BAYTREE CAPITAL ASSOCIATES, LLC.
INVESTMENT BANKERS
THE XXXXX BUILDING AT
00 XXXX XXXXXX
XXX XXXX, XXX XXXX 00000
212/509-1700 * FACSIMILE 212/363-4231
September 3, 1998
Nettaxi Online Communities, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxx Xxxxxxxx, Xx.
CEO
Dear Xx. Xxxxxxxx:
This letter agreement (the "Agreement") confirms the terms and conditions
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of the exclusive engagement of Baytree Capital Associates, LLC ("Baytree") by
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Nettaxi Incorporated and its affiliates to render certain financial advisory and
investment banking services to Nettaxi and any person, corporation or other
entity formed by or affiliated with such person (the "Company") which
participates in, or which was formed for the purpose of effecting a Transaction
(as hereinafter defined) and effecting a certain Financing as hereinafter
described. In the context of this Agreement, "Transaction" shall mean, whether
effected in one transaction or a series of transactions, (i) any merger,
consolidation, reorganization, recapitalization or other business combination
pursuant to which the business of Nettaxi is combined with that of another
entity (the "Merger Candidate"),whether or not Nettaxi is the surviving entity
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in such business combination.
1. Services. Xxxxxxx will assist Xxxxxxx in negotiating and
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effecting a loan as described in subparagraph (a) hereinbelow and thereafter
structuring a Transaction on the terms and conditions as set forth in this
Agreement. In this regard, we propose to undertake certain activities on behalf
of Xxxxxxx, including, the following:
(a) structuring and negotiating a loan (the "Loan") in the principal
amount of One Million Dollars (S1,000,000) to Nettaxi within ten (10) days of
the execution of this Agreement on terms and conditions substantially in the
form of the Note (the "Note") as set forth in Annex B attached hereto;
(b) identifying a Merger Candidate which is a public company within the
meaning of Rule 15(c)-2 of the Securities Act of 1934;
(c) advising Nettaxi as to the structure and form of the Transaction;
(d) assisting Nettaxi in obtaining appropriate information and
performing due diligence regarding the Merger Candidate-,
(e) counseling Nettaxi with respect to, and conducting, negotiations
with, the Merger Candidate regarding the Transaction;
(f) arranging for consummation of the Transaction;
(g) arranging for financing on behalf of the Company as otherwise
discussed in this Agreement;
(h) rendering such other financial advisory and investment banking
services as may from time to time be agreed upon by Xxxxxxx and Nettaxi or the
Company.
Any obligations pursuant to this Paragraph I shall survive the termination
or expiration of this Agreement.
2. FINANCING.
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(a) Baytree shall arrange the Loan and thereafter arrange a financing
(the "Financing") on behalf of the Company either by conversion of the Loan or
funding the Financing otherwise to be completed contemporaneously with the
consummation of the Transaction through the private placement of One Million
Dollars ($1,000,000 U.S.) of Common Stock subject to Xxxxxxx's successful
completion of its due diligence. The placement of the Common Stock will rely on
Rule 504 of Regulation D ("Regulation D") promulgated under the U.S. Securities
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Act of 1933, as amended (the "Act"), and shall thereby be exempt from the
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registration requirements of the Act, and will close contemporaneously with the
Transaction. In connection with their purchase of the Common Stock in the
Financing, the purchasers will receive One Million Two Hundred Fifty Thousand
shares (1,250,000) of the Common Stock of the Company based upon the
post-Transaction value of the Company.
