of the agreements, obligations and conditions set forth in this
Agreement that are required to be complied with or performed by the Investor on
or before the purchase of the Note.
Section 6 - Defaults
6.1 Events of Default. Each of the following events shall be an event of
default (an "Event of Default") for purposes of the Loan Documents:
a) Failure of the Company to pay principal or interest on the Note when
due;
b) Failure of the Company to perform or observe any covenant or agreement
as required by the Loan Documents and continuation of such failure for a
period of ten (10) days following written notice from the Investor;
c) The Company can generally not pay its debts as such debts become due,
or admits in writing its inability to pay its debts generally, or makes a
general assignment for the benefit of creditors; or any proceeding is
instituted by or against the Company seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, custodianship, protection, or relief of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of
a receiver, custodian trustee, or other similar official for it or for any
substantial part of its property, and such proceeding is not dismissed
within 90 days of its commencement;
d) The entry against the Company of a final judgment, decree or order for
the payment of money in the excess of $50,000 and such judgment, decree or
order remains unsatisfied for a period of 30 days without a stay of
execution; or
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e) Any of the representations and warranties of the Company made in this
Agreement are not true and correct in any material respect as of the date
of this Agreement.
6.2 Rights and Remedies. If any Event of Default occurs and continues, the
Investor may exercise any or all of the following rights and remedies:
a) Declare the Note and all interest thereon to be immediately due and
payable, and upon such declaration the Note and interest shall immediately
be due and payable, without presentment, demand, protest or any notice of
any kind, all of which are expressly waived; and
b) Exercise any and all other rights and remedies available to the
Investor under the Security Agreement, the Guaranty and each other
Transaction Document and all other rights and remedies available to the
Investor at law and in equity.
6.3 Notice of Default. When, to its knowledge, an Event of Default has
occurred or exists, the Company agrees to give written notice to the Investor
within three (3) business days of the Event of Default.
6.4 Termination of Section 6. This Section 6 shall terminate upon repayment of
all principal and accrued interest on the Note or conversion of the Note in
accordance with its terms, whichever occurs earlier.
Section 7 - Miscellaneous
7.1 No Waiver; Cumulative Remedies. No failure or delay on the part of the
Investor in exercising any right or remedy under, or pursuant to, any of the
Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, remedy or power preclude other or further
exercise thereof, or the exercise of any other right, remedy or power. The
remedies in the Loan Documents are cumulative and are not exclusive of any
remedies provided by law.
7.2 Amendments and Waivers. No amendment or waiver or any provisions of any of
the Loan Documents shall be effective unless such amendment or waiver is in
writing signed by the Investor and the Company and such amendment or waiver
shall be effective only in the specific instance and for the specific purpose
for which it was given.
7.3 Notices, Etc. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person, sent by facsimile transmission to the
telephone number set forth on the signature page or such other number as may
hereinafter be designated in writing by the recipient to the sender, or duly
sent by first class registered or certified mail, return receipt requested,
postage prepaid, addressed to such party at the address set forth on the
signature page hereof or such other address as may be designated in writing by
the addressee to the addresser. All notices and communications shall be deemed
to have been received: (a) in the case of personal delivery, on the date of such
delivery;
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(b) in the case of facsimile transmission, on the date of transmission; and (c)
in the case of mailing, on the third day after the posting thereof.
7.4 Governing Law. The Loan Documents shall be governed by and construed in
accordance with the laws of the State of Colorado, excluding that body of law
relating to conflict of laws.
7.5 Disputes. Any claim, dispute, or controversy arising out of the
interpretation, performance, or breech of this Agreement shall be resolved by
binding arbitration by a single arbiter, at the request of either party, in
Denver, Colorado, subject to the rules of the American Arbitration Association;
provided however that the opinion rendered and the reasons upon which the
decision is based shall be in writing and provide to the parties an award
including findings of fact. The losing party in any such arbitration shall have
to pay the costs of the arbitration plus the reasonable costs of the prevailing
party in the arbitration. No award of punitive or exemplary damages shall be
made in any such arbitration.
7.6 Severability. If any term in this Agreement shall be held to be illegal or
unenforceable, the remaining portions of this Agreement shall not be affected,
and this Agreement shall be construed and enforced as if this Agreement did not
contain the term held to be illegal or unenforceable.
7.7 Binding Effect; Assignment. The Loan Documents shall be binding upon and
inure to the benefit of the Company and the Investor and their respective
successors and assigns. Neither party may assign its rights or interest under
the Loan Documents without the prior written consent of the other party.
7.8 Survival of Warranties. The representations and warranties of the Company
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
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THE COMPANY: THE INVESTOR:
XXXXXX.XXX, INC. FRANCE TELECOM TECHNOLOGIES
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxx Cozanet
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Its: President and Chief Executive Its: Director General
----------------------------- ----------------------------------
Officer
-----------------------------
Address: Address:
0000 Xxxxxxx, Xxxxx 000 --------------------------------------
Xxxxxx, XX 00000 --------------------------------------
Phone: (000) 000-0000 Phone:
--------------------------------
Fax: Fax:
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XXXX:
XXXX INTERACTIVE SERVICES, INC.
