PROMISSORY NOTE
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October
31, 2001
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WHEREAS
Vertical agreed to purchase from Paradigm Sales, Inc., 000 Xxxxx Xxxxx, 0xx
Xxxxx, Xxx Xxxxxxx, XX 00000, (“Paradigm”) certain property of Adhesive Software
(the “Property”), a Texas corporation, which Paradigm intends to acquire through
bank foreclosure sale by Silicon Valley Bank (the “Bank”), pursuant to the terms
and conditions set forth in the Asset Purchase Agreement, dated October 31,
2001.
For
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned VERTICAL COMPUTER SYSTEMS, INC., a Delaware
corporation (“Promissor”), promises to pay to the order of ________________,
a Texas
resident, ________________________________,
("Promissee"), in lawful money of the United States of America the principal
amount of TWO HUNDRED THOUSAND
EIGHTY DOLLARS ($280,000 U.S.), together
with interest on the amount of such principal outstanding from time to time
at
the rate of four percent (4%) per annum at the times and in the manner provided
herein.
1.
Payment
of Principal and Interest.
Principal and interest shall be paid as follows:
a. The
principal shall be payable in monthly installments beginning on the date that
is
seven (7) days after the closing date of the sale of the Property to Vertical,
pursuant to the following schedule:
i. The
first
four monthly payments shall be for Five Thousand Dollars ($5,000.00 US)
ii.
All
remaining monthly payments shall be for Ten Thousand dollars ($10,000.00 U.S.)
and shall continue until the Principal has been paid in full.
b.
All
interest due shall be due and payable on the day the Principal has been paid
in
full.
c.
Promissor shall pay all amounts owing under this Note in immediately available
funds to Promissee at Promissee's address as set forth herein, or at such other
place as may be specified in writing by Promissee. Each payment, when made,
shall be credited to the principal.
Payments
received after 1:00 p.m. on any banking day or at any time on any Saturday,
Sunday, or holiday shall be deemed received on the next banking
day.
2. Collateral
as Security.
This
Note is secured by certain collateral, which encumbers, among other things,
the
interest of Promissor in certain assets, as more particularly described therein
(the "Collateral"). This Note and the Asset Pledge Agreement between Promissor
and Promissee of even date herewith, and any other documents or instruments
given or to be given to Promissee to secure the indebtedness evidenced by this
Note are collectively referred to herein as the "Loan Documents".
3. Default;
Remedies.
Each of
the following occurrences and conditions shall constitute an Event of
Default:
a. failure
of Promissor to pay as and when due any money, whether principal, interest,
or
otherwise, under this Note, or the breach or default of any obligation to pay
money under or secured by the Security Agreement; or
b. failure
of Promissor to perform any obligation other than an obligation to pay money,
as
and when performance of such obligation is due under this Note or Loan Documents
which failure continues for thirty (30) days after notice thereof from Promissee
to Promissor; or
c. failure
by Promissor to comply with any of the terms, provisions, covenants, conditions
or restrictions now or hereafter affecting the Collateral or any part thereof
or
contained in any agreement related or pertaining to the Collateral, which
failure continues for thirty (30) days after notice thereof from Promissee
to
Promissor; or
d. Promissor's
making or at any time having made any representation, warranty or disclosure
to
Promissee that is or was materially false or misleading on the date as of which
made, whether or not that representation or disclosure appears in the Loan
Documents; or
e. the
sale,
transfer, conveyance, or lease of all or any portion of the Collateral or of
any
of Promissor's rights therein, whether voluntarily, involuntarily, or otherwise,
or Promissor's entering into an agreement to do any of the foregoing, in each
case except as expressly permitted in the Security Agreement; or
At
any
time following the occurrence of any Event of Default, or following the
occurrence of any event as a consequence of which the obligations evidenced
hereby may be accelerated, then at the election of Promissee and notwithstanding
anything to the contrary herein or elsewhere, the entire amount of principal
then outstanding under this Note and all interest, fees, charges, and other
amounts owing and then unpaid hereunder shall become immediately due and
payable, and Promissee may exercise any and all rights that it may have under
the Loan Documents, at law, in equity, and otherwise.
4. Attorneys’
Fees.
Promissor shall pay to Promissee upon demand all costs and expenses incurred
by
Promissee in connection with determination, protection, or enforcement of any
and all of Promissee's rights hereunder or under any of the Loan Documents,
including enforcement of any and all obligations of Promissor hereunder and
thereunder and protection, enhancement, or maintenance of the security interests
securing such obligations or the priority of the same. Such costs and expenses
shall be payable whether or not any suit is instituted, and the same shall
include without limitation attorneys' fees, expert witness fees, costs of
investigation, and all of such costs incurred in connection with any trial,
appellate proceeding, or any case or proceeding under Chapters 7, 11, or 13
of
the Bankruptcy Code or any successor thereto.
5. Waiver
of Notice.