Xxxxxxx shall not be deemed an agent of the Company nor an agent of Nettaxi
for any other purpose. Any proceeds shall be paid, less the Expense Allowance
and legal fees reimbursement (each as defined in Paragraph 4 below), to the
Company at a closing held with respect to the sale of the Common Stock in the
Financing (the "Closing") against delivery of certificates representing the
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securities sold. The Company agrees that until the later of the termination of
the Offering Period, or twelve (12) months from the Closing, it will not,
directly or indirectly, seek to arrange or place any equity or convertible
security financing, without Baytree's prior written consent except if such
financing is a sale of securities of nonconvertible
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debt. Additionally, the Company agrees that upon Closing, the Company shall
grant Baytree a right of first refusal for a period of twenty-four (24)
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monthsfrom the Closing with respect to any sale of securities by the Company
except if the sale is either pursuant to an underwritten public offering or is
of securities of non-convertible debt and except for the issuance of securities
upon the exercise of currently outstanding options and warrants. Baytree shall
have ten (10) business days following receipt of written notice from the Company
setting forth the terms of any proposed financing to be conducted by it (a
"Notice"),to exercise the right of first refusal by presenting a letter of
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intent for a proposed financing on the same or better economic terms as
presented to the Company. In the event Baytree falls to exercise this right to
present a letter of intent for a proposed financing, the Company shall be free
to sell such securities in the manner, amount and for the prices and terms set
forth in the Notice without liability to Baytree, subject to Xxxxxxx's right of
consent for a period of twelve (12) months as set forth above.
(b) In the event that the Loan shall have been converted to stock
pursuant to the terms of the Note, then and in that event Baytree shall be
deemed to have provided the Company the financing contemplated in subparagraph
(a) hereof and shall therefore be entitled to all Fees and Expenses provided for
in Paragraph 4 of this Agreement.
This Agreement does not constitute an understanding or a commitment,
express or implied, by Xxxxxxx to provide any of the Financing from its own
account. Any obligations pursuant to this Paragraph 2 shall survive the
termination or expiration of this Agreement.
3. REGISTRATION RIGHTS. The shares of Common Stock representing
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compensation to Baytree as provided for in Paragraph 4(e) will be registered by
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the Company under the Act on any appropriate form necessary for the registration
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of said shares at the request of Baytree anytime after six months from the date
of ClosingThe Company shall file such registration statement with the Securities
and Exchange Commission within sixty (60) days from the date of the request by
Xxxxxxx. The Company shall use its best efforts to cause the registration
statement to be declared effective by the Securities and Exchange Commission as
soon as practicable thereafter, and take whatever action may be necessary in
order to cause such registration statement to remain effective for so long as
any of the shares of Common Stock issued as a result of the Financing are
beneficially owned by Baytree or until all shares of Common Stock may be sold
pursuant to Rule 144 under the Securities Exchange Act of 1934, as amended,
without limitation, In addition, Baytree shall receive unlimited "Piggy back"
registration rights for the shares of Common Stock representing compensation to
Baytree.
4. Fees and Expenses. Nettaxi agrees to cause the Company to pay
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Baytree for its services as follows:
(a) Baytree shall receive a placement fee equal to two hundred thousand
(200,000) shares of the Common Stock of the Company(the "Placement Fee")on a
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post-split basis as described in Paragraph 5 (d) (11), infra. The Placement Fee
and Xxxxxxx's
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Expense Allowance (as hereinafter defined) with respect to the Financing shall
be payable concurrently with Closing.
(b) In addition to any other fees payable to Baytree hereunder, if at
any time commencing with the date hereof and ending twenty-four (24) months
after termination of this Agreement or the closing of the Transaction (whichever
is later) a party introduced to Nettaxi or the Company by Baytree or by any
broker-dealers selected by Xxxxxxx to participate in the Financing shall
purchase or commit to purchase any securities of Nettaxi, the Company or any
person or entity controlled by or under common control with Nettaxi, the
Company, or such other person (which commitment the Company shall have accepted
or shall subsequently accept), Baytree shall receive as compensation the
Placement Fee that would have, been payable and issuable had such purchases
occurred in connection with the Financing (10% of the gross proceeds),
regardless of the type of securities so purchased or the form of payment
therefor.
(c) It shall be the Company's obligation to bear all of its expenses in
connection with the Transaction and the Financing, which expenses shall include,
but are not limited to the following: printing and duplication costs, postage
and mailing expenses with respect to the transmission of offering materials,
registrar and transfer agent fees, accounting fees and issue and transfer taxes,
if any. In addition, Nettaxi will cause the Company to pay to Baytree a
non-accountable expense allowance of three (3%) percent of the gross proceeds of
the Financing, and to pay the fees and disbursements of Baytree's legal counsel,
Xxxxx Xxxxxxxxx & Xxxxx, LLP incurred in connection with the Transaction and
Financing (collectively, the "Expense Allowance").
