Date: March 24, 2000
Amount: $250,000
TUTORNET.COM, INC.
(A Delaware Corporation)
SECURED PROMISSORY NOTE
EMERGENCY INTERIM FUNDING SERIES
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THE ISSUE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER COMPLIANCE UNDER THE ACT OR
THE LAWS OF THE APPLICABLE STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT THE SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT AND SUCH STATE STATUTES.
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Tutornet.com, Inc., a corporation duly organized and existing under the
laws of the State of Delaware, (hereinafter referred to as"Maker"), for value
received, hereby promises to pay to GJM Trading Partners Ltd., a Colorado
limited partnership, (the "Lender") the principal sum of two hundred fifty
thousand dollars ($250,000.00), as loaned to the Maker as set forth in the
Bridge Loan Agreement by and between the Maker and Business Development
Corporation dated March 24, 2000, and incorporated herein (the "Bridge Loan
Agreement"), in such lawful money of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts, on
the terms and at the time hereinafter provided.
This Note is also subject to the following terms and provisions:
1. Payment of Principal and Interest. The outstanding principal amount
of this Note, together with all interest then accrued, shall be due and payable
on the occurrence of the earliest of the following events (the "Due Date"):
a. Upon the completion of the Private Placement set
forth in Paragraph 3 of the Bridge Loan Agreement.
b. Upon the sale of any other equity securities, or
other securities convertible
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into equity securities, by the Maker.
c. March 23, 2002.
Interest on the outstanding principal shall accrue at the rate of eight percent
(8%) per annum from the date hereof. Interest shall be payable quarterly
commencing July 1, 2000, and the first day of each subsequent calendar quarter
thereafter. Interest on any overdue payments of principal and interest due
hereunder shall accrue and be payable at the rate of twelve percent (12%) 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. Payment of the
principal and interest shall be made at the offices of the Lender as set forth
in Paragraph 13, below.
2. Security Interest. This Note is secured by a certain Security
Agreement of even date hereof (the "Security Agreement"), whereby Maker has
pledged Maker's assets as described in Exhibit "A" attached hereto and
incorporated herein as security for repayment of this Note. Reference is made to
the Security Agreement for a description of the nature and extent of the
security and the rights of Holder in respect to such security.
3. Prepayment. Prepayment of this Note with interest to the date of
prepayment may be made at any time without penalty.
4. Satisfaction and Discharge of Note. This Note shall cease to be of
further effect when:
a. The Maker has paid or caused to be paid all sums payable
hereunder by the Maker, including all outstanding principal amounts and interest
accrued under the Note; and
b. All the conditions precedent herein provided for relating
to the satisfaction and discharge of this Note have been complied with.
5. Events of Default. "Event of Default," when used herein, whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law pursuant to any judgment, decree,
or order of any court or any order, rule, or regulation of any administration or
government body or be caused by the provisions of any paragraph herein means any
one of the following events:
a. Default in the payment of any principal or interest on this
Note when it becomes due and payable; or
b. Default in the performance or breach of any covenant or
warranty of the Maker in this Note (other than a covenant or warranty, the
breach or default in performance of which is elsewhere in this section
specifically dealt with), and continuation of such default or breach for a
period of 30 days after there has been given to the Maker by registered or
certified
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mail, by the holder of this Note, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a notice
of default hereunder; or
c. The entry of a decree or order by a court having
jurisdiction in the premises adjudging the Maker a bankrupt or insolvent under
the Federal Bankruptcy Act or any other applicable federal or state law, or
appointing a receiver, liquidator, assignee, trustee (or other similar official)
of the Maker or of any substantial part of its property , or ordering the
winding up or liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 60 consecutive days;
d. The institution by the Maker of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or a filing by it of a petition
or answer or consent seeking reorganization or relief under the Federal
Bankruptcy Act or any other applicable federal or state law; or the consent by
it to the filing of any such petition or the appointment of a receiver,
liquidator, assignee, trustee (or other similar official) of the Maker or of any
substantial part of its property, or the making by it of any assignment for the
benefit of creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due, or the taking of corporate action by the
Maker in furtherance of any such action; or
e. Any material breach of the representations or warranties of
the Maker in, the Bridge Loan Agreement, or any material default of the Maker of
the terms and conditions of the Bridge Loan Agreement.
6. Acceleration of Maturity. If an Event of Default occurs and is
continuing then, in every such case, the holder of this Note may declare the
outstanding principal of this Note to be due and payable immediately, by a
notice in writing to the Maker of such default, and upon any such declaration,
such principal shall become immediately due and payable. At such time after such
declaration of acceleration has been made, and before a judgment or decree for
payment of money due has been obtained by the holder, the holder of this Note,
by written notice to the Maker, may rescind and annul such declaration and its
consequences, if all Events of Default, other than the nonpayment of the
principal of this Note which has become due solely by such acceleration, has
been cured or waived. No such rescission shall affect any subsequent default or
impair any right consequent thereon.
7. Restrictions. The Lender, by acceptance hereof, represents and
warrants as follows:
a. The Note is being acquired for the Lender's own account to
be held for investment purposes only and not with a view to, or for, resale in
connection with any distribution of such Note or any interest therein without
registration, or an applicable exemption from registration, or other compliance
under the Act, or any state securities law, and the holder hereof has no direct
or indirect participation in any such undertaking or in underwriting such an
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undertaking.
b. The Lender knows and understands that the Note has not been
registered under the Act, or any state securities laws, and the Maker is under
no obligation to register the Note under the Act or such state securities laws.
