Exhibit 10.3
PLEDGE AND SECURITY AGREEMENT
-----------------------------
This PLEDGE AND SECURITY AGREEMENT (the "Agreement"), dated as of
January 17, 2002, is by and between Xxxx Interactive Services, Inc., a
corporation organized and existing under the laws of Colorado (the "Pledgor")
and JONA, INC., whose offices are in the State of Wyoming (the "Pledgee").
Recitals
--------
WHEREAS, the Pledgor has given a promissory note to Pledgee, of even
date herewith (the "Note");
WHEREAS, as a condition to the consummation of the transactions
contemplated by the Note, the Pledgor has agreed to secure its obligations under
the Note by entering into this Agreement.
Agreement
---------
NOW, THEREFORE, the Pledgor and the Pledgee hereby agree as follows:
I. Pledge and Grant of Security Interest.
--------------------------------------
A. For value received and to induce the Pledgee to
extend a loan to the Pledgor, the Pledgor hereby pledges and assigns
to the Pledgee and grants as security to the Pledgee for all present
and future obligations, indebtedness and liabilities of all kinds of
Pledgor to the Pledgee under the Note (the "Secured Obligations"), a
first lien on, and security interest in, all its right, title and
interest in and to the following:
i. 3,600,000 shares of the Series C Convertible
Preferred Stock of Jabber, Inc., a Delaware corporation (the "Pledged
Subsidiary"), which are presently owned by the Pledgor (and all
additional shares acquired by the Pledgor by stock dividend, stock
split, distribution or otherwise with respect to the 3,600,000 shares
of Series C Convertible Preferred Stock (all such shares of stock of
the Pledged Subsidiary pledged hereunder being referred to
collectively as the "Pledged Shares");
ii. all certificates representing any of the Pledged
Shares, whether currently existing or hereafter issued; and
iii. except as otherwise provided in Section 5 hereof,
---------
any and all dividends, cash, securities, instruments, warrants,
options and
162
other property, proceeds and distributions from time to time received,
receivable, paid or otherwise distributed in respect of, in
substitution for, in addition to or in exchange for or evidencing any
of the Pledged Shares and all proceeds thereof.
(b) The Pledged Shares, the certificates therefor, all
dividends, cash, securities, instruments, warrants, options and other property,
proceeds and distributions from time to time received, receivable, paid or
otherwise distributed in respect of, in substitution for, in addition to or in
exchange for or evidencing any of the Pledged Shares and all proceeds thereof
together with all other property, rights and interests described in this Section
-------
1, whether now existing or hereafter acquired or obtained, are referred to
-
herein collectively as the "Collateral."
II. Delivery of Pledged Share Certificates; Registry
------------------------------------------------
Notations.
---------
A. All certificates or instruments representing or
evidencing the Pledged Shares referred to in Section 1 hereof have
---------
previously been delivered or are being delivered to the Pledgee
concurrently with the execution of this Agreement, and are in suitable
form for transfer by delivery, endorsed in blank or accompanied by
duly executed undated instruments of transfer or assignments in blank,
having attached thereto or to such certificates all requisite federal,
state or provincial stock transfer tax stamps, all in form and
substance satisfactory to the Pledgee.
B. All necessary and appropriate entries,
notations and written descriptions in the books or share registry of
the Pledged Subsidiary evidencing and necessary or desirable to
perfect the pledge of the Collateral pursuant hereto have been or will
be made concurrently with the execution of this Agreement, and the
Pledgor shall pay all requisite federal, state, provincial or other
governmental fees or taxes therefor. The Pledgor shall forthwith take
all other actions necessary, appropriate or desirable pursuant to
applicable law to perfect the pledge of the Collateral.
III. Representations, Warranties, Covenants and Agreements of
--------------------------------------------------------
the Pledgor.
------------
The Pledgor represents, warrants, covenants and agrees that:
A. The Pledged Shares have been duly authorized
and are validly issued, fully paid and non-assessable.
163
B. Except for the security interests granted
hereby, the Pledgor is, and as to Collateral acquired after the date
hereof the Pledgor shall and will be at the time of acquisition, the
record and beneficial owner and holder of the Collateral free from any
adverse claim, security interest, pledge, encumbrance, lien, charge,
or other right, title or interest of any person other than the
Pledgee, and covenants that at all times the Collateral will be and
remain free of all such adverse claims, security interests, pledges,
encumbrances, liens, charges or other adverse interests by third
parties. The Pledged Shares are free from and not otherwise subject to
any voting agreements, voting trusts, proxies, options, preferential
purchase rights or other right of any party to acquire all or any
portion of the Pledged Shares.
