Document:

PROMISSORY
      NOTE

    

    
      	
              $
                280,000.00

            	
              October
                31, 2001

            

    

    

    WHEREAS
      Vertical agreed to purchase from Paradigm Sales, Inc., 520 South Grand, 7th
      Floor, Los Angeles, CA 90071, (“Paradigm”) certain property of Adhesive Software
      (the “Property”), a Texas corporation, which Paradigm intends to acquire through
      bank foreclosure sale by Silicon Valley Bank (the “Bank”), pursuant to the terms
      and conditions set forth in the Asset Purchase Agreement, dated October 31,
      2001.

    

    For
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the undersigned VERTICAL COMPUTER SYSTEMS, INC., a Delaware
      corporation (“Promissor”), promises to pay to the order of ________________,
      a Texas
      resident, ________________________________,
      ("Promissee"), in lawful money of the United States of America the principal
      amount of TWO HUNDRED THOUSAND
      EIGHTY DOLLARS ($280,000 U.S.), together
      with interest on the amount of such principal outstanding from time to time
      at
      the rate of four percent (4%) per annum at the times and in the manner provided
      herein. 

    

    1.
       Payment
      of Principal and Interest.
      Principal and interest shall be paid as follows:

    

    a. The
      principal shall be payable in monthly installments beginning on the date that
      is
      seven (7) days after the closing date of the sale of the Property to Vertical,
      pursuant to the following schedule:

    

    i. The
      first
      four monthly payments shall be for Five Thousand Dollars ($5,000.00 US)

    

    ii.
       All
      remaining monthly payments shall be for Ten Thousand dollars ($10,000.00 U.S.)
      and shall continue until the Principal has been paid in full.

    b.
      All
      interest due shall be due and payable on the day the Principal has been paid
      in
      full.

    

    c.
      Promissor shall pay all amounts owing under this Note in immediately available
      funds to Promissee at Promissee's address as set forth herein, or at such other
      place as may be specified in writing by Promissee. Each payment, when made,
      shall be credited to the principal. 

     

    Payments
      received after 1:00 p.m. on any banking day or at any time on any Saturday,
      Sunday, or holiday shall be deemed received on the next banking
      day.

     

    
      
        Promissory
          Note

         

      

      
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    2. Collateral
      as Security.
      This
      Note is secured by certain collateral, which encumbers, among other things,
      the
      interest of Promissor in certain assets, as more particularly described therein
      (the "Collateral"). This Note and the Asset Pledge Agreement between Promissor
      and Promissee of even date herewith, and any other documents or instruments
      given or to be given to Promissee to secure the indebtedness evidenced by this
      Note are collectively referred to herein as the "Loan Documents".

    

    3. Default;
      Remedies.
      Each of
      the following occurrences and conditions shall constitute an Event of
      Default:

    

    a. failure
      of Promissor to pay as and when due any money, whether principal, interest,
      or
      otherwise, under this Note, or the breach or default of any obligation to pay
      money under or secured by the Security Agreement; or

    

    b. failure
      of Promissor to perform any obligation other than an obligation to pay money,
      as
      and when performance of such obligation is due under this Note or Loan Documents
      which failure continues for thirty (30) days after notice thereof from Promissee
      to Promissor; or

    

    c. failure
      by Promissor to comply with any of the terms, provisions, covenants, conditions
      or restrictions now or hereafter affecting the Collateral or any part thereof
      or
      contained in any agreement related or pertaining to the Collateral, which
      failure continues for thirty (30) days after notice thereof from Promissee
      to
      Promissor; or

    

    d. Promissor's
      making or at any time having made any representation, warranty or disclosure
      to
      Promissee that is or was materially false or misleading on the date as of which
      made, whether or not that representation or disclosure appears in the Loan
      Documents; or

    

    e. the
      sale,
      transfer, conveyance, or lease of all or any portion of the Collateral or of
      any
      of Promissor's rights therein, whether voluntarily, involuntarily, or otherwise,
      or Promissor's entering into an agreement to do any of the foregoing, in each
      case except as expressly permitted in the Security Agreement; or

    

    At
      any
      time following the occurrence of any Event of Default, or following the
      occurrence of any event as a consequence of which the obligations evidenced
      hereby may be accelerated, then at the election of Promissee and notwithstanding
      anything to the contrary herein or elsewhere, the entire amount of principal
      then outstanding under this Note and all interest, fees, charges, and other
      amounts owing and then unpaid hereunder shall become immediately due and
      payable, and Promissee may exercise any and all rights that it may have under
      the Loan Documents, at law, in equity, and otherwise.