8. Non-Negotiability and Assignment. This Note is non-negotiable and is
assignable by the Lender only with the prior written consent of the Maker,
except that the Holder may assign this Note, or a portion of this Note, without
such prior consent to Gary J. McAdam or Ronald J. Miller, or to legal entities
controlled by them, provided that such assignment or assignments shall not
violate state or federal securities laws.
9. Presentment Waiver. The Maker waives presentment for payment,
protest, and notice of protest and of nonpayment of this Note.
10. Default. In the event of default or acceleration, the Maker agrees
to pay to the Holder hereof reasonable attorney's fees, legal expenses, and
lawful collection costs, in addition to all other sums due hereunder.
11. Successors and Assigns. This Note shall be binding upon the parties
and their successors and assigns and shall inure to the benefit of the other
parties and successors and assigns.
12. Partial Invalidity. If any term of this Note shall be held to be
invalid or unenforceable, such term shall be deemed to be severable and the
validity of the other terms of this Note shall in no way be affected thereby.
13. Notices. All communications provided for herein shall be in writing
and shall be deemed to be given or made on (a) the date of delivery, if
delivered in person, by nationally recognized overnight delivery service, or by
facsimile, or (b) three days after mailing if mailed from within the continental
United States by registered or certified mail, return receipt requested, to the
party entitled to receive the same, if to the Maker at 11410 Isaac Newton Square
North, Suite 105, Reston, VA 20190, Attention: Euburn R. A. Forde, President, or
if to the Lender, at 14 Red Tail Drive, Highlands Ranch, CO 80126, Attention:
Gary McAdam, or at such other address or facsimile number as shall be designated
by any party hereto in written notice to the other party hereto delivered
pursuant to this Paragraph.
14. Governing Law. This Note and the rights and duties of the parties
hereto shall be construed and determined in accordance with the laws of the
State of Colorado, and any and all actions to enforce the provisions of this
Agreement, shall be brought in a court of competent jurisdiction in the State of
Colorado and in no other place.
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Tutornet.com, Inc.
By \s\ Euburn Forde
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Its President and CEO
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EXHIBIT A TO PROMISSORY NOTE
(a) All of Debtor's inventory including, but not limited to, all goods,
merchandise and other personal property furnished under any contract of service
or intended for sale or lease, all parts, supplies, raw materials, work in
process, finished goods, materials used or consumed, mad repossessed and
returned goods (herein "Inventory"); (b) all of Debtor's contracts,
undertakings, or other agreements (other than rights evidenced by Chattel Paper,
Documents, or Instruments) in or under which Debtor may now or hereafter have
any right, title or interest, including, without limitation, with respect to an
Account, any agreement relating to the terms of payment of the terms of
performance thereof (herein "Contracts"); (c) all of Debtor's accounts, accounts
receivable, contract rights, chattel paper, general intangibles, income or other
tax refunds, proceeds of letters of credit, preference recoveries and all claims
in respect of any transfers of any kind, instruments, negotiable documents,
notes, drafts, acceptances and other forms of obligations, all books, records,
ledger cards, computer programs, and other documents or property, including
without limitation such items which are evidencing or relating to Debtor's
accounts and inventory and including, but not limited to, any of the foregoing
arising from or in connection with Debtor's sale, lease or other disposition of
Inventory (herein "Accounts"); (d) all of Debtor's machinery, equipment, tools,
dies, molds, rolling stock, furniture, furnishings and fixtures including, but
not limited to, all manufacturing, fabricating, processing, transporting and
packaging equipment, power systems, heating, cooling and ventilating systems,
lighting and communications systems, electric, gas and water distribution
systems, food service systems, fire prevention, alarm and security systems,
laundry systems and computing and data processing systems (herein "Equipment");
(e) all of Debtor's trade names, trademarks, trade secrets, service marks, data
bases, software and software systems, including the source and object codes,
information systems, discs, tapes, customer lists, telephone numbers, credit
memoranda, goodwill, patents, patent applications, patents pending, copyrights,
royalties, literary rights, licenses and franchises (herein "Intellectual
Property"); (f) all of Debtor's investment property, including without
limitation, securities, whether certificated or uncertificated, securities
entitlements, securities accounts, commodities contracts and commodities
accounts (herein the "Investment Property"); and (g) all of Debtor's deposit
accounts, whether general, special, time, demand, provisional or final, all cash
or monies wherever located, any and all deposits or other sums at any time due
to Debtor, any and all policies, certificates of insurance, goods, choses in
action, cash and property, which now or hereafter are at any time in the
possession or control of Secured Party or in transit by mail or carrier to or
from Secured Party, or in the possession of any third party acting in Secured
Party's behalf, without regard to whether Secured Party received the same in
pledge for safekeeping, as agent for collection or transmission or otherwise, or
whether Secured Party has conditionally released the same (herein "Deposits")
(all of Accounts, Inventory, Equipment, Intellectual Property, Investment
Property and Deposits herein are collectively termed the "Collateral"); whether
Debtor's interest in the Collateral be as owner, co- owner, lessee, consignee,
secured party or otherwise, and whether the same be now owned or existing or
hereafter arising or acquired, and wherever located, together with all
substitutions, replacements, additions and accessions therefor or thereto, all
documents, negotiable documents, documents of title, warehouse receipts, storage
receipts, dock receipts, dock warrants, express bills, freight bills, airbills,
bills of lading and other documents relating thereto, all products
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thereof and all cash and non-cash proceeds thereof including, but not limited
to, notes, drafts, checks, instruments, insurance proceeds, indemnity proceeds,
warranty and guaranty proceeds.
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