Promissor and each endorser, guarantor and surety of this Note hereby waive
diligence, demand, presentment for payment, notice of discharge, notice of
nonpayment, protest and notice of protest, and specifically consent to and
waive
notice of any renewals or extensions of this Note, whether made to or in favor
of Promissor or any other person or persons. Promissor and each endorser,
guarantor and surety of this Note further waive and renounce all rights to
the
benefits of all statutes of limitation and any moratorium, appraisement, by
any
federal exception and homestead now or hereafter provided or state law or
statute, including but not limited to exemptions provided by or allowed under
the Bankruptcy Code, both as to each of themselves personally and as to all
of
their property, whether real or personal, against the enforcement and collection
of the obligations evidenced by this Note and any and all extensions, renewals
and modifications thereof.
6.
Notices.
All
notices required hereunder or pertaining hereto shall be in writing and shall
be
deemed delivered and effective upon the earlier of (i) actual receipt, or (ii)
the date of delivery or refusal of the addressee to accept delivery if such
notice is sent by express courier service or United States mail, postage
prepaid, certified or registered, return receipt requested, in either case
to
the applicable address as follows:
To
Promissee: ________________
________________
________________
To
Promissor:
VERTICAL
COMPUTER SYSTEMS, INC.
0000
Xxxxxxxx Xxxxxxxxx
Los
Angeles, CA 90048
Attn:
President
Notwithstanding
the foregoing, any notice under or pertaining to the Loan Documents or the
obligations secured thereby given and effective in accordance with applicable
law shall be effective for purposes hereof. Either party may change the address
at which it is to receive notices hereunder to another business address within
the United States (but not a post office box or similar mail receptacle) by
giving notice of such change of address in accordance herewith.
7.
Exercise
of Rights.
No
single or partial exercise of any of Promissees rights or powers under this
Note
or any of the other Loan Documents shall preclude any other or further exercise
thereof or the exercise of any other right or power. Promissee at all times
shall have the right to proceed against any portion of the security which
secures payment of the indebtedness evidenced hereby in such order and manner
as
Promissee may elect without waiving any rights with respect to any other portion
of such security. Each and all rights and remedies of Promissee hereunder and
under the Loan Documents are cumulative and in addition to each and all other
such rights and remedies. No exercise of any right or remedy shall preclude
exercise of any other right or remedy.
8.
No
Waiver.
No
failure of Promissee to insist upon strict performance of any obligation of
Promissor or to exercise any right or remedy hereunder or under the Loan
Documents, whether before or after any default, shall constitute or give rise
to
a waiver thereof, and no waiver of any default shall constitute a waiver of
any
future default or of any other default. No failure to accelerate the debt
evidenced hereby by reason of default hereunder or otherwise, and no acceptance
of any past due payment hereunder or acceptance of any amount less than the
amount then due, and no other indulgence that may be granted by Promissee from
time to time shall (a) preclude the exercise of any right that Promissee may
have at law, in equity, by contract or agreement or otherwise, or (b) constitute
or give rise to (i) a waiver of such right of acceleration or any other right,
or (ii) a novation of this Note or a reinstatement of the debt evidenced hereby,
or (iii) any waiver of Promissee's rights to demand and receive from Promissor
full and prompt payment and performance thereafter, to impose late charges
retroactively, or to declare a default. Promissor and each endorser, guarantor,
and surety of this Note hereby expressly waive the benefit of any statute or
rule of law or equity which would produce any result contrary to or otherwise
in
conflict with any of the foregoing.
9. Assignment;
Successors and Assigns.
Promissee may assign or otherwise transfer all or any part of its interest
herein. Promptly following written notice of such assignment or other transfer,
duly executed by Xxxxxxxxx, Promissor shall render full and complete performance
hereunder as and when due to the transferee so designated by Promissee.
Promissor shall not assign or transfer all or any of its interests or
obligations hereunder, and any attempted or purported assignment or transfer
by
Promissor shall be void and of no force or effect, except to the extent that
the
same may be expressly permitted under the Security Agreement. Subject to the
foregoing, the terms of this Note shall apply to, be binding upon, and inure
to
the benefit of ail parties hereto and their successors and assigns.
10. Modification.
This
Note shall not be modified, amended, or terminated, except by written agreement
duly executed and delivered by both Promissee and Promissor.
11. Conflicts.
In the
event of any conflict between any provision of this Note and any provision
of
the Security Agreement, which conflict cannot reasonably be resolved in such
a
way as to give effect to all provisions herein and therein contained, this
Note
shall govern.
12. Severability.
If any
provision of this Note or any payments pursuant to the terms hereof shall be
invalid or unenforceable to any extent, the remainder of this Note and any
other
payments hereunder shall not be affected thereby and shall be enforceable to
the
greatest extent permitted by law.
13. Governing
Law.
This Note shall be governed by and construed in accordance with the laws of
the
State of California.
IN
WITNESS WHEREOF, Xxxxxxxxx has executed and delivered this Note as of the date
first written above.
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VERTICAL
COMPUTER SYSTEMS, INC.
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Xxxxxxx
Xxxx, President
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