     

    
      
        Promissory
          Note

         

      

      
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    4. Attorneys’
      Fees.
      Promissor shall pay to Promissee upon demand all costs and expenses incurred
      by
      Promissee in connection with determination, protection, or enforcement of any
      and all of Promissee's rights hereunder or under any of the Loan Documents,
      including enforcement of any and all obligations of Promissor hereunder and
      thereunder and protection, enhancement, or maintenance of the security interests
      securing such obligations or the priority of the same. Such costs and expenses
      shall be payable whether or not any suit is instituted, and the same shall
      include without limitation attorneys' fees, expert witness fees, costs of
      investigation, and all of such costs incurred in connection with any trial,
      appellate proceeding, or any case or proceeding under Chapters 7, 11, or 13
      of
      the Bankruptcy Code or any successor thereto.

    

    5. Waiver
      of Notice.
      Promissor and each endorser, guarantor and surety of this Note hereby waive
      diligence, demand, presentment for payment, notice of discharge, notice of
      nonpayment, protest and notice of protest, and specifically consent to and
      waive
      notice of any renewals or extensions of this Note, whether made to or in favor
      of Promissor or any other person or persons. Promissor and each endorser,
      guarantor and surety of this Note further waive and renounce all rights to
      the
      benefits of all statutes of limitation and any moratorium, appraisement, by
      any
      federal exception and homestead now or hereafter provided or state law or
      statute, including but not limited to exemptions provided by or allowed under
      the Bankruptcy Code, both as to each of themselves personally and as to all
      of
      their property, whether real or personal, against the enforcement and collection
      of the obligations evidenced by this Note and any and all extensions, renewals
      and modifications thereof.

    

    6.
      Notices.
      All
      notices required hereunder or pertaining hereto shall be in writing and shall
      be
      deemed delivered and effective upon the earlier of (i) actual receipt, or (ii)
      the date of delivery or refusal of the addressee to accept delivery if such
      notice is sent by express courier service or United States mail, postage
      prepaid, certified or registered, return receipt requested, in either case
      to
      the applicable address as follows:

    

    To
      Promissee:     ________________

    ________________

    ________________

    

    To
      Promissor:                          
   VERTICAL
      COMPUTER SYSTEMS, INC.

    6336
      Wilshire Boulevard

    Los
      Angeles, CA 90048

    Attn:
      President

    

    Notwithstanding
      the foregoing, any notice under or pertaining to the Loan Documents or the
      obligations secured thereby given and effective in accordance with applicable
      law shall be effective for purposes hereof. Either party may change the address
      at which it is to receive notices hereunder to another business address within
      the United States (but not a post office box or similar mail receptacle) by
      giving notice of such change of address in accordance herewith.

     

    
      
        Promissory
          Note

         

      

      
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    7.
      Exercise
      of Rights.
      No
      single or partial exercise of any of Promissees rights or powers under this
      Note
      or any of the other Loan Documents shall preclude any other or further exercise
      thereof or the exercise of any other right or power. Promissee at all times
      shall have the right to proceed against any portion of the security which
      secures payment of the indebtedness evidenced hereby in such order and manner
      as
      Promissee may elect without waiving any rights with respect to any other portion
      of such security. Each and all rights and remedies of Promissee hereunder and
      under the Loan Documents are cumulative and in addition to each and all other
      such rights and remedies. No exercise of any right or remedy shall preclude
      exercise of any other right or remedy.

    

    8.
       No
      Waiver.
      No
      failure of Promissee to insist upon strict performance of any obligation of
      Promissor or to exercise any right or remedy hereunder or under the Loan
      Documents, whether before or after any default, shall constitute or give rise
      to
      a waiver thereof, and no waiver of any default shall constitute a waiver of
      any
      future default or of any other default. No failure to accelerate the debt
      evidenced hereby by reason of default hereunder or otherwise, and no acceptance
      of any past due payment hereunder or acceptance of any amount less than the
      amount then due, and no other indulgence that may be granted by Promissee from
      time to time shall (a) preclude the exercise of any right that Promissee may
      have at law, in equity, by contract or agreement or otherwise, or (b) constitute
      or give rise to (i) a waiver of such right of acceleration or any other right,
      or (ii) a novation of this Note or a reinstatement of the debt evidenced hereby,
      or (iii) any waiver of Promissee's rights to demand and receive from Promissor
      full and prompt payment and performance thereafter, to impose late charges
      retroactively, or to declare a default. Promissor and each endorser, guarantor,
      and surety of this Note hereby expressly waive the benefit of any statute or
      rule of law or equity which would produce any result contrary to or otherwise
      in
      conflict with any of the foregoing.

