Document:

ex4-1.htm

    Exhibit 4.01

    EXHIBIT
A

     

    PROMISSORY
NOTE

     

    
      	
              $500,000

            	
              Tampa,
      Florida

            
	 
      	
              June
      17, 2009

            

    

    

    

    FOR VALUE
RECEIVED, The WEB Channel Network, Inc., a Florida corporation (“Borrower”),
hereby agrees to pay to The WEB Channel Network, LLC. (“Holder”),
at 19901 Arbor Path, Lutz, Florida 33559 or at such other place as the Holder
may designate in writing from time to time, the principal sum of FIVE HUNDRED
THOUSAND DOLLARS ($500,000), together with interest on the principal balance of
this obligation from time to time remaining unpaid, at the rate and at the times
provided in this Promissory Note (“this
Note”).  All payments required by this Note must be by legal
tender of the United States of America.

    

    1.          
 Interest. The outstanding
principal amount of this Note shall bear interest beginning on the date of this
Note at a rate equal to eight percent (8%) per annum, calculated on a
non-compounded simple rate basis, using a 365-day year, for the actual number of
days elapsed through the actual payment date.  Interest shall accrue
and be paid at maturity with the principal balance.  Notwithstanding
anything contained herein, from and after the occurrence and during the
continuance of an Event of Default pursuant to Section 5 below, this Note shall
bear interest on the due and unpaid principal amount at the default rate
(the “Default
Rate”) equal to the twelve percent (12%) per annum.

    

    2.          
 Security. This Note is secured by
certain assets of Borrower pursuant to a Security Agreement of even date
herewith between Borrower and Holder.

    

    3.          
 Method of
Repayment. The total amount of
this Note shall be paid in five annual and equal principal payments of $100,000
plus accrued interest on the anniversary dates of this Note.

    

    4.          
 Prepayments. This Note may be
prepaid at Borrower’s option without the consent of the Holder, either in whole
or in part, at any time and from time to time without premium or
penalty.

    

    5.         
  Events of
Default. For
purposes of this Note, an “Event of
Default” is:  (i) a failure to pay any
portion of the principal amount or interest on this Note when due; (ii) any event or condition
shall occur which (A)
results in the acceleration of the maturity of any long-term debt (other than
this Note), equipment lease line, or real estate lease of Borrower, or (B) enables (or, with the
giving of notice or lapse of time or both, would enable) the holder of such
long-term debt, equipment lease line, or real estate lease, or any or person
acting on such holder’s behalf, to accelerate the maturity thereof; (iii) admission by the
Borrower of its inability to pay its debts generally as they become due or
otherwise acknowledges its insolvency; (iv) the filing of a petition
in bankruptcy by the Borrower or the execution by the Borrower of a general
assignment for the benefit of creditors; (v) the filing against the
Borrower of a petition in bankruptcy or a petition for relief under the
provisions of the federal bankruptcy code or another state or federal law for
the relief of debtors and the continuation of such petition without dismissal
for a period of ninety (90) days or more; (vi) the Borrower’s ceasing to
carry on business; (vii)
the sale, transfer, or other disposition of all or substantially all of the
assets of the Borrower or a merger, acquisition, consolidation or similar
transaction which results in the Borrower’s stockholders immediately prior to
such transaction holding less than fifty percent (50%) of the voting power of
the surviving, continuing or purchasing entity; or (viii) a breach by Borrower of
any covenant, condition, or obligation contained in the Asset Purchase Agreement
of even date herewith among Borrower, Holder and others.  If an Event
of Default occurs, Holder may declare all of the outstanding principal amount of
this Note, including any interest due thereon, to be due and payable
immediately.  Borrower shall pay interest on such amount in cash at
the Default Rate to Holder if such amount is not paid within two (2) days of
Holder’s request.  The remedies under this Note shall be
cumulative.