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Any obligation pursuant to this Paragraph 4 shall survive the termination
or expiration of this Agreement.
(d) Following the provision of a Merger Candidate into which there
shall have been any merger, consolidation, reorganization, recapitalization or
other business combination pursuant to Paragraph I of this Agreement, the
Company agrees that 660,000 shares of the Common Stock of the Merger Candidate
shall remain with the original shareholders of the Merger Candidate on
post-split basis as described in Paragraph 5 (d) (ii), infra.
5. REPRESENTATIONS, WARRANTIES, AND COVENANTS.
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(a) The Company represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Company and constitutes a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms. The Company further represents and warrants that
consummation of the transactions contemplated herein will not conflict with or
result in a breach of any of the terms, provisions or conditions of any written
agreement to which it is a party.
(b) The Company has done nothing that may be considered a direct
selling effort in the United States or which could reasonably be expected to
result in general
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preconditioning Of the United States Market for the Securities of the Company.
Subject to the requirements of law, the Company shall not make any public
announcement of the Financing without the prior written consent of Bay-tree and
in any event, shall make no such disclosure which could be deemed to be a
general solicitation or directed selling effort within the meaning of Regulation
D under the Act.
(c) Baytree covenants that it will comply with all Rules and
Regulations applicable to Regulation D with regard to this Offering. Further,
Baytree represents and warrants that this Agreement has been duly authorized,
executed and delivered by it and constitutes its valid and binding agreement
enforceable against it in accordance with its terms. Baytree further represents
and warrants that consummation of the transactions contemplated herein will not
conflict with or result in a breach of any of the terms, provisions or
conditions of any written agreement to which it is a party.
(d) The Company represents and warrants that:
(i) The total number of issued and outstanding shares of stock in
Nettaxi as of the date of this Agreement does not exceed 4,785,092 shares of
common stock.
(ii) In conjunction with any reverse merger as described in Paragraph
I of this Agreement Nettaxi agrees to forward split its existing common stock on
a 2.51 for I basis so that simultaneously with any reverse merger Nettaxi would
have twelve million shares issued and outstanding to exchange with the Merger
Candidate.
(e) The Company represents that upon the completion the Transaction it
shall cause a nominee identified by Xxxxxxx to be added to the Company's Board
of Directors for the maximum term provided for in the Company's By Laws.
(f) The Company represents that it has One Million Dollars
($1,000,000) of eligibility pursuant to Rule 504 of Regulation D. In the event
that it is determined that the Company has less than One Million Dollars of
eligibility, then the amount under-taken in connection with any Financing shall
be reduced to the amount of the Company's remaining Rule 504 eligibility.
(g) The Company acknowledges that Xxxxxxx's undertaking to perform the
Financing described in Paragraph 2 is on a best efforts basis.
(h) The Company represents that the post Transaction capitalization of
the Company shall be as set forth on Annex C attached hereto.
6. TERM. The term of this Agreement with regard to the completion
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of the Transaction shall be sixty (60) days from the date of the execution of
this Agreement. This Agreement may be renewed upon mutual written agreement of
Baytree and Nettaxi and/or the
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Company. Nettaxi agrees to cause the Company to pay Baytree any fees specified
in Paragraph 4 if the events specified therein shall occur during the term of
this Agreement or within two years after the termination or expiration of this
Agreement. Any obligation pursuant to this Paragraph 6 shall survive the
termination or expiration of this Agreement.
Notwithstanding anything in this Agreement to the contrary, in the event
that Xxxxxxx shall have failed to arrange for and fund the Loan within thirty
(30) days of the date of execution of this Agreement, then and in that event
this Agreement shall be null and void and of no further force or effect.
7. INDEMNIFICATION. In addition to the payment of fees and
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reimbursement of fees and expenses provided for above, and regardless of whether
the Transaction or the Financing are consummated, Xxxxxxx agrees to indemnify
and to cause the Company to indemnify Baytree and any broker-dealers who
participate in the Financing, as set forth in Annex A, attached hereto, which is
incorporated by reference as if fully set forth herein. This Paragraph 7 shall
survive the termination or expiration of this Agreement.