By: /s/ Xxxxxxx Xxxxx
-----------------
Its: Senior Vice President Corporate
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Development
-------------------------------
Address:
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Phone: (000) 000-0000
Fax:
--------------------
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EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE, AND MAY NOT BE OFFERED OR SOLD UNLESS A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR AN EXEMPTION FROM REGISTRATION
UNDER SUCH LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER OR SALE.
CONVERTIBLE PROMISSORY NOTE
Date of Issuance: May 2, 2001 (the "Date of Issuance")
Name of Holder: France Telecom Technologies (the "Holder")
Principal Amount: $2,500,000 (the "Principal Amount")
For good and valuable consideration received, Xxxxxx.xxx, Inc., a Delaware
corporation (the "Company"), promises to pay to the Holder the Principal Amount,
plus simple interest accrued on unpaid principal from the Date of Issuance until
paid at the rate of nine and one-half percent (9 1/2%) per annum (the "Base
Rate").
The Holder and the Company are parties to the Note Purchase Agreement dated
as of even date herewith (the "Note Purchase Agreement"), and the Company's
obligations under this Note are secured by a Security Agreement as of even date
herewith (the "Security Agreement") and guaranteed by a Guaranty of even date
herewith (the "Guaranty") from Xxxx Interactive Services, Inc. ("Xxxx").
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the Note Purchase Agreement.
The following is a statement of the rights of the Holder and the terms and
conditions to which this Note is subject:
1. Payment.
(a) Obligation. Subject to acceleration and mandatory prepayment upon the
occurrence of any Event of Default, the outstanding principal under this Note
and the accrued interest thereon will be due and payable on demand at any time
on or after May 2, 2002 (the "Demand Payment Date"). All payments of principal
and interest under this Note shall be payable in immediately available funds to
an account at a bank designated in writing by the Holder. In the absence of any
such written designation, any such principal or interest payment shall be deemed
made on the date a check in the applicable amount payable to the order of Holder
is received by the Holder at its address set forth in the Note Purchase
Agreement or such other address as the Holder shall designate in writing.
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(b) Interest Payment. The Company promises to pay interest on the
Principal Amount at the Base Rate. Interest on this Note shall accrue from and
including the date of issuance of this Note through and until repayment of the
principal and payment of all accrued interest in full and the accrued interest
shall be payable in full on the earlier to occur of the Demand Payment Date or
the date the Note is accelerated pursuant to Section 1(e).
(c) Prepayment. On thirty (30) days' prior written notice to the Holder,
the Company may prepay this Note in whole or in part at any time without
penalty. Prepayments will be applied to accrued but unpaid interest first and
then to unpaid principal.
(d) Defaults. An Event of Default shall occur if: (i) the Company shall
default in the payment of the principal of or any installment of interest on
this Note, when and as the same shall become due and payable, whether at
maturity, on demand, on a date fixed for payment thereof, at a date fixed for
prepayment, by acceleration or otherwise, (ii) the Company shall fail to perform
or observe any covenant, obligation or agreement contained herein or in any
other Transaction Document and the Company has not remedied such default within
thirty (30) days after notice of default has been given by the Investor to the
Company, (iii) the Company and the Holder, or either one of them, fail, for any
reason, to execute, deliver or consummate the "Stock Purchase Agreement" as
defined in that certain Letter of Intent among the Company, Xxxx and the Holder,
dated May 2, 2001, by July 1, 2001, (iv) an Event of Default shall occur under
the Note Purchase Agreement or any other Transaction Document and the Company
has not remedied such default within thirty (30) days after notice of default
has been given by the Investor to the Company, (v) an involuntary proceeding
shall be commenced or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (a) relief in respect of the Company or Xxxx, or
of a substantial part of its property or assets, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other federal or
state bankruptcy, insolvency, receivership or similar law, (b) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Company or Xxxx, or for a substantial part of its property or assets, or
(c) the winding up or liquidation of the Company or Xxxx, and such proceeding or
petition shall continue undismissed for 60 days, or any order or decree
approving or ordering any of the foregoing shall be entered or (vi) the Company
or Xxxx shall (a) voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other federal or state bankruptcy, insolvency,
receivership or similar law, (b) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or the filing of any
petition described herein, (c) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (e) make a general
assignment for the benefit of creditors, (f) become unable, admit in writing its
inability or fail generally to pay its debts as they become due, (g) suspend the
operation of its business or (h) take any action for the purpose of effecting
any of the foregoing.
(e) Acceleration. If an Event of Default occurs under Section 1(d)(v) or
1(d)(vi), then the outstanding principal of and all accrued interest on this
Note shall automatically become immediately due and payable. If an Event of
Default occurs under Section 1(d)(i),(ii) or (iv) and is continuing, the Holder,
by written notice to the Borrower, may declare the outstanding principal of and
all accrued interest on this Note immediately due and payable. Upon such
declaration, such principal and interest shall become immediately due and
payable. If an Event
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of Default occurs under Section 1(d)(iii), the Company shall have until May 2,
2002 to either cure such default or obtain such funds to repay the principal,
interest, fees and all other amounts owing under this Note or the other
Transaction Documents. After May 2, 2002, if the default has not been cured or
all amounts due paid to the Holder, then all such principal, interest, fees and
other amounts shall be immediately due and payable and the Holder shall have all
of its rights and remedies under this Note and the other Transaction Documents.
