SECURED PROMISSORY NOTE
$2,937,500 April 7, 2000
San Jose, California
FOR VALUE RECEIVED, Gateway Advisors, Inc., together with its
successors and assigns (the "Borrower"), hereby promises to pay to the order of
eMarketplace, Inc., together with its successors and assigns (the "Company"), in
lawful currency of the United States of America, at Company's offices, the
principal sum of two million nine hundred thirty seven thousand five hundred
dollars ($2,937,500) and to pay interest on the principal amount hereof from
time to time outstanding from the date hereof until the date on which the Note
will be paid in full, at the rate of 6% per annum. Interest and principal shall
be paid on April 7, 2001.
SECTION 1. DEFAULT, ACCELERATION. In the event that: (i) the
Borrower shall fail to pay any principal of or interest hereunder for a period
of ten (10) days after such payment is due and delivery of a written notice by
Company with respect thereto; or (ii) the Borrower shall fail to observe or
perform any of the material covenants of the Borrower contained herein for a
period of ten (10) days and delivery of a written notice by Company with respect
thereto; or (iii) of the Borrower shall file a petition or enter into any
voluntary case under any bankruptcy or similar law; or (iv) there is commenced
against either of the Borrower an involuntary case or other similar proceeding
under any bankruptcy or similar law which remains undismissed for a period of
sixty (60) days, then and in any such event, upon written notice to the Borrower
from the Company, the principal amount hereof, together with accrued interest
thereon and all other amounts due hereunder, shall become immediately due and
payable without any further demand, presentment, protest, notice of protest,
dishonor, notice of dishonor or notice of any other kind, all of which are
hereby expressly waived by the Borrower.
SECTION 2. OPTIONAL PREPAYMENT; MANDATORY REPAYMENT. (a) At
its option, the Borrower may prepay at any time all or any part of the principal
amount of this Secured Promissory Note, without premium or penalty.
(b) In the event that the Borrower intends to sell, pledge,
hypothecate or transfer ("Transfer") any shares of the Company's common stock
issued in connection with the exercise of that certain Common Stock Purchaser
Warrant dated as of April 9, 1999 and amended as of April 7, 2000 issued by the
Company to the Borrower (the "Shares"), the Borrower shall give the Company not
less than five (5) business days prior written notice. The Borrower shall then
arrange for Borrowers obligations to the Company under this Note (the
"Obligations") to be repaid, from the proceeds of the Transfer; provided
however, that no Transfer may occur unless the arrangements for repayment to the
Company are approved in advance by the Company, such approval to be in the
Company's sole discretion.
SECTION 3. PLEDGED COLLATERAL. In order to secure the payment
and performance in full of all of the Borrower's Obligations under this Secured
Promissory Note, whether existing as of this date or any time thereafter, the
Borrower hereby pledges and assigns to the Company, and grants to the Company a
senior, first priority, continuing security interest in (i) the Shares and the
certificate(s) representing the Shares, (ii) all dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Shares, and (iii)
all cash proceeds received from the sale of any of the foregoing (collectively,
the "Pledged Collateral"). "
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SECTION 5. SECURITY FOR OBLIGATIONS. The pledge and security
interest granted pursuant to this Secured Promissory Note secures the payment of
all Borrower's Obligations.
SECTION 6. DELIVERY OF THE SHARES. All certificates or
instruments representing or evidencing the Shares shall be delivered to and held
by or on behalf of the Company and shall be accompanied by duly executed
instruments of transfer or assignment in blank.
SECTION 7. FURTHER ASSURANCES. The Borrower agrees that at any
time and from time to time, the Borrower will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
reasonably necessary, or that the Company may reasonably request, in order to
perfect and preserve any security interest granted or purported to be granted
hereby or to enable the Company to exercise and enforce its rights and remedies
hereunder. Upon the repayment in full of this Note, ,the Company shall take all
actions reasonable and necessary to release the security interests granted
hereby, including the delivery of the Shares to the Borrower.
SECTION 8. TRANSFERS AND OTHER LIENS. The Borrower agrees that
it will not (i) sell, pledge or otherwise dispose of, or grant any option with
respect to, any of the Shares without complying with the terms and provisions of
this Note, or (ii) create or permit to exist any lien, security interest, or
other charge or encumbrance upon or with respect to any of the Shares, except
for the security interest under this Secured Promissory Note.