8. INFORMATION. Nettaxi recognizes and confirms that in performing
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its duties pursuant to this Agreement, Baytree and broker-dealers selected by it
to participate in the Financing will be using and relying on data, material, and
other information (the "Information")or ("Offering Materials")furnished by
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Nettaxi and the Merger Candidate or their respective employees and
representatives. In connection with Xxxxxxx's activities on Xxxxxxx's behalf,
Xxxxxxx will cooperate with Xxxxxxx and will furnish Baytree with all
information concerning Nettaxi, the Transaction and, to the extent available to
Nettaxi, the Merger Candidate, which Xxxxxxx deems appropriate and will provide
Xxxxxxx with access to Xxxxxxx's officers, directors, employees, independent
accountants and legal counsel for the purpose of performing Xxxxxxx's
obligations pursuant to this agreement. To the extent that Xxxxxxx has access to
the officers, directors, employees, independent accountants and legal counsel of
the Merger Candidate, it will provide such access to Baytree for the purpose of
performing Baytree's obligations pursuant to this Agreement. Nettaxi hereby
agrees and represents that all Information (a) furnished to Baytree pursuant to
this Agreement, and (b) contained in any filing by Nettaxi with any court or
governmental or regulatory agency, commission or instrumentality (each, an
"Agency") shall, at all times during the period of the engagement of Baytree
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hereunder, be accurate and complete in all material respects and that, if the
Information provided by Nettaxi becomes materially inaccurate, incomplete or
misleading during the term of Xxxxxxx's engagement hereunder, the Company shall
so advise Xxxxxxx in writing. Accordingly, Xxxxxxx assumes no responsibility for
the accuracy and completeness of the Information. In rendering its services
hereunder, Xxxxxxx will be using and relying upon the Information without
independent verification thereof or independent evaluation of any of the assets
or liabilities of Nettaxi or the Merger Candidate. All Information that is not
publicly available will be treated in strict confidence, and will not be
revealed, or used (except in the performance of Xxxxxxx's duties under this
Agreement) by Xxxxxxx unless legally compelled as determined in good faith by
counsel to Baytree.
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9. DISCLOSURE. Xxxxxxx agrees that, except as compelled by law,
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rule or regulation, it will not disclose and will cause the Company not to
disclose the services or advice to be provided by Baytree under this Agreement
publicly or to any third party without the prior written approval of Xxxxxxx.
10. SEVERABILITY. If any provision of this Agreement shall be held
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or made invalid by a statute, rule, regulation, decision of a tribunal or
otherwise, the remainder of this Agreement shall not be affected thereby and, to
this extent, the provisions of this Agreement shall be deemed to be severable.
11. AUTHORIZATION. Nettaxi and Baytree-represent and warrant that
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each has all requisite power and authority, and all necessary authorizations, to
enter into and carry out the terms and provisions of this Agreement.
12. SUCCESSORS. This Agreement and all rights, liabilities and
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obligations hereunder shall be binding upon and inure to the benefit of each
party's successors but may not be assigned without the prior written approval of
the other party. Any such approval shall not be unreasonably withheld.
13. HEADINGS. The descriptive headings of the Paragraphs of this
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Agreement are inserted for convenience only, do not constitute a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement.
14. NO BROKERS. Other than Elliot, Lane & Co., Nettaxi represents
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and warrants to Baytree that there are no brokers, representatives or other
persons which have an interest in or claim for compensation due to Baytree from
any transaction contemplated herein.
15. NOTICES. Any notice or other communication to be given to
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Nettaxi hereunder may be given by delivering the same in writing to the address
set forth above, and any notice or other communication to be given to Bay-tree
may be given by delivering the same to Bay-tree Capital Associates, LLC, 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Xxxxxxx, Principal, or in
each case, such other address of which a party shall have received notice. Any
notice or other communication hereunder shall be deemed given three days after
deposit in the mail if mailed by certified mail, return receipt requested, or on
the day after deposit with an overnight courier service for next day delivery,
or on the date personally delivered.