    

    6.           
Waivers. No delay on the part of
Holder in exercising any right or remedy hereunder shall operate as a waiver of
such right or remedy.  No single or partial exercise of a right or
remedy shall preclude other or further exercise of that or any other right or
remedy.  The failure of Holder to insist upon the strict performance
of any term of this Note, or to exercise any right or remedy hereunder, shall
not be construed as a waiver or relinquishment by Holder for the future of that
term, right or remedy.  No waiver of any right of Holder hereunder
shall be effective unless in writing executed by Holder.

    

    7.         
  Severability. The unenforceability or
invalidity of any provision or provisions of this Note as to any persons or
circumstances shall not render that provision or those provisions unenforceable
or invalid as to any other provisions or circumstances, and all provisions
hereof, in all other respects, shall remain valid and enforceable.

    

    8.          
 WAIVER OF
JURY TRIAL.
BORROWER AND HOLDER ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY MAY BE
WAIVED.  EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY
TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR
THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED
TO, THIS NOTE.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    9.            
Binding
Effect. This
Note shall be binding on and inure to the benefit of the parties hereto and
their respective successors and assigns.

    

    10.           Governing
Law and Venue. 
This Note shall be governed by and construed in accordance with the laws
of the State of Florida, without reference to principles of choice of law
thereunder.  The venue for any judicial or arbitration proceedings
arising out of this Note or the obligations hereunder shall be in the state
courts of Hillsborough County, Florida.

     

    11.           Compliance
With Usury Laws. 
As it is the intent of all parties to this transaction to abide by the
interest limitations of any applicable usury law, it is expressly agreed,
anything herein to the contrary notwithstanding, that Holder shall not be
allowed or entitled to collect any interest (or any sum which is considered
interest by law) which is in excess of any legal rate applicable
hereto.  Should any amount be collected hereunder which would cause
the interest to exceed said lawful rate, such part of said amount in excess of
the lawful rate shall automatically be credited to principal, or, if all
principal amounts have been paid, shall be refunded to Borrower.  The
provisions of this Note are hereby modified to the extent necessary to conform
to the limitations and provisions of this paragraph.  This paragraph
shall govern over all other provisions in any document or agreement now or
hereafter existing.

    

    12.           Documentary
Stamp Tax Liability. Holder
shall pay any and all documentary stamp tax and any other excise tax due and
payable on this Note.  Holder shall further indemnify and save
harmless Borrower from any documentary stamp tax or intangibles tax assessed by
the State of Florida with respect to this Note, including, without limitation,
any penalties and interest.

    

    13.           Costs.  In
the event that this Note is collected by law or through attorneys at law, or
under advice therefrom, Borrower hereby agrees to pay all costs of collection,
including reasonable attorneys’ fees and costs, whether or not suit is brought,
and whether incurred in connection with collection, trial, appeal, bankruptcy or
other creditors’ proceedings or otherwise.

    

    14.           Application
of Payments. All principal, interest and any other amounts due
under this Note shall be payable in lawful money of the United States of America
at the place or places above stated.  All payments shall be credited
first to costs and expenses, if any, incurred by Holder in collecting any
amounts due hereunder, second to any late payment charges and interest accrued
at the Default Rate (as defined above), third to past due interest, fourth to
principal and any other amounts due hereunder.

    

    IN
WITNESS WHEREOF, the Borrower has executed and delivered this Note effective as
of the date stated above.

    

      
“Borrower”

     

    
      	 	The WEB Channel
      Network, Inc.
	 	By:  /s/ Robert V.
      Rudman                
      
	 	Robert V. Rudman,
      Presidentex4-2.htm

    Exhibit
4.02

    EXHIBIT
B

     

    SECURITY
AGREEMENT

     

    THIS
SECURITY AGREEMENT (“this
“Agreement”) is made and entered into as of the 17th day of June, 2009,
by and between The WEB Channel Network, Inc., a Florida corporation ("WEB Channel"),
and The WEB Channel Network, LLC, a Florida entity ("Secured
Party").