    

    9. Assignment;
      Successors and Assigns.
      Promissee may assign or otherwise transfer all or any part of its interest
      herein. Promptly following written notice of such assignment or other transfer,
      duly executed by Promissee, Promissor shall render full and complete performance
      hereunder as and when due to the transferee so designated by Promissee.
      Promissor shall not assign or transfer all or any of its interests or
      obligations hereunder, and any attempted or purported assignment or transfer
      by
      Promissor shall be void and of no force or effect, except to the extent that
      the
      same may be expressly permitted under the Security Agreement. Subject to the
      foregoing, the terms of this Note shall apply to, be binding upon, and inure
      to
      the benefit of ail parties hereto and their successors and assigns.

    

    10. Modification.
      This
      Note shall not be modified, amended, or terminated, except by written agreement
      duly executed and delivered by both Promissee and Promissor.

     

    
      
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    11. Conflicts.
      In the
      event of any conflict between any provision of this Note and any provision
      of
      the Security Agreement, which conflict cannot reasonably be resolved in such
      a
      way as to give effect to all provisions herein and therein contained, this
      Note
      shall govern.

    

    12. Severability.
      If any
      provision of this Note or any payments pursuant to the terms hereof shall be
      invalid or unenforceable to any extent, the remainder of this Note and any
      other
      payments hereunder shall not be affected thereby and shall be enforceable to
      the
      greatest extent permitted by law.

    

    13. Governing
      Law.
      This Note shall be governed by and construed in accordance with the laws of
      the
      State of California.

    

    IN
      WITNESS WHEREOF, Promissor has executed and delivered this Note as of the date
      first written above.

     

    
      	 	 	 
	 	
              VERTICAL
                COMPUTER SYSTEMS, INC.

            
	 
 	 
 	 
 
	 	By 	 
	 	
              

              Richard
                Wade, President

            
	 	 

    
      
        Promissory
          Note

         

      

      
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          5ASSET
      PLEDGE AGREEMENT

    Date:
      October 31, 2001

    TO
      : ________________

     

    Pledge
      of Asset

    

    To
      induce
      you ________________,
      a Texas
      resident, ________________
      (hereinafter
      “You”), to provide the services to facilitate
      the sale of that certain property of Adhesive Software, Inc. pursuant
      to the Service Agreement, dated, October 31, 2001, to us as evidenced by our
      Promissory
      Note by and between VERTICAL COMPUTER SYSTEMS, INC., a Delaware corporation
      (“Company”) and you in that amount dated the date of this Agreement (hereinafter
      the “Asset Pledge Agreement”), and payable to your order pursuant to the
      schedule set forth therein (the "Note", which term will include any amendments
      thereto and substitutions therefor), and in consideration of your services
      in
      facilitating the sale of that certain property of Adhesive Property pursuant
      to
      the Services Agreement, and to secure payment of all amounts owing under the
      Note and this Asset Pledge Agreement and performance of all of our other
      obligations under the Note and under this Asset Pledge Agreement, the
      undersigned hereby pledge to you and grant you a security interest in that
      certain technology developed by Adhesive Software and known as “siteflash”
(hereinafter the “Siteflash Technology”) .

    

    Definition
      of Collateral; 

    

    The
      term
      "Collateral" means (i) the Siteflash Technology, and (ii) any cash, securities
      or other property paid or otherwise distributed on, with respect to, or in
      exchange for any Collateral. Upon default under this Asset Pledge Agreement,
      you
      may at any time transfer the Collateral into your name or the name of your
      nominee. 

    

    Warranties

    

    We
      hereby
      warrant to you that:

    

    
      	 	
              a.

            	
              The
                Company is duly incorporated and validly existing under the laws
                of the
                State of Delaware;

            

    

    

    
      	 	
              b.

            	
              We
                have taken all necessary corporate action to authorize the execution,
                delivery and performance of this Asset Pledge Agreement and the Note,
                which constitute our legally binding
                obligations;

            

    

    

    Prohibition
      on Transfer of Collateral

    

    We
      agree
      that we will not sell, transfer, assign or encumber any of our rights in any
      of
      the Collateral or grant any rights in or to any of the Collateral except
      pursuant to this Asset Pledge Agreement. Notwithstanding the foregoing, you
      acknowledge and agree that, provided we are not in Default of this Agreement,
      we
      shall have the express right (a) in our sole and absolute discretion, to
      commercially exploit the Siteflash Technology, in any manner, or refrain
      therefrom and to enter into any contracts with respect thereto; (b) to collect,
      receive, and retain any revenues derived from our commercial exploitation of
      the
      Siteflash Technology for our own benefit. 