SECTION 9. REMEDIES UPON DEFAULT. In the event that the
Borrower shall breach any of the Obligations:
The Company may, without demand of performance or
other demand, advertisement or notice of any kind to or upon the
Borrower or any other person (all of which are hereby expressly waived
by the Borrower), forthwith collect, receive, appropriate and realize
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upon the Pledged Collateral, or any part thereof, and, may forthwith
sell, assign, give options to purchase, contract to sell or otherwise
dispose of and deliver the Pledged Collateral, or any part thereof, in
one or more parcels at public or private sales, at any exchange or
broker's board or at any of the Borrower's offices or elsewhere, upon
such terms and conditions as it may deem advisable and at such prices
as it may deem best, for cash or on credit or for future delivery,
without assumption of any credit risk, with the right upon any such
sale, public or private, to purchase the whole or any part of the
Pledged Collateral so sold, free of any right or equity of redemption
in the Borrower, which right or equity is hereby expressly waived and
released by the Borrower; PROVIDED, HOWEVER, that the Borrower shall
not be credited with the net proceeds of any sale on credit or for
future delivery until the cash proceeds thereof are actually received
by the Company.
SECTION 10. AMENDMENTS. No amendment or waiver of any
provision of this Secured Promissory Note nor consent to any departure by the
Borrower or the Company herefrom shall in any event be effective unless the same
shall be in writing and signed by the Company, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 11. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing and shall be given by
mail, if to the Borrower, addressed to it at the address indicated on the
signature page hereof, if to the Company, addressed to it at corporate
headquarters, or, as to either party, at such other address as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section 11. All such notices and other
communications shall be effective three (3) business days after being deposited
in the mails, postage prepaid, addressed as aforesaid.
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SECTION 12. TRANSFER OF NOTE. The Obligations of the Borrower
hereunder may not be assigned without the prior written consent of the Company
and any purported assignment shall be null and void.
SECTION 13. CONSENT TO JURISDICTION AND SERVICE; WAIVER OF
JURY TRIAL. The Borrower hereby absolutely and irrevocably consents and submits
to the jurisdiction of the Courts of the State of California and of any Federal
Court located in said State in connection with any actions or proceedings
brought against the Borrower by the Company arising hereunder. In any such
action or proceeding, the Borrower hereby absolutely and irrevocably waives
personal service of any summons, complaint, declaration or other process and
hereby absolutely and irrevocably agrees that the service thereof may be made,
in addition to other methods permitted by law, by certified, registered or
recorded first class mail directed to the Borrower at its address set forth in
Section 11. The Borrower hereby waives and agrees not to assert in any such
action or proceeding, in case, to the fullest extent permitted by applicable
law, any claim that (a) the Borrower is not personally subject to the
jurisdiction of any such court, (b) the Borrower is immune from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to it or
its property, (c) any such suit, action or proceeding is brought in an
inconvenient forum, (d) the venue of such suit, action or proceeding is
improper, (e) that this Secured Promissory Note may not be enforced in or by any
such court and (f) any right to a trial by jury in any action, proceeding or
counterclaim concerning any rights under this Secured Promissory Note. Anything
hereinbefore to the contrary notwithstanding, the Company may sue the Borrower
in the courts of any country, State of the United States or place where the
Borrower or any of the property or assets of the Borrower may be found or in any
other appropriate jurisdiction.
SECTION 14. EXPENSES. Should all or any part of the
indebtedness represented by this Secured Promissory Note be collected by action
at law, or in bankruptcy, insolvency, receivership or other court proceedings,
or should this Secured Promissory Note be placed in the hands of attorneys for
collection after default, the Borrower hereby promises to pay to the Company,
upon demand by the Company at any time, in addition to principal of, interest on
and any other amount owing in respect of this Secured Promissory Note or the
indebtedness evidenced hereby, all court costs and reasonable attorneys, fees
and all other reasonable collection charges and expenses incurred or sustained
by the Company.
SECTION 15. GOVERNING LAW; TERMS. This Secured Promissory Note
shall be governed by and construed in accordance with the laws of the State of
Delaware, without regard to principles of conflicts of law.
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IN WITNESS WHEREOF, the Borrower has executed this instrument on the date first
above written.
GATEWAY ADVISORS, INC.
By /s/
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Name:
Title:
