Exhibit 10.11
TERM NOTE
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$57,348.76 Date: April 14, 2000
FOR VALUE RECEIVED, without defalcation, MICHAEL G. KANTROWITZ
("Maker"), in accordance with the terms and conditions set forth below, hereby
promises to pay to the order of NEOWARE SYSTEMS, INC. ("Payee"), the principal
sum of Fifty-Seven Thousand Three Hundred Forty-Eight Dollars and 76/100
($57,348.76), in lawful money of the United States of America, together with
interest thereon at an annual rate of eight percent (8%), subject to the terms
of this Note.
(a) The principal balance of this Note shall be payable in
equal, annual installments of $14,337.19 commencing on April 14, 2001 and
continuing on each April 14 thereafter until April 14, 2004. In addition to the
foregoing, in the event of the payment of a bonus to Maker by Payee during the
period that any amount of the principal balance under this Note shall remain
outstanding, the net amount of such bonus payable to Maker shall be applied to
the payment of the outstanding principal balance of this Note, and the remaining
outstanding principal balance shall be paid in accordance with the foregoing
schedule of principal payments until payment in full of the unpaid principal
balance.
(b) Interest on the outstanding principal balance of this
Note, from time to time, shall be payable in annual installments on April 14,
2001 and continuing on each April 14 thereafter until the earlier of April 14,
2004 or the repayment in full of the unpaid principal balance and accrued
interest of this Note.
(c) The unpaid principal balance of this Note, plus all
accrued and unpaid interest thereon, shall be payable on the earliest to occur
of: (i) Event of Default (as such term is defined herein), (ii) an event of
default under the Pledge Agreement (as defined herein), or (iii) April 14, 2004
(unless the principal balance is sooner paid in full); provided, however, that
Maker shall have the right to prepay this Note, in whole or in part, at any time
without premium or penalty.
(d) Interest shall be computed on the basis of a 360-day year
for the actual number of days elapsed (365/360 or 366/360 as appropriate).
(e) All payments of principal and interest with regard to this
Note shall be made to Payee in lawful money of the United States of America in
immediately available funds at Neoware Systems, Inc., 400 Feheley Drive, King of
Prussia, Pennsylvania 19406.
(f) This Note is being delivered by Maker to Payee in
connection with the exercise by Maker of Payee's common stock purchase warrants
to acquire 31,293 shares of Payee's Common Stock on even date herewith with the
proceeds of the Note. This Note is the Note referred to in the Pledge Agreement
of even date herewith (the "Pledge Agreement") and is entitled to all the
benefits of such Pledge Agreement and all the security referred to therein. In
the event of a conflict between the terms of this Note and the terms of the
Pledge Agreement, the terms of this Note shall control.
(g) Each of the following shall constitute an event of default
("Event of Default"):
(i) Failure by Maker to pay the interest on, or
principal of, this Note within ten (10) days after such amounts become due;
(ii) Any representation or warranty made by Maker in
the Pledge Agreement shall prove to be false or misleading in any material
respect as of the date when made;
(iii) Failure by Maker to observe or perform any
covenants, conditions or provisions contained in the Pledge Agreement provided
that such failure shall continue for a period of fifteen (15) days after written
notice from Payee to Maker or the occurrence of an Event of Default (as defined
herein);
(iv) Filing by Maker of a voluntary petition in
bankruptcy or a voluntary petition or any answer seeking arrangement or
readjustment of her debts or for any other relief under the Bankruptcy Reform
Act of 1994, as amended ("Bankruptcy Code"), or under any other existing or
future federal or state insolvency act or law, or any formal written consent to,
approval of, or acquiescence in, any such petition or proceeding by Maker, the
application by Maker for, or the appointment by consent or acquiescence of, a
receiver or trustee of Maker or for all or a substantial part of her property;
the making by Maker of an assignment for the benefit of creditors; or
(v) Filing of any involuntary petition against Maker
in bankruptcy or seeking arrangement or readjustment of his debts or for any
other relief under the Bankruptcy Code, or under any other existing or future
federal or state insolvency act or law; or the involuntary appointment of a
receiver or trustee of Maker, or for all or a substantial part of the property
of Maker; and the continuance of any of such events for a period of sixty (60)
days undismissed, unbonded or undischarged.
(h) Upon the occurrence of an Event of Default, then, and in
such event, Payee may declare this Note to be due and payable, whereupon the
entire unpaid balance of principal, together with all accrued interest thereon,
shall become immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived, anything
herein or in the Pledge Agreement to the contrary notwithstanding.
(i) THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY
FOR AN ATTORNEY TO CONFESS JUDGMENT AGAINST MAKER. IN GRANTING THIS WARRANT OF
AUTHORITY TO CONFESS JUDGMENT AGAINST HIM, MAKER HEREBY KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY, AND, ON THE ADVICE OF COUNSEL, UNCONDITIONALLY WAIVES ANY AND
ALL RIGHTS MAKER HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR A
HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE
COMMONWEALTH OF PENNSYLVANIA AND ALL OTHER JURISDICTIONS.
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UPON THE OCCURRENCE OF AN EVENT OF DEFAULT AS THAT TERM IS
DEFINED HEREIN, MAKER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF
ANY COURT OF THE COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE TO APPEAR AT ANY TIME
FOR MAKER IN ANY ACTION BROUGHT AGAINST SUCH MAKER ON THIS NOTE AT THE SUIT OF
PAYEE, WITH OR WITHOUT DECLARATION FILED, AS OF ANY TERM, AND THEREIN TO CONFESS
OR ENTER JUDGMENT AGAINST MAKER FOR THE ENTIRE UNPAID PRINCIPAL OF THIS NOTE AND
ALL OTHER SUMS PAYABLE BY OR ON BEHALF OF MAKER PURSUANT TO THE TERMS OF THIS
NOTE OR THE PLEDGE AGREEMENT, AND ALL ARREARAGES OF INTEREST THEREON, TOGETHER
WITH COSTS OF SUIT, ATTORNEY'S COMMISSION FOR COLLECTION OF FIVE PERCENT (5%) OF
THE TOTAL AMOUNT THEN DUE BY MAKER TO PAYEE (BUT IN ANY EVENT NOT LESS THAN ONE
THOUSAND DOLLARS ($1,000.00)), AND FOR SO DOING THIS NOTE OR A COPY HEREOF
VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. THE AUTHORITY GRANTED
HEREIN TO CONFESS JUDGMENT SHALL NOT BE EXHAUSTED BY ANY EXERCISE THEREOF BUT
SHALL CONTINUE FROM TIME TO TIME AND AT ALL TIMES UNTIL PAYMENT IN FULL OF ALL
THE AMOUNTS DUE HEREUNDER.
(j) Maker hereby waives and releases all errors, defects and
imperfections in any proceedings instituted by Payee under the terms of this
Note or of the Pledge Agreement, as well as all benefit that might accrue to
Maker by virtue of any present or future laws exempting any property, real or
personal, or any part of the proceeds arising from any sale of any such
property, from attachment, levy, or sale under execution, or providing for any
stay of execution, exemption from civil process, or extension of time for
payment; and Maker agrees that any real estate that may be levied upon pursuant
to a judgment obtained by virtue hereof, on any writ of execution issued
thereon, may be sold upon any such writ in whole or in part in any order desired
by Payee.
(k) Payee shall not be deemed, by any act of omission or
commission, to have waived any of its rights or remedies hereunder unless such
waiver is in writing and signed by Payee, and then only to the extent
specifically set forth in the writing. A waiver on one event shall not be
construed as continuing or as a bar to or waiver of any right or remedy to a
subsequent event.
(l) This instrument shall be governed by and construed
according to the domestic, internal law (but not the law of conflict of laws) of
the Commonwealth of Pennsylvania.
(m) Whenever used, the singular number shall include the
plural, the plural the singular, the use of any gender shall be applicable to
all genders, and the words "Payee" and "Maker" shall be deemed to include the
respective heirs, personal representatives and assigns of Payee and Maker.
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(n) Any provision contained in this Note which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability, without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has
executed this Note on the day and year first above written.
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Witness Michael G. Kantrowitz
ADDRESS:
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telephone:
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facsimile:
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Exhibit 10.11 (Continued)
PLEDGE AGREEMENT
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PLEDGE AGREEMENT, dated as of April 14, 2000, by MICHAEL G. KANTROWITZ,
with a mailing address at 620 Christian Street, Philadelphia, Pennsylvania 19947
("Pledgor"), in favor of Neoware Systems, Inc., a Delaware corporation with its
principal office at 400 Feheley Drive, King of Prussia, Pennsylvania 19406
("Pledgee").
WHEREAS, Pledgor has delivered to Pledgee in payment for certain
obligations pursuant to the terms of a promissory note ("Note"), dated as of
even date herewith, and Pledgor desires to pledge and to grant to Pledgee a
security interest in 31,293 shares of common stock, par value $.001 per share
("Common Stock"), of Pledgee in order to secure the obligations of Pledgor under
the Note.
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto agree as follows:
1. Pledgor hereby grants a security interest in, and pledges to,
Pledgee, 31,293 shares of Common Stock (the "Shares"), in order to secure
payment and performance of all obligations due by Pledgor to Pledgee under the
Note.
2. Upon the exercise of common stock purchase warrants to acquire
31,293 shares of Pledgee's Common Stock owned by Pledgor (the "Warrants"), the
Shares issued upon exercise of the Warrants will be represented by a
certificate, duly issued in the name of Pledgor (the "Certificate") and duly
endorsed for transfer or accompanied by an appropriate stock power executed in
blank.
3. Except for the security interest granted or acknowledged hereby,
upon exercise of the Warrants, Pledgor will own the Shares free from any adverse
lien, security interest or encumbrance. Pledgor will defend the Shares against
all claims and demands of all persons at any time claiming the same or any
interest therein.
4. Pledgor hereby covenants that, until the Shares are delivered to
Pledgor by Pledgee, Pledgor will not sell, convey, or otherwise dispose of any
of the Shares or any interest therein, or create, incur or permit to exist any
claim, pledge, mortgage, lien, charge, encumbrance or any security interest
whatsoever in or with respect to any of the Shares or the proceeds thereof,
other than that created hereby and will not do or suffer any act or failure to
act which would impair the lien on or the value of the Shares.
5. Upon the occurrence of an Event of Default under the Note, Pledgor
shall have the rights and remedies provided in the Uniform Commercial Code of
the Commonwealth of Pennsylvania as regards the Shares subject hereto or any
other applicable law.
6. Pledgor hereby irrevocably appoints Pledgee as the true and lawful
attorney and proxy for Pledgor, with full power of substitution for and in
Pledgee's name in the stock records of Pledgor with respect to all of the
Shares, to vote and otherwise act, or give written consent in lieu thereof, at
all meetings of stockholders of the Company, and at any time the Shares are
required to or may be voted or acted upon. This appointment of proxy is
irrevocable and coupled with an interest and shall not terminate by operation of
law, whether by the dissolution, liquidation or bankruptcy of the Company, or
the occurrence of any other event.
7. In the event that Pledgor prepays a portion of the principal amount
due under the Note, Pledgee agrees to deliver to Pledgor a certificate for such
amount of the Shares as shall be related to the amount of the principal prepaid,
and the stock power with respect thereto, upon receipt from Pledgor of a stock
power with respect to the certificate representing the balance of the Shares
pledged hereunder. Upon payment of all obligations due under the Note, Pledgee
agrees to return to Pledgor, or to such party as Pledgor shall designate, all
Shares subject to this Pledge Agreement and all Certificates representing the
Shares and all stock powers with respect thereto, and this Pledge Agreement
shall thereby be terminated. In addition thereto, Pledgee further agrees to
execute such release or termination notice that might reasonably be required.
8. (a) No course of dealing between Pledgor and Pledgee, nor any
failure to exercise, nor any delay in exercising, any right, power or privilege
of Pledgee hereunder or under the Note shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.
(b) Pledgor hereby agrees that Pledgee, at any time and
without affecting his rights in the Shares and without notice to Pledgor, may
grant any extensions, releases or other modifications of any kind respecting the
Note, the Pledgor's obligations under the Note and any collateral security
therefor, and Pledgor hereby waives all notices in connection therewith.
9. This Pledge Agreement shall be binding upon Pledgor and his heirs
and assigns.
10. This Agreement shall be construed in accordance with the
substantive law of the Commonwealth of Pennsylvania without regard to principles
of conflicts of laws.
IN WITNESS WHEREOF, this Pledge Agreement has been duly executed as of
the 14th day of April, 2000.
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MICHAEL G. KANTROWITZ
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