16. ARBITRATION. In the case of any dispute, question, controversy
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or claim arising among the parties hereto which shall arise out of or in
connection with this Agreement, the same shall be submitted to arbitration
before a panel of three arbitrators in New York, New York, in accordance with
the rules of the American Arbitration Association. One arbitrator shall be
appointed by the party or parties bringing the claims ("Claimant") and one
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arbitrator shall be appointed by the party or parties defending the claim
("Respondent"). The arbitrators selected by such parties shall be selected
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within thirty (30) days after notification by the
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Claimant to the Respondent that it has determined to submit such dispute,
question, controversy or claim to arbitration. The two arbitrators so selected
shall select a third arbitrator within thirty (30) days after the selection of
the arbitrator selected by such parties. Should a party fall to select an
arbitrator within the specified time period, or should the arbitrators selected
by the parties fail to select a third arbitrator, the missing arbitrator or
arbitrators shall be appointed by the New York, New York office of the American
Arbitration Association. The decision of the panel shall be final and binding on
the parties and enforceable in any court of competent junsdiction. The costs of
the arbitration will be imposed upon the Claimant and Respondent as determined
by the arbitration panel or, failing such determination, will be borne equally
by the Claimant and the Respondent. The successful or prevailing party or
parties shall be entitled to recover reasonable attorneys' fees in addition to
any other relief to which it may be entitled.
In the event of any dispute, question, controversy or claim arising among
the parties hereto which shall arise out of or in connection with this
Agreement, the parties shall keep the proceeding related to such controversy in
strict confidence and shall not disclose the nature of said dispute, the status
of the proceeding or any testimony, documents or information obtained or
exchanged in the course of said proceeding without the express written consent
of all parties to such dispute unless either party is legally compelled to make
any such disclosure.
Please confirm that the foregoing correctly sets forth our agreement by
signing the enclosed letters in the space provided and returning them to us for
execution, whereupon we will send you a fully executed original letter which
shall constitute a binding agreement as of the date first above written.
Very truly yours,
BAYTREE CAPITAL ASSOCIATES, LLC
By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx, Principal
Agreed to and accepted as of the above date I
NETTAXI ONLINE COMMUNITIES, INC.
By:
Xxxxxx Xxxxxxxx, Xx., CEO
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ANNEX A: INDEMNIFICATION
Xxxxxxx agrees to indemnify and to cause the Company to indemnify Baytree,
any broker-dealers who participate in the Financing, and their respective
employees, directors, officers, agents, affiliates, and each person, if any, who
controls them within the meaning of either Section 20 of the Securities Exchange
Act of 1934 or Section 15 of the Securities Act of 1933 (each such person,
including Xxxxxxx and such broker-dealers, is referred to as "Indemnified
Party") from and against any losses, claims, damages and liabilities, joint or
several including all legal or other expenses reasonably incurred by an
Indemnified Party in connection with the preparation for or defense of any
threatened or pending claim, action or proceeding, whether or not resulting in
any liability ("Damages"), to which such Indemnified Party, in connection with
its services or arising out of its engagement hereunder, may become subject
under any applicable Federal or state taw or otherwise, including but not
limited to liability (1) caused by or arising out of an untrue statement or an
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact necessary in order to make a statement not misleading
in light of the circumstances under which it was made, (11) caused by or arising
out of any act or failure to act or (ill) arising out of Baytree's engagement or
the rendering by any Indemnified Party of its services under this Agreement;
provided, however, that neither Nettaxi nor the Company will be liable to the
Indemnified Party hereunder to the extent that any Damages are found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence, bad faith or willful misconduct of the Indemnified
Party seeking indemnification hereunder.
These indemnification provisions shall be in addition to any liability
which Nettaxi and/or the Company may otherwise have to any Indemnified Party.
If for any reason, other than a final non-appealable judgment finding an
Indemnified Party liable for Damages for its gross negligence, bad faith, or
willful misconduct the foregoing indemnity is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless, then Nettaxi shall
and shall cause the Company, to contribute to the amount paid or payable by an
Indemnified Party as a result of such Damages in such proportion as is
appropriate to reflect not only the relative benefits received by Nettaxi or the
Company, as the case may be and its shareholders on the one hand, and Bay1ree on
the other, but also the relative fault of Nettaxi or the Company, as the case
may be, and the Indemnified Party as well as any relevant equitable
considerations, subject to the limitation that in no event shall the total
contribution of all Indemnified Parties to all such Damages exceed the amount of
fees actually received and retained by Baytree and the broker-dealers selected
by Xxxxxxx that participate in the placement of the Common Stock.