(f) Enforcement. Upon the occurrence of any one or more Events of Default,
the Holder may proceed to protect and enforce its rights hereunder by suit in
equity, action at law or by other appropriate proceeding, and the Holder may
pursue all of its rights and remedies under this Note, the Security Agreement
and each other Transaction Document. The Holder shall have all rights and
remedies available at law or in equity. If an Event of Default occurs, the
Company will pay to the Holder such amounts as shall be sufficient to cover the
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses) of such Holder due to, or incurred as a consequence of, such
default.
2. Conversion.
(a) Automatic Conversion. If, prior to the Demand Payment Date or the
acceleration of this Note, the Company and the Investor have each executed and
delivered the Stock Purchase Agreement pursuant to which the Investor is to
acquire equity securities of the Company with a purchase price of at least
$5,000,000, or such lesser amount as is agreed in writing by the Company and the
Holder, not including any principal under this Note converted as provided herein
(a "Financing"), then all outstanding principal and accrued interest under this
Note automatically shall convert (the "Financing Automatic Conversion"), on the
Financing Automatic Conversion Date (as defined below), into the type of
securities issued in the Financing (the "Financing Automatic Conversion
Shares"), at the same price and on the same terms and conditions as the shares
sold in the Financing. The date of closing of the Financing is hereinafter
referred to as the "Financing Automatic Conversion Date").
(b) Optional Conversion. On or prior to the Demand Payment Date, the
Holder shall have the option to convert, at any time, all or any portion of the
principal and accrued interest of this Note into Series B Preferred Stock of the
Company. The number of shares of Series B Preferred Stock of the Company
issuable by the Company upon conversion shall be determined by dividing (x) the
amount of the principal and accrued interest under this Note to be converted by
(y) $1.586 (the "Conversion Price"). In order to prevent dilution of the
conversion rights granted under this Note, the Conversion Price shall be subject
to customary anti-dilution adjustments in the event of stock splits, stock
dividends or combination and to weighted average anti-dilution adjustment in the
event of issuance by the Company of common stock of the Company or preferred
stock of the Company or securities convertible into or exercisable for Company
common stock or preferred stock, at an issuance, conversion or exercise price of
less than the Conversion Price. The Conversion Price shall also be subject to
adjustment in the event of a reverse stock split.
(c) Mechanics and Effect of Conversion. The conversion of this Note into
the Financing Automatic Conversion Shares, pursuant to Section 2(a), shall be
deemed to have been
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made immediately at the closing of the Financing on the Financing Automatic
Conversion Date and the Holder shall be treated for all purposes as the record
holder of such Financing Automatic Conversion Shares on the Financing Automatic
Conversion Date. The conversion of this Note into Series B Preferred Stock,
pursuant to Section 2(b), shall occur 5 days after the Company receives written
notice from the Holder (the "Optional Conversion Date"). Upon conversion of all
principal and interest of this Note, the Company shall be forever released from
all of its obligations and liabilities under this Note. No fractional shares
shall be issued upon any such conversion of this Note. In lieu of any fractional
share to which the Holder would otherwise be entitled, the Company shall pay the
cash value of that fractional share to the Holder, as provided herein. The
Holder shall surrender this Note on or before the Financing Automatic Conversion
Date at the principal offices of the Company together with the executed
signature pages to the stock purchase documents and agreements applicable to the
Financing (as to an Automatic Conversion) as requested by the Company (the
"Purchase Documents"), or in the case of an Optional Conversion, shall surrender
the Note on or before the Optional Conversion Date with executed signature pages
to the stock purchase documents and agreements applicable to the issuance of the
Series B Preferred Stock. The Company shall, as soon as practicable thereafter,
issue and deliver to such Holder a certificate or certificates for the number of
Financing Automatic Conversion Shares or Series B Preferred Stock, as the case
may be, to which the Holder is entitled (bearing such legends as may be required
by applicable state and federal securities laws in the opinion of legal counsel
of the Company), including a check payable to the Holder for any cash amounts
payable for any fractional share resulting from the conversion of this Note.
This Note does not entitle Holder to any rights as a shareholder of the Company.
(d) Reservation of Preferred Stock. The Company shall authorize and at all
times reserve and keep available for issuance upon the conversion of the Note
the maximum number of its authorized but unissued Series B Preferred Stock, free
from all preemptive rights therein, as is reasonably anticipated to be
sufficient to permit the conversion of all of the Note into Series B Preferred
Stock and shall take all action required to increase the authorized number of
shares of Series B Preferred Stock if at any time there shall be insufficient
authorized but unissued shares of Series B Preferred Stock to permit such
reservation or to permit the conversion of all of the Note.