C. (i) The Pledgor has full power and lawful
authority to enter into this Agreement and to pledge the Collateral to
the Pledgee and to grant to the Pledgee a first and prior security
interest therein as herein provided, all of which have been duly
authorized by all necessary corporate action.
(ii) The execution and delivery and the performance
hereof are not in contravention of any charter, articles of
incorporation or by-law provision, or of any Instrument or undertaking
to which the Pledgor is a party or by which the Pledgor or its
property is bound.
(iii) This Agreement constitutes the valid and legally
binding obligation of the Pledgor enforceable in accordance with its
terms.
(iv) The Pledgor will defend the Collateral against all
claims and demands of all persons at any time claiming the same or any
interest therein. Any officer or representative acting for or on
behalf of the Pledgor in connection with this Agreement or any aspect
hereof, or entering into or executing this Agreement on behalf of the
Pledgor, has been duly authorized to do so, and is fully empowered to
act for and represent the Pledgor in connection with this Agreement
and all matters related thereto or in connection therewith.
(d) (i) Pledgor's principal place of business and chief
executive office is in Denver, Colorado. Pledgor shall not change the location
of its principal place of business or chief executive office without twenty (20)
days prior written notice to the Pledgee.
(ii) The preamble hereof states the correct legal name of
the Pledgor and the Pledgor does not conduct business under any other
name. Pledgor shall not change its corporate name, nor do business
under any name other than its current name, unless the Pledgor has
delivered to
164
the Pledgee written notice of such other names at least 30 days prior
to the date of first use thereof by the Pledgor.
(e) (i) The Pledgor has not heretofore agreed to or signed
any pledge, charge, financing statement or security agreement which covers any
of the Collateral, and no such pledge, charge, financing statement or security
agreement is now on file in any public office and the Pledgor has not heretofore
filed or inserted any entries or notations in the books or share registry of the
Pledgor or the Pledgor evidencing any pledge of the Collateral (other than such
financing statements, security agreements and share registry notations, if any,
of which both written notice and true and correct copies have heretofore been
given by the Pledgor to the Pledgee).
(ii) As long as any amount remains unpaid on any of the
Secured Obligations or under any agreement entered into in connection
with the Secured Obligations, except as expressly permitted by any
such agreement, (A) the Pledgor will not enter into or execute any
pledge, charge, security agreement or financing statement covering the
Collateral, other than those pledges, charges, security agreements and
financing statements in favor of the Pledgee hereunder, (B) the
Pledgor shall not file or consent to the filing of any pledge,
financing statement or statements (or any documents or papers filed as
such) covering the Collateral, other than financing statements in
favor of the Pledgee hereunder, unless in any case the prior written
consent of the Pledgee shall have been obtained, and further (C) the
Pledgor shall not insert, file or make any notations in the books or
share registry of the Pledgor evidencing any pledge of the Collateral,
other than such entries and notations in favor of the Pledgee
hereunder.
(iii) The Pledgor authorizes the Pledgee to file, in its
discretion, in jurisdictions where this authorization will be given
effect, a financing statement, personal property security act filing
or other instrument for filing required by any jurisdiction applicable
to the Collateral signed only by the Pledgee covering the Collateral,
and hereby appoints the Pledgee as the Pledgor's attorney-in-fact to
sign and file any such financing statements or other instruments
covering the Collateral. At the request of the Pledgee, the Pledgor
will join the Pledgee in executing such Instruments as the Pledgee may
determine from time to time to be necessary or desirable under
provisions of any applicable Uniform Commercial Code, Personal
Property Security Act or other applicable laws in effect where the
Collateral is located or where the Pledgor conducts business; without
limiting the generality of the foregoing, the Pledgor agrees to join
the Pledgee, at the Pledgee's request, in executing one or more
financing statements or other Instruments in form satisfactory to the
Pledgee, and the Pledgor will pay the costs of filing or recording the
same in all public offices at any time and from time to time whenever
165
filing or recording of any such financing statement or other
Instrument is deemed by the Pledgee to be necessary or desirable.
IV. Rights of the Pledgee and the Pledgor Related to
------------------------------------------------
Collateral.
----------
The Pledgee may from time to time following the occurrence of an Event
of Default, as defined in the Note or the Purchase Agreement:
A. Transfer any of the Collateral into the name of
the Pledgee or its nominee.
B. Notify parties obligated on any of the
Collateral to make payment to the Pledgee of any amounts due or to
become due thereunder.
C. Subject to compliance with federal and state
securities laws, enforce collection of any of the Collateral by suit
or otherwise; surrender, release or exchange all or any part thereof,
or compromise or extend or renew for any period (whether or not longer
than the original period) any obligation of any nature of any party
with respect thereto; and exercise all other rights of the Pledgor in
any of the Collateral, except as hereinafter provided with respect to
income from or interest on the Collateral and except that, prior to an
Event of Default, the Pledgor may exercise its voting and consensual
rights with respect to any Collateral constituting voting securities.
D. Take possession or control of any proceeds of
the Collateral.
Until the occurrence of an Event of Default, the Pledgor shall have
the right to receive all income from or interest on the Collateral, and if the
Pledgee receives any such income or interest prior to the occurrence of an Event
of Default, the Pledgee shall pay the same promptly to the Pledgor, except that
in the case of securities or other property distributed by way of a dividend or
otherwise with respect to the Collateral, such securities or other property
shall be promptly delivered to the Pledgee to be held as Pledged Shares or other
Collateral hereunder. Upon the occurrence of an Event of Default, the Pledgor
will not demand or receive any income from or interest on the Collateral, and if
the Pledgor receives any such income or interest without any demand by it, the
same shall be held by the Pledgor in trust for the Pledgee in the same medium in
which received, shall not be commingled with any assets of the Pledgor and shall
be delivered to the Pledgee in the form received, properly endorsed to permit
collection, not later than the next business day following the day of its
receipt. The Pledgee may apply the net cash received from such income or
interest to payment of any of the Secured Obligations, provided that the Pledgee
shall account for and pay over to the Pledgor any such income or interest
remaining after payment in full of the Secured Obligations then outstanding.
166
So long as no Event of Default shall have occurred, the Pledgor shall
be entitled to exercise any and all voting and other consensual rights
pertaining to the Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Purchase Agreement;
provided, however, that the Pledgor shall not exercise or refrain from
-------- -------
exercising any such right if, in the Pledgee's judgment, such action would have
a material adverse effect on the value of the Collateral or any part thereof;
and, provided, further, that the Pledgor shall give the Pledgee at least five
-------- -------
days' written notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such rights.
The Pledgee shall never be under any obligation to collect, attempt to
collect, protect or enforce the Collateral or any security therefor, which the
Pledgor agrees and undertakes to do at the Pledgor's expense, but the Pledgee
may do so in its discretion at any time after the occurrence of an Event of
Default and at such time the Pledgee shall have the right to take any steps by
judicial process or otherwise as it may deem proper to effect the collection of
all or any portion of the Collateral or to protect or to enforce the Collateral
or any security therefor. All expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred or paid by the Pledgee in
connection with or incident to any such collection or attempt to collect the
Collateral or actions to protect or enforce the Collateral or any security
therefor shall be borne by the Pledgor or reimbursed by the Pledgor to the
Pledgee upon demand. The proceeds received by the Pledgee as a result of any
such actions in collecting or enforcing or protecting the Collateral shall be
utilized by the Pledgee in accordance with Section 10 hereof.
----------
V. Further Assurances.
-------------------
The Pledgor agrees to take such actions and to execute such stock or
bond powers or other Instruments and such other or different writings as the
Pledgee may reasonably request further to perfect, confirm and assure the
Pledgee's security interest in the Collateral and irrevocably authorizes the
Pledgee, as Pledgor's agent and attorney-in-fact, to assist the Pledgee's
realization thereon upon the occurrence of an Event of Default including,
without limitation, the right to receive, indorse, and collect all instruments
made payable to the Pledgor representing any dividend, interest payment or other
distribution in respect of the Pledged Shares or any part thereof.
VI. Events of Default.
------------------
The occurrence of an Event of Default under the Note shall constitute
an "Event of Default" hereunder.
167
VII. Rights and Remedies of the Pledgee Upon Default.
------------------------------------------------
If an Event of Default shall have occurred:
A. The Pledgee shall have and may, subject to
compliance with federal and state securities laws, exercise with
reference to the Collateral and the Secured Obligations any and all of
the rights and remedies of a secured party under the Uniform
Commercial Code ("UCC"), and as otherwise granted herein or under any
other applicable law now or hereafter in effect executed by the
Pledgor, 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 the 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
Pledgee and toward payment of the Secured Obligations in such order or
manner as permitted by law. Specifically and without limiting the
foregoing, the Pledgee shall have the right to take possession of all
or any part of the Collateral, any certificate therefor or any
security therefor and of all books, records, papers and documents of
the Pledgor or in the Pledgor's possession or control relating to the
Collateral which are not already in the Pledgee's possession, and for
such purpose may enter upon any premises upon which any of the
Collateral or any security therefor or any of said books, records,
papers and documents are situated and remove the same therefrom
without any liability for trespass or damages thereby occasioned. To
the extent permitted by law, the Pledgor expressly waives any notice
of sale or other disposition of the Collateral and all other rights or
remedies of the Pledgor or formalities prescribed by law relative to
sale or disposition of the Collateral or exercise of any other right
or remedy of the Pledgee existing after default hereunder. The Pledgee
shall have all other rights and remedies available, whether at law or
in equity.
B. Upon notice by the Pledgee to the Pledgor, the
Pledgee or its nominee or nominees shall have the sole and exclusive
right to exercise all voting and consensual powers pertaining to the
Collateral or any part thereof and may exercise such powers in such
manner as the Pledgee may elect.
C. All dividends, payments of interest and other
distributions of every character made upon or in respect of the
Pledged Shares or any part thereof shall be deemed to be Collateral
and shall be paid directly to and shall be held by the Pledgee as
additional Collateral pledged under and subject to this Agreement.
168
D. All rights to marshaling of assets of the Pledgor,
including any such right with respect to the Collateral, are hereby
waived by the Pledgor.
VIII. Special Provisions for Pledged Shares.
--------------------------------------
The Pledgor hereby acknowledges that the sale by the Pledgee of any of
the Pledged Shares pursuant to the terms hereof in compliance with federal and
applicable state or securities laws or the securities laws of any other
applicable jurisdiction exercising valid jurisdiction over the Pledged Shares
(as now in effect or as hereafter amended, or any similar statute hereafter
adopted with similar purpose or effect, the "Securities Laws") may require
strict limitations as to the manner in which the Pledgee or any subsequent
transferee of the Pledged Shares may dispose of such securities. The Pledgor
understands that in order to protect the Pledgee's interest it may be necessary
to sell the Pledged Shares at a price less than the maximum price attainable if
a sale were delayed or were made in another manner, such as a public offering
requested under the Securities Laws. The Pledgor has no and waives any
objection to a sale in such a manner.
IX. Application of Proceeds by the Pledgee.
---------------------------------------
In the event the Pledgee sells or otherwise disposes of the Collateral
in the course of exercising the remedies provided for in Sections 8 or 9 hereof,
---------- -
any amounts held, realized or received by the Pledgee pursuant to the provisions
hereof, including the proceeds of the sale of any of the Collateral or any part
thereof, shall be applied by the Pledgee first toward the payment of any costs
and expenses incurred by the Pledgee in enforcing this Agreement, then to any
amounts otherwise due hereunder or under the Guaranty, and then as provided in
the Purchase Agreement. Any amounts and any Collateral remaining after such
application and after payment to the Pledgee of all of the Secured Obligations
in full shall be paid or delivered as required by law, or as a court of
competent jurisdiction may direct.
The Pledgee shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Pledgee accords its
own property, it being understood that the Pledgee shall not have any
responsibility for (x) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Pledgee has or is deemed to have knowledge of
such matters or (y) taking any necessary steps to preserve rights against any
parties with respect to any Collateral.
169
X. Absolute Interest.
------------------
A. All rights of the Pledgee hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and
unconditional irrespective of (i) any lack of validity or
enforceability of any provision of the Note, any agreement with
respect to the Secured Obligations or any other agreement or
instrument relating to any of the foregoing, (ii) any change in the
time, manner or place of payment of, or in any other term of, all or
any of the Secured Obligations, or any other amendment or waiver of or
any consent to any departure from the, (iii) any exchange, release or
non-perfection of any Collateral or any other security for or
Collateral securing the Secured Obligations, or any release or
amendment or waiver of or any consent to or departure from any
guarantee or any other security, for all or any of the Secured
Obligations or (iv) any other circumstance which might constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Secured Obligations or this Agreement.