Promptly after receipt by the Indemnified Party of notice of any claim or
of the commencement of any action in respect of which indemnity may be sought,
the Indemnified Party will notify Nettaxi or the Company in writing of the
receipt or commencement thereof and
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Nettaxi or the Company shall have the right to assume the defense of such claim
or action (including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of fees and expenses of such counsel),
provided that the Indemnified Party shall have the right to control its defense
if, in the opinion of its counsel, the Indemnified Party's defense is unique or
separate to it as the case may be, as opposed to a defense pertaining to Nettaxi
or the Company In any event, the Indemnified Party shall have the right to
retain counsel reasonably satisfactory to Nettaxi or the Company, at Nettaxi's
or the Company's expense, to represent it in any claim or action in respect of
which indemnity may be sought and agrees to cooperate with Nettaxi or the
Company and Nettaxi's or the Company's counsel in the defense of such claim or
action, it being understood, however, that Nettaxi or the Company shall not, in
connection with any one such claim or action or separate, but substantially
similar or related claims or actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys, for all the Indemnified
Parties unless the defense of one Indemnified Party is unique or separate from
that of another Indemnified Party subject to the same claim or action. In the
event that Nettaxi or the Company does not promptly assume the defense of a
claim or action, the Indemnified Party shall have the right to employ counsel
reasonably satisfactory to Nettaxi or the Company, at Nettaxi's or the Company's
expense, to defend such claim or action. The omission by an Indemnified Party to
promptly notify Nettaxi or the Company of the receipt or commencement of any
claim or action in respect of which indemnity may be sought will relieve Nettaxi
or the Company from any liability Nettaxi or the Company may have to such
Indemnified Party only to the extent that such a delay in notification
materially prejudice Nettaxi's or the Company's defense of such claim or action.
Nettaxi or the Company shall not be liable for any settlement of any such claim
or action effected without its written consent, which shall not be unreasonably
withheld or delayed. Any obligation pursuant to this Annex shall survive the
termination or expiration of this Agreement.
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ANNEX B: FORM OF PROMISSORY NOTE
1,000,000.00 September 3, 1998
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FOR VALUE RECEIVED, NETTAXI, INC. (the "Maker"), a California corporation, with
offices at 0000 X. Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, hereby promises to
pay to the order of _________________(the "Payee"), residing at (or with a
business office located at) ____________________________, the principle sum of
One Million Dollars ($ 1,000,000), together with interest on the principal
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amount outstanding from the date hereof until payment in full.
The principal amount of this Note together with all interest then accrued
shall be payable three months from the date hereof (the "Due Date"). However,
the term of this Note shall automatically be extended for an additional three
months from the original Due Date in the event that the conversion of this Note
as hereinafter described has not been completed by the original Due Date.
Interest on outstanding principal shall accrue at the rate of 9% per annum from
the date hereof and shall be paid on the Due Date. All interest shall be
calculated on the basis of a 365-day year, counting the actual number of days
elapsed from the date of this Note to the Due Date. Interest on any overdue
payments of principal and interest due hereunder shall accrue and be payable at
the rate of twelve (12%) percent per annum, based on the actual number of days
elapsed from the date such principal or interest payment was due to the date of
actual payment.
The principal of this Note may be prepaid in whole or in part, without
premium or penalty, at any time. The Maker shall prepay the principal and
accrued interest of this Note, as and to the extent that the Maker receives
proceeds (net of expenses) (1) from the sale of common stock of the Maker prior
to the Due Date, or (2) as a part of being acquired by a public company prior to
the Due Date.
This Note shall be convertible at the option of by the Payee to shares of
common stock of any publicly-held corporation which acquires at least 51% of the
Maker at any time prior to the Due Date. The terms of the issuance of such
shares shall be part of a structure wherein the public company shall have
12,660,000 shares of common stock outstanding after the acquisition of Maker
(but before the conversion of this Note). In connection with said acquisition,
the public company shall issue 12,000,000 shares to the shareholders of the
Maker and shall sell 1,250,000 shares at $.80 per share (the "Offering Shares").