3. Governing Law. This Note will be governed by and construed in accordance
with the laws of the State of Colorado, excluding that body of law relating to
conflict of laws.
4. Waiver. The Company hereby waives diligence, presentment, demand, protest
and notice of dishonor.
5. Collection Expenses. If suit is brought for collection of this Note, the
Company shall pay all reasonable expenses, including reasonable fees and costs
of attorneys, incurred by the Holder in connection therewith whether or not such
suit is prosecuted to judgment.
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IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the
date first written above.
XXXXXX.XXX, INC.
By:
-----------------------------------------
Its:
----------------------------------------
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EXHIBIT B
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of May 2, 2001 by and
between Xxxxxx.xxx, Inc., a Delaware corporation (the "Debtor"), and France
Telecom Technologies, a French corporation (the "Secured Party"). Capitalized
terms not otherwise defined herein shall have the meanings set forth in the Note
Purchase Agreement of even date herewith (the "Purchase Agreement") among the
Debtor, the Secured Party and Xxxx Interactive Services, Inc. ("Xxxx").
1. Grant of Security Interest. The Debtor, in consideration of the
indebtedness described in this Agreement, grants and conveys to the Secured
Party a security interest in and to all of the Debtor's existing and future
right, title and interest in, to and under the Collateral as defined in Section
2 of this Agreement. This security interest is granted to the Secured Party to
secure (a) the payment of all indebtedness evidenced by the Debtor's Convertible
Promissory Note payable to the Secured Party (the "Note"), and all renewals,
extensions, and modifications of the Note, (b) the payment of all other sums,
with interest thereon, advanced under the terms of this Agreement, the Note, the
Purchase Agreement and any other Transaction Document and (c) the Debtor's
performance of its covenants, agreements and obligations under the Transaction
Documents (collectively, the "Secured Obligations").
2. Property. The property subject to the security interest granted hereby
(the "Collateral") is as follows:
2.1 Equipment and Fixtures. All equipment of every type and description
owned by the Debtor, including (without limitation) all present and future
machinery, furniture, fixtures, manufacturing equipment, shop equipment, office
and recordkeeping equipment, parts, tools, supplies and other goods (except
inventory) used or bought for use by the Debtor for any business or enterprise
and including all goods that are or maybe attached or affixed to or otherwise
become fixtures upon any real property.
2.2 Accounts Receivable, Software and Other Intangibles. All of the
Debtor's accounts, chattel paper, contract rights, commissions, warehouse
receipts, bills of lading, delivery orders, drafts, acceptances, notes,
securities and other instruments; documents; general intangibles, patents and
trademarks, applications for patents and trademarks including, without
limitation, the Debtor's "Instant Messaging" software , including all source and
object codes, whether created or licensed by Debtor, and all modifications and
enhancements thereto.
2.3 Inventory and Other Tangible Personal Property. All of the Debtor's
inventory, including all goods, merchandise, materials, raw materials, work in
progress, finished goods, now owned or hereinafter acquired and held for sale or
lease or furnished or to be furnished under contracts or service agreements or
to be used or consumed in the Debtor's business and all other tangible personal
property of the Debtor, wherever located, now or hereafter existing.
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2.4 After-Acquired Property. All property of the types described in
Sections 2.1 through 2.3, or similar thereto, that at any time hereafter may be
acquired by Debtor including, but not limited to, all accessions, parts,
additions and replacements.
2.5 Products and Proceeds. All products and proceeds of the Collateral,
including, without limitation, all dividends, income, collections or
distributions associated therewith and the products and proceeds from the sale
or other disposition of any of the Collateral described or referred to in
Sections 2.1 through 2.4, including (without limitation) all accounts,
instruments, chattel paper or other rights to payment, money, insurance proceeds
and all refunds of insurance premiums due or to become due under all insurance
policies covering the forgoing property.
Notwithstanding the foregoing, the security interest granted herein shall
not extend to and the term "Collateral" shall not include any contract right or
licenses to the extent that any such contract or license prohibits the granting
of a security interest therein, and the granting of a security interest in such
contract or license would cause the Debtor to be in breach thereof or otherwise
lose its rights thereunder.
3. Representations and Warranties. The Debtor hereby represents and warrants
to the Secured Party that:
3.1 Except for the security interest granted to the Secured Party pursuant
to this Agreement, the Debtor owns or holds each item of the Collateral free and
clear of any and all adverse claims, security interests, encumbrances, liens,
options, preferential rights, charges or other right, title or interest of any
person other than the Debtor (collectively, "Liens"), other than [Permitted
Liens]. No financing statement under the UCC of any state which names Debtor as
the debtor or other public notice, recording or filing with respect to all or
any part of the Collateral is on file or of record in any public office. The
Debtor has not heretofore agreed to or signed any pledge, assignment or security
agreement (other than this Agreement) that covers any of the Collateral, which
pledge, assignment or security agreement is still in full force and effect. No
Collateral is in the possession of any person other than the Debtor asserting
any claim thereto or security interest therein.