B. The Pledgee is hereby subrogated to all of the
Pledgor's interests, rights and remedies in respect to the Collateral
and all security now or hereafter existing with respect thereto and
all guaranties and endorsements thereof and with respect thereto.
XI. Termination.
------------
This Agreement and the security interests created hereunder shall
terminate when all the Secured Obligations have been indefeasibly paid in full,
at which time the Pledgee shall execute and deliver to the Pledgor all documents
which the Pledgor shall reasonably request to evidence termination of such
security interest and shall return physical possession of any Collateral then
held by the Pledgee to the Pledgor; provided, however, that all indemnities of
-------- -------
the Pledgor contained in this Agreement shall survive, and remain in full force
and effect regardless of the termination of the security interest of this
Agreement.
XII. Additional Information.
-----------------------
The Pledgor agrees to furnish the Pledgee from time to time such
additional information and copies of such documents relating to this Agreement,
the Collateral, the Secured Obligations and the Pledgor's financial condition as
the Pledgee may reasonably request.
XIII. Notices.
--------
Any communication, notice or demand to be given to a party hereunder shall be in
writing and delivered in person or duly sent by first class registered or
certified mail, return receipt requested, postage prepaid, to such party at the
address set forth on the signature page hereof.
170
XIV. Indemnity and Expenses.
-----------------------
The Pledgor agrees to indemnify the Pledgee, and the officers,
directors, employees and agents of the Pledgee (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.
XV. No Waiver; Cumulative Rights.
-----------------------------
No failure on the part of the Pledgee to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by the Pledgee of any right,
remedy or power hereunder preclude any other or future exercise of any other
right, remedy or power. Each and every right, remedy and power hereby granted
to the Pledgee or allowed it by law or other agreement shall be cumulative and
not exclusive of any other and may be exercised by the Pledgee from time to
time.
XVI. Governing Law; Consent to Jurisdiction.
---------------------------------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Colorado, excluding the body of law relating to
conflict of laws.
XVII. Execution in Counterparts.
--------------------------
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute one
and the same agreement. Each of the parties to this Agreement will be entitled
to rely upon delivery by facsimile machine of an executed copy of this Agreement
and acceptance of such facsimile copy will be legally effective to create a
valid and binding agreement between the parties in accordance with the terms
hereof.
XVIII. Severability.
-------------
If any one or more provisions of this Agreement should be declared
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected, impaired or prejudiced thereby.
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to
be duly executed as of the date first above written.
171
PLEDGOR:
XXXX INTERACTIVE SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
Title: CEO
0000 Xxxxxxx, Xxxxx 000
--------------------------
Xxxxxx, XX 00000
--------------------------
PLEDGEE:
JONA, INC.
By:/s/ Xxxx X. XxXxxxx
-----------------------
Name: Xxxx X. XxXxxxx
Title: President
0000 Xxxx X. Xxxxxx
--------------------------
Xxxxxx, XX 00000
--------------------------
Address
172
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.
PROMISSORY NOTE
Date of Issuance: January 17, 2002 (the "Date of Issuance")
Name of Holder: JONA, INC. (the "Holder")
Principal Amount: $900,000.00 (the "Principal Amount")
For good and valuable consideration received, Xxxx Interactive Services,
Inc., a Colorado 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 ten percent (10%) per annum (the "Base
Rate").
The Company's obligations under this Note are secured by a Pledge and
Security Agreement as of even date herewith (the "Security 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 April 30, 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 the address set forth below or such
other address as the Holder shall designate in writing.
(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).
------------
173
(c) Prepayment. On ten (10) 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 and the
Company has not remedied such default within fifteen (15) days after notice of
default has been given by the Investor to the Company, (iii) 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
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 for a substantial part of its property or assets, or (c) the
winding up or liquidation of the Company, 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 (iv) the Company 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)(iii) or
------------
(iv), 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) or (ii) and is continuing, the Holder, by written
notice to the Company, 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. After April
30, 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 Security Agreement.
(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
174
rights and remedies under this Note and the Security Agreement. 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. 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.
3. Waiver. The Company hereby waives diligence, presentment, demand, protest
------
and notice of dishonor.
4. 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.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the
date first written above.
XXXX INTERACTIVE SERVICES, INC.
By /s/ Xxxxxxx X. Xxxxxx
----------------------
Its: CEO
-------------------
Holder's Address:
JONA, INC.
-------------------
0000 Xxxx X. Xxxxxx
-------------------
Xxxxxx, XX 00000
-------------------
175