     

    
      
        Asset
          Pledge Agreement

         

      

      
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    Further
      Assurances

    

    We
      will,
      at our expense, take or cause to be taken such action and execute and deliver
      or
      cause to be executed and delivered such additional agreements and documents
      as
      you may request in connection with this Asset Pledge Agreement or any of the
      Collateral or to perfect your security interest in any of the Collateral,
      including, without limitation, delivering any Collateral to you and executing
      and filing financing and other statements under the Uniform Commercial Code
      in
      effect in any state; and we hereby authorize you to sign any such agreement
      or
      document or statement on our behalf and to file any such statement with or
      without our signature.

     

    Default

    

    Upon
      a
      default under any of the provisions of the Note, or if any warranty by us
      hereunder is incorrect, or if we fail to perform any of our obligations under
      this Agreement (any such default or breach of warranty or failure being herein
      called "a default under this Asset Pledge Agreement"), you may, without notice,
      take such action as you deem advisable with respect to the Collateral,
      including, without limitation, selling any of the Collateral at public or
      private sale on such terms as you deem appropriate; and you are also authorized
      as our attorney-in-fact to endorse or otherwise effect the transfer of any
      of
      the Collateral. At any such sale you may be the purchaser.

    

    Remedies;
      Order of Pursuit

    

    You
      shall
      not be required to resort to or pursue any of your rights or remedies under
      or
      with respect to any other agreement or any other collateral before pursuing
      any
      of your rights or remedies under this Asset Pledge Agreement. You may pursue
      your rights and remedies in such order as you determine, and the exercise by
      you
      of any right or remedy will not preclude your exercising any other right or
      remedy.

    

    Delay;
      Waiver

    

    The
      failure or delay by you in exercising any of your rights hereunder or with
      respect to the Note or any other collateral securing the Note in any instance
      shall not constitute a waiver thereof in that or any other instance. You may
      waive your rights only by an instrument in writing signed by you.

    

    Expenses

    

    We
      agree
      to pay on demand (a) all expenses (including, without limitation, legal fees
      and
      disbursements) incurred by you in connection with the negotiation and
      preparation of this Asset Pledge Agreement and the perfection of your security
      interest in any of the Collateral, and (b) all expenses of enforcing the
      provisions of this Asset Pledge Agreement and your rights against any of the
      Collateral, including, without limitation, expenses and fees of legal counsel,
      court costs and the cost of appellate proceedings.

    

    Where
      to Make Payments

    

    All
      payments under this Asset Pledge Agreement shall be made in lawful currency
      of
      the United States of America in immediately available funds at the address
      as
      provided in the Note, or in such other manner or at such other place as you
      shall designate in writing.

     

    

    
      
        Asset
          Pledge Agreement

         

      

      
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    Notices

    

    Unless
      otherwise specified, all notices or other communications required herein must
      be
      in writing and will be deemed to have been duly served if hand delivered, sent
      by first class mail postage prepaid and properly addressed, return receipt
      requested, or sent by overnight delivery. Notices shall be delivered to the
      address of each party as set forth above or as otherwise designated by the
      respective party, as the case may be. All notices to Farias shall be addressed
      to Robert Farias at ________________________________.

    

    Governing
      Law; Agent for Service of Process

    

    This
      Asset Pledge Agreement and your rights and our obligations hereunder shall
      be
      governed by and construed in accordance with the law of the State of California.
      You and we agree that any legal action or proceeding with respect to this Asset
      Pledge Agreement or any of the Collateral may be brought in the courts of the
      State of California and of the United States having jurisdiction in the County
      of Los Angeles and State of California and for the purpose of any such legal
      action or proceeding, shall be subject to the exclusive jurisdiction of such
      courts. For purposes of any proceeding involving this Asset Pledge Agreement,
      we
      hereby irrevocably appoint ________________________________,
      our
      agent to receive service of process for us and on our behalf.

    

    We
      will
      at all times maintain an agent to receive service of process in California,
      on
      our behalf with respect to this Asset Pledge Agreement, and in the event that,
      for any reason, the agent named above or any successor agent shall no longer
      serve as our agent to receive service of process in California, we shall
      promptly appoint a successor and advise you thereof.

    

    Amendment

    

    This
      Asset Pledge Agreement may only be amended by an instrument in writing signed
      by
      you and us.

    

    
      	 	 	 
	 	
              Very
                truly yours,

            
	 	 
	 	PLEDGEE
	 	 
	 	ROBERT FARIAS
	 	 

              
By
	 	 
	 	PLEDGOR
	 	 
	
               AGREED:

            	 
	 	 
	 	VERTICAL COMPUTER SYSTEMS,
              INC.
	 	 
	 	
               

              
                

              

              By: Richard Wade, President

            
	 
 	 
 	 
 

     

    
      
        Asset
          Pledge Agreement

         

      

      
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