3.2 The security interests granted pursuant to this Agreement (a)
constitute valid security interests in all of the Collateral in favor of the
Secured Party as collateral security for the Secured Obligations, enforceable in
accordance with the terms hereof against all creditors of Debtor and (b) are
prior in right and interest to all other Liens on the Collateral in existence on
the date hereof, [except for Permitted Liens].
3.3 The Debtor's principal place of business and chief executive office
and the office where the Debtor keeps its books and records concerning the
Collateral is located at the address set forth below the Debtor's name on the
signature page of this Agreement. All of the Debtor's equipment and inventory is
located at the places specified in Schedule 3.3 hereto.
3.4 The preamble of this Agreement states the full and correct legal name
of the Debtor and the Debtor does not conduct business under any other name.
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3.5 No consents or authorizations of, filing with, or other act by or in
respect of any governmental agency, bureau, authority or other instrumentality
(other than filings pursuant to the Uniform Commercial Code) and no consent of
any other person or entity is required in connection with the execution,
delivery, performance, validity or enforceability against Debtor of this
Agreement.
4. Covenants. Until the Secured Obligations have been paid in full, the
Debtor covenants and agrees that:
4.1 The Debtor shall promptly after the date of this Agreement file all
Uniform Commercial Code financing statements, make all such other filings or
recordations and take all actions necessary or appropriate to perfect and
protect the security interests in the Collateral granted hereby. The Debtor
shall maintain the security interest created by this Agreement as a perfected
security interest having at least the priority described in Section 3.2 and
shall defend such security interest against the claims and demands of all
persons whomsoever.
4.2 The Debtor will furnish to the Secured Party from time to time
statements and schedules further identifying and describing the assets and
property of the Debtor and such other reports in connection therewith as the
Secured Party may reasonably request, all in reasonable detail.
4.3 The Debtor shall not (i) create or suffer to exist any Lien or other
charge or encumbrance upon or with respect to any of the Collateral, (ii) file
or consent to the filing of any pledge, financing statement, security agreement
or other instrument covering the Collateral or any portion thereof, other than
financing statements in favor of Secured Party hereunder, (iii) enter into or
execute, or agree to enter into, any pledge, security agreement, assignment or
financing statement covering the Collateral or any portion thereof, other than
in favor of Secured Party.
4.4 The Debtor shall not sell, transfer, assign or otherwise dispose of
any of the Collateral without the Secured Party's prior written consent, except
for sales, transfers, assignments and other dispositions of Collateral in the
normal course of business consistent with the Debtor's current practice and
procedure.
4.5 The Debtor shall comply in all material respects with all federal,
state and local laws, statutes, rules and regulations applicable to the
Collateral or any part thereof or to the operation of Debtor's business.
4.6 The Debtor will not, except upon twenty (20) days' prior written
notice to the Secured Party and delivery to the Secured Party of all additional
executed financing statements and other documents reasonably requested by the
Secured Party to maintain the validity, perfection and priority of the security
interests provided for herein:
(i) permit any of the Debtor's inventory or equipment (except mobile
goods) to be kept at a location other than that listed on Schedule 3.3 hereto;
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(ii) change its jurisdiction of organization or the location of its
chief executive office from that referred to herein; or
(iii) change its name, identity or corporate structure, or adopt or
operate under a new name, to such extent that any financing statement filed to
perfect the security interest granted hereby would become misleading.
4.7 The Debtor will promptly notify the Secured Party in writing of
(i) any Lien (other than as granted to the Secured Party) on any of the
Collateral which could adversely affect the ability of the Secured Party to
exercise any of its remedies hereunder and (ii) the occurrence of any other
event which could reasonably be expected to have a material adverse effect on
the value of the Collateral or on the security interests created hereby.
5. Protection of Secured Party's Security. If an Event of Default, as defined
in the Purchase Agreement, has occurred and is continuing, or if any action or
proceeding is commenced which could have a material adverse effect on the
Collateral or title thereto or the interest of the Secured Party, then the
Secured Party, at the Secured Party's option, may make such appearance, disburse
such sums and take such action as the Secured Party deems necessary, in its sole
discretion, to protect the Secured Party's interest; provided, however, the
Secured Party may undertake the foregoing only if it has first provided written
notice of the Event of Default to the Debtor and the Debtor has failed to cure
such default within any applicable cure period. Any amounts disbursed by
Secured Party pursuant to this Section 3, with interest thereon, shall become
additional indebtedness of the Debtor secured by this Agreement. Nothing
contained in this Section 3 shall require the Secured Party to incur any expense
or take any action.
6. Forbearance by Secured Party Not a Waiver. Any forbearance by the Secured
Party in exercising any right or remedy hereunder, or otherwise afforded by
applicable law, shall not be a waiver of, or preclude the exercise of, any right
or remedy. The acceptance by the Secured Party of payment of any sum secured by
this Agreement after the due date of such payment shall not be a waiver of the
Secured Party's right to either require prompt payment when due of all other
sums so secured or to declare a default for failure to make prompt payment. No
action taken by the Secured Party shall waive the Secured Party's right to
accelerate the indebtedness secured by this Agreement and seek such other
remedies as are provided by this Agreement, the Purchase Agreement and/or
applicable law.