The shares issuable upon conversion of this Note shall be a part of the Offering
Shares and shall be converted at $.80 per share.
All principal and interest payments hereunder are payable in lawful money
of the United States of America to the Payee at the address first shown above,
or at such other address as may be directed by Xxxxx, in immediately available
funds.
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The Maker hereby waives presentment, demand, dishonor, protest, notice of
protest, diligence and any other notice or action otherwise required to be given
or taken under the law in connection with the delivery, acceptance, performance,
default, enforcement or collection of this Note, and expressly agrees that this
Note, or any payment hereunder, may be extended, modified or subordinated (by
forbearance or otherwise) from time to time, without in any way affecting the
liability of the Maker.
In the event that (a) the Maker shall fall to pay when due, any payment of
principal or interest due hereunder and such failure to pay is not cured within
ten (10) days of the date such payment was due, or (b) if the maker shall
(0-make a general assignment for the benefit of creditors; (11) be adjudicated a
bankrupt or insolvent; (111) file a voluntary petition in bankruptcy; (1v) take
advantage of any bankruptcy or insolvency law or statute of the United States of
America or any state or jurisdiction thereof now or hereafter in effect; (v)
have a petition or proceeding filed against the Maker under any bankruptcy or
insolvency taw or statute of the United States of America or any state or
jurisdiction thereof, which petition or proceeding is not dismissed within
forty-five (45) days from the date of commencement thereof, or (vi) have a
receiver, trustee, custodian, conservator or other person appointed by any court
to take charge of the Maker's affairs, assets or business and such appointment
is not vacated or discharged within forty-five (45) days thereafter; then, and
upon the happening of any such event, the Payee, at Xxxxx's option, by written
notice to the Maker, may declare the entire indebtedness evidenced by this Note
immediately due and payable, whereupon the same shall forthwith mature and
become immediately due and payable without presentment, demand, protest or
further notice.
In the event that Maker shall fail to pay when due any principal or
interest payment, and the Payee shall exercise or endeavor to exercise any of
its remedies hereunder, the Maker shall pay all reasonable costs and expenses
incurred in connection therewith including, without limitation, reasonable
attorneys' fees, and the Payee may take judgment for all such amounts in
addition to all other sums due hereunder.
No consent or waiver by the Payee with respect to any action or failure to
act by maker which, without such consent or waiver, would constitute a breach of
any provision of this Note shall be valid and binding unless in writing and
signed by the Payee.
All agreements between the Maker and the Payee are expressly limited to
provide that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to the Payee for the use, forbearance
or detention of the indebtedness evidenced hereby exceed the maximum amount
which the Payee is permitted to receive under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by law, then, without the necessity of any action by
Payee or Maker, the obligation to be fulfilled shall automatically be reduced to
the limit of such validity, and if from any circumstance the Payee should ever
receive as interest an amount which would exceed the highest lawful rate, such
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amount which would be excessive interest shall be applied to the reduction of
the principal balance hereof, and not to the payment of interest. As used
herein, the term "applicable law" shall mean the law in affect as of the date
hereof, provided, however, that in the event there is a change in the law which
results in a higher permissible rate of interest, then this Note shall be
governed by such new law as of its effective date. This provision shall control
every other provision of all agreements between the Maker and the Payee.
This Note shall be governed by and construed in accordance with the laws of
the State of New York, except to the extent that such laws are superseded by
Federal enactments.
If any covenant or other provision of the Note is invalid, illegal, or
incapable of being enforced by reason of any rule of law or public policy, all
other covenants and provisions of the Note shall nevertheless remain in full
force and effect, and no covenant or provision shall be deemed dependent upon
any other covenant or provision.
IN WITNESS WHEREOF, the Maker, by its duly authorized officer, has executed
this Note as of the date first above written.
NETTAXI ONLINE COMMTJNITIES, INC.
By: _______________________________
Xxxxxx Xxxxxxxx, Xx., CEO
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