7. Uniform Commercial Code Security Agreement. This Agreement is intended to
be a security agreement pursuant to the Uniform Commercial Code for the
Collateral which, under applicable law, may be subject to a security interest
pursuant to the Uniform Commercial Code of Delaware, Colorado or any applicable
jurisdiction where the Collateral may be located (the "UCC"), and the Debtor
grants the Secured Party a security interest in the Collateral. The Debtor
agrees and authorizes the Secured Party to file any appropriate document in the
appropriate jurisdiction as a financing statement for any of the Collateral and
to file any extension, renewal and amendment thereto. In addition, the Debtor
agrees to execute and deliver to the Secured Party, upon the Secured Party's
request, any financing statements, as well as extensions, renewals and
amendments thereof, and reproductions of this Agreement and/or the
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Purchase Agreement in such form as the Secured Party may require to perfect a
security interest with respect to the Collateral. The Debtor shall pay all costs
of filing such financing statements and any extensions, renewals, amendments and
releases. Upon the occurrence and during the continuance of an Event of Default
(as such term is defined in the Purchase Agreement), the Secured Party shall
have the remedies of a secured party under the UCC and, at the Secured Party's
option, may also invoke the other remedies provided in this Agreement and/or the
Purchase Agreement as to such items. In exercising any of said remedies, the
Secured Party may proceed against any or all of the Collateral separately or
together and in any order whatsoever, without in any way affecting the
availability of the Secured Party's remedies under the UCC or of the other
remedies provided in this Agreement and/or the Purchase Agreement.
8. Events of Default. The Debtor shall be in default under this Agreement
upon the occurrence of an Event of Default under the Note, the Purchase
Agreement or any other Transaction Document.
9. Rights of Secured Party.
9.1 The Secured Party shall have and may exercise with reference to the
Collateral and the Secured Obligations any and all of the rights and remedies of
a secured party under the UCC and as otherwise granted herein or under any other
Transaction Documents or under any other applicable law, whether at law or in
equity, including, without limitation, the right and power to sell, at public or
private sale or sales, or otherwise dispose of, or otherwise utilize the
Collateral and any part or parts thereof in any manner authorized or permitted
under said UCC after default by a debtor, and to apply the proceeds thereof
toward payment of any costs and expenses and attorneys' fees and expenses
thereby incurred by the Secured Party and toward payment of the Obligations in
such order or manner as the Secured Party may elect. Specifically, and without
limiting the foregoing, the Secured Party shall have the right to take
possession of all or any party of the Collateral or any security thereof and of
all books, records, papers and documents of the Debtor or in the Debtor's
possession or control relating to the Collateral which are not already in the
Secured Party's possession, and for such purpose may enter upon any premises
upon which any of the Collateral or any of said books, records, papers and
documents are located and remove the same therefrom without any liability for
trespass or damages thereby occasioned. To the extent permitted by law, the
Debtor expressly waives any notice of sale or other disposition of the
Collateral and all other rights or remedies of a debtor or formalities
prescribed by law relative to sale or disposition of the Collateral or exercise
of any other right or remedy of the Secured Party existing after default
hereunder; and to the extent any such notice is required and cannot be waived,
the Debtor agrees that if such notice is given at least ten days prior to the
time of the sale or disposition, such notice shall be deemed reasonable and
shall fully satisfy any requirement for giving of said notice. The Secured
Party shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Secured Party may adjourn any public or private
sale.
9.2 In the event the Secured Party elects not to sell the Collateral, the
Secured Party shall follow the procedures set forth in the UCC for retaining the
Collateral in satisfaction of the Debtor's obligation, subject to the Debtor's
rights under such procedures.
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10. Remedies Cumulative. Each remedy provided in this Agreement and/or the
Purchase Agreement is distinct and cumulative to all other rights or remedies
under this Agreement and/or the Purchase Agreement or afforded by law or equity,
and may be exercised concurrently, independently, or successively, in any order
whatsoever.
11. Further Assurances. The Debtor agrees to take such actions and to execute
such documents and instruments and such other or different writings as the
Secured Party may reasonably request (and irrevocably authorizes the Secured
Party to execute such writings as the Debtor's agent and attorney-in-fact)
further to perfect, confirm and assure the Secured Party's security interest in
the Collateral and to assist the Secured Party's realization thereon including,
without limitation, the right to receive, indorse and collect all instruments
made payable to the Debtor.
12. Secured Party Appointed Attorney-in-Fact. The Debtor hereby irrevocably
appoints the Secured Party the Debtor's attorney-in-fact, with full authority in
the place and stead of the Debtor and in the name of the Debtor or otherwise,
upon the occurrence and during the continuance of an Event of Default, from time
to time in the Secured Party's discretion, to take any action and to execute any
instrument that the Secured Party may deem necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, to obtain and
adjust insurance, to ask for, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral, to receive, indorse and collect any
drafts, instruments or documents and to file any claims or take any action or
institute any proceedings that the Secured Party may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce compliance
with the rights of the Secured Party with respect to any of the Collateral.
13. Indemnity and Expenses. The Debtor agrees to indemnify the Secured Party
and the officers, directors, employees and agents of the Secured Party (with the
foregoing referred to collectively as the "Indemnified Parties"), for, and to
hold each Indemnified Party harmless against, any loss, liability, claim,
judgment, settlement, compromise, obligation, damage or penalty of any kind or
nature, including the costs and expenses of the Indemnified Party incurred in
defending itself against any claim of liability in connection with or arising
out of this Agreement, unless arising from the gross negligence or willful
misconduct of such Indemnified Party.
14. Costs and Expenses. The Debtor agrees to pay on demand all costs and
expenses, including reasonable attorneys fees' and court costs, of the Secured
Party in connection with the enforcement of this Agreement (whether suit is
commenced or not).
15. Notices, etc. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person, sent by facsimile transmission to the
number set forth below, or such other number as may hereinafter be designated in
writing by the recipient to the sender listing all parties, or duly sent by
first class registered or certified mail, return receipt requested, postage
prepaid, or overnight delivery service (e.g., Federal Express), addressed to
such party at the address set forth below or such other address as may hereafter
be designated in writing by the addressee to the sender. All
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notices and communications shall he deemed to have been received: (a) in the
case of personal delivery, on the date of such delivery; (b) in the case of
facsimile transmission, on the date of transmission as noted on the confirmation
of transmission; and (c) in the case of mailing or delivery by service, on the
date of delivery as shown on the return receipt or delivery service statement.
16. Entire Agreement, Savings Clause, Assigns and Governing Law. This
Agreement contains the entire understanding between the parties and supersedes
any prior understandings and agreements between them respecting the subject
matter hereof. If any provision of this Agreement, or the application of such
provision to any person or circumstance, is held invalid, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid, shall not be affected thereby.
This Agreement shall be binding upon the heirs, executors, administrators,
successors and permitted assigns of the parties. This Agreement shall be
governed by and construed in accordance with the laws of the State of Colorado.
17. Amendment. The Agreement may be amended only in writing signed by the
Secured Party and the Debtor.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
THE DEBTOR: THE SECURED PARTY:
XXXXXX.XXX, INC. FRANCE TELECOM TECHNOLOGIES
By: By:
------------------------------- -------------------------------
Its: Its:
------------------------------ ------------------------------
Address: Address:
0000 Xxxxxxx, Xxxxx 000 ----------------------------------
Xxxxxx, XX 00000 ----------------------------------
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Phone: (000) 000-0000 Phone: _________________
Fax: ___________________ Fax: ___________________
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XXXXXXX X
XXXXXXXXX XXXXXXXX
THIS CORPORATE GUARANTY is given this second day of May, 2001 by XXXX
INTERACTIVE SERVICES, INC., a Colorado corporation (the "Corporate Guarantor").
Recitals
WHEREAS, the Corporate Guarantor and Xxxxxx.xxx, Inc., a Delaware
corporation (the "Obligor") and a subsidiary of the Corporate Guarantor, have
entered into a Note Purchase Agreement (the "Purchase Agreement") with French
Telecom Technologies, a French corporation ("FTT"), on even date herewith. In
connection with the Purchase Agreement, the Obligor has given a promissory note
to FTT, dated as of even date herewith (the "Note"); and
WHEREAS, as a condition to the consummation of the transactions
contemplated by the Purchase Agreement and the Note, FTT has required the
execution and delivery of this Corporate Guaranty by the Corporate Guarantor.
In order to induce FTT to consummate the transactions memorialized by the
Purchase Agreement and the Note, the Corporate Guarantor is willing to enter
into this Corporate Guaranty.
Agreement
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
and in order to induce FTT to consummate the transactions contemplated by the
Purchase Agreement and the Note, and in full knowledge of FTT's reliance on the
Corporate Guarantor's agreements contained herein, the Corporate Guarantor
agrees as follows:
1) The Corporate Guarantor hereby absolutely and unconditionally
guarantees to FTT the payment and performance by the Obligor of its obligations
under the Note (the "Guaranteed Obligations").
2) No act or thing, except payment and performance, which but for this
provision could act as a release of the liabilities of the Corporate Guarantor
hereunder, shall in any way affect or impair this Corporate Guaranty, and this
shall be a continuing, absolute and unconditional guaranty and shall be in force
and be binding upon the Corporate Guarantor until the Guaranteed Obligations are
fully paid.
3) The liability of the Corporate Guarantor shall not be affected or
impaired in any way (and FTT is expressly authorized to do the following acts
and things from time to time without notice to anyone): (i) by any assignment,
sale, pledge, surrender, compromise, settlement, release, renewal, extension,
indulgence, alteration, substitution, exchange, change in, modification or other
disposition of any of the Guaranteed Obligations, or any collateral therefor;
(ii) by any acceptance of collateral for, or other guarantors of, any of the
Guaranteed Obligations; (iii) by any failure, neglect or omission to realize
upon or protect any of the
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Guaranteed Obligations or perfect a security interest in or preserve any
collateral therefor, or to exercise any lien upon or right of appropriation of
any moneys, credits or property toward the liquidation of any of the Guaranteed
Obligations; (iv) by any application of payments or credits upon any of the
Guaranteed Obligations; or (v) by any other change in the Guaranteed
Obligations, including FTT's consent to a change in the business or
organizational structure of the Obligor.
4) No payment by the Corporate Guarantor pursuant to this Corporate
Guaranty shall entitle the Corporate Guarantor, by subrogation to the rights of
FTT or otherwise, to any payment by the Obligor or out of the property of the
Obligor until all of the Guaranteed Obligations have been fully paid.
5) This Corporate Guaranty shall be binding upon the legal
representatives, successors and permitted assigns of the Corporate Guarantor,
and shall inure to the benefit of the successors and assigns of FTT.
6) Any invalidity or unenforceability of any provision or application of
this Corporate Guaranty shall not affect the validity and enforceability of the
remaining provisions of this Corporate Guaranty, which shall remain in full
force and effect.
7) This Corporate Guaranty sets forth the entire understanding between
FTT and the Corporate Guarantor and supersedes and replaces all prior or
contemporaneous communications and agreements of the parties, written or
otherwise, concerning the subject matter of this Corporate Guaranty. No course
of dealing, course of performance or trade usage shall be used to supplement or
alter the terms of this Corporate Guaranty. No alteration, modification or
amendment of this Corporate Guaranty shall be effective except by a writing
signed by the Corporate Guarantor and FTT. This Corporate Guaranty shall be
governed by the laws of the State of Colorado.
8) The Corporate Guarantor agrees to pay all costs, expenses and
reasonable attorneys' fees paid or incurred by FTT in endeavoring to collect any
of the Guaranteed Obligations and in enforcing this Corporate Guaranty.
IN WITNESS WHEREOF, the Corporate Guarantor has executed this Corporate
Guaranty as of the day and year first above written.
XXXX INTERACTIVE
TECHNOLOGIES, INC.
By:
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Its:
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Schedule 2.6
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Xxxxxx.xxx, Inc.
Liabilities and Stockholders' Equity
April 30, 2001
The following table shows Xxxxxx.xxx's liabilities and stockholders' equity at
April 30, 2001 and as adjusted to show the affect of the proposed issuance of
Series B Preferred Stock to Investor and the conversion of certain outstanding
liabilities into Series B and Series C Preferred Stock.
Current liabilities Actual As Adjusted
------------------ ------------------
Accounts payable and accrued liabilities (1) $ 761,136 $ ---
Accrued salaries and payroll taxes payable 329,097 329,097
Customer deposits and deferred revenue 48,080 48,080
Advances from parent (2) 7,789,963 ---
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Total current liabilities $ 8,441,662 $ 377,177
Stockholders' equity
Preferred stock, $.01 par value (20,000,000 shares authorized)
Series A - 8,800,000 shares outstanding (liquidation $ 4,400,000 $ 4,400,000
value - $.50 per share)(3)
Series B - 7,710 shares outstanding (liquidation value - --- 7,710,000(4)
$1,000 per share)
Series C - 7,871 shares outstanding (liquidation value - --- 7,871,000(5)
$1,000 per share)
Common stock, $.01 par value (30,000,000 shares authorized)
912,500 shares outstanding (4) 523,700 523,700
Warrants and options 30,000 30,000
Deferred compensation (112,403) (112,403)
Accumulated deficit(7) (10,158,066) (10,158,066)
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Total stockholders' equity $ (5,316,769) $ 10,264,231
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Total liabilities and stockholders' equity $ 3,708,610 $ 10,641,408
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(1) Includes $680,000 payable to Diamond Technologies Partners. This
obligation is to be converted into Series B Preferred Stock at Closing.
Balance will be included in amount advanced by parent and converted into
Series C Preferred stock on signing of LOI.
(2) To be converted into Series C Preferred stock of the Company.
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(3) Shares issued to parent in connection with formation of the Company in
consideration for transfer to the Company of all of parent's rights/assets
relative to the Company's business. Convertible into 8,800,000 shares of
Common Stock.
(4) Based on $7,000,000 investment, interest of $30,000 on note assuming note
outstanding for 45 days and conversion of $680,000 payable to Diamond
Technologies Partners. Convertible at $1.586 per share into an aggregate
of 4,861,286 shares of common stock.
(5) Convertible at $1.586 per share into an aggregate of 4,962,799 shares of
common stock.
(6) Does not include 3,820,000 shares reserved for options under the Company's
2000 Stock Option Plan, including options for an aggregate of 2,559,848
shares granted to employees of the Company and its parent. Also does not
include a Warrant representing the right to acquire 50,000 shares issued to
VA Linux in consideration for placement of the Company's instant messaging
software on VA Linux's websites. Exercise price of Warrant to be based on
first external funding.
(7) Subject to adjustment for April revenue of approximately $91,000.
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