    

    Recitals

    

    WHEREAS, Pursuant to that
certain Asset Purchase Agreement of even date herewith (the “Asset Purchase
Agreement”) among Innovative Software Technologies, Inc. (the “Company”),
The WEB Channel Network, Inc. (“WEB
Channel”), The WEB Channel Network, LLC. (the “Secured
Party”), and Robert W. Singerman, (“Manager”),
WEB Channel has executed a Secured Promissory Note of even date herewith in
favor of Secured Party  (the “Note”)in
the principal amount of Five Hundred Thousand Dollars ($500,000).

    

    WHEREAS, Secured Party has
required, as a condition to entering into the transactions contemplated by the
Asset Purchase Agreement, that WEB Channel grant Secured Party a first priority
security interest in all of WEB Channel’s assets and property, and to that end
has required the execution and delivery of this Agreement by WEB
Channel.

    

    NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained in the Note and
herein, the parties hereto, intending to be legally bound, agree as
follows:

    

    1.           Incorporation
of Recitals, Purchase Agreement, and Note. The foregoing Recitals, the
Note and the terms and provisions thereof, are hereby incorporated herein in
their entirety by this reference.

    

    2.           Definitions. The
following terms shall have the meanings set forth below:

    

    “Obligations”
means each and every debt, liability, and obligation of every type and
description, including without limitation any debt, liability, and obligation
arising under or in connection with the Note and Asset Purchase Agreement, and
the related documents entered into in connection therewith, which WEB Channel
may now or at any time hereafter owe to Secured Party, whether such debt,
liability, or obligation now exists or is hereafter created or incurred and
whether it is or may be direct or indirect, due or to become due, absolute or
contingent, primary or secondary, liquidated or unliquidated, independent,
joint, several, or joint and several.

    

    “Security
Interest” has the meaning given in Section 3.

    

    “Collateral”
means all assets and property of any kind and nature whatsoever now owned or
hereafter acquired by WEB Channel, whether tangible or intangible, including
without limitation all of WEB Channel’s right, title, and interest in and to the
property and assets listed on Schedule
A hereto, including all proceeds thereof and all increases,
substitutions, replacements, additions, and accretions thereof.

     

    3.            
Security
Interest.  To secure payment of the Obligations, WEB Channel hereby
irrevocably pledges and assigns to, and grants Secured Party a first priority
security interest (the “Security
Interest”), with power of sale to the extent permitted by law, in the
Collateral.

     

    4.            
Representations
and Warranties.  WEB Channel represents and warrants as
follows:

    

    (a)           Authority. WEB Channel has
authority to enter into this Agreement and any person signing it on WEB
Channel’s behalf has been duly authorized to take such action.

    

    (b)           Financing
Statements. Except for the
financing statements in favor of Secured Party at the time of granting the
security interest described herein, no financing statement covering the
Collateral or any portion thereof will be on file in any public office and WEB
Channel agrees not to execute or authorize the filing of any such additional
financing statement in favor of any person, entity or governmental agency
(whether federal, state or local) other than Secured Party as long as any
portion of the Obligations evidenced by the Note remain unpaid.

    

    (c)        
   Legal
Name. WEB
Channel’s exact legal name is as set forth in the first paragraph of this
Security Agreement.  WEB Channel shall not change its legal name or
its form of organization without thirty (30) days’ prior written notice to
Secured Party.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.       
     Covenants
and Agreements. WEB Channel covenants and agrees as follows:

    

    (a)           
Restrictions
Future Agreements. WEB Channel agrees that
until the Obligations shall have been satisfied in full, WEB Channel shall not,
without Secured Party’s prior written consent, assign, transfer, encumber or
otherwise dispose of the Collateral, or any interest therein, or enter into any
agreement (for example, a license agreement) which is inconsistent with WEB
Channel’s obligations under this Agreement, and WEB Channel further agrees that
it will not take any action, or permit any action to be taken by others subject
to its control, including licensees, or fail to take any action, which would
affect the validity or enforcement of the rights transferred to Secured Party
under this Agreement.

     

    (b)          
 Defense.  WEB Channel shall at
its own expense and using commercially reasonable efforts, protect and defend
the Collateral against all claims or demands.

     

    (c)         
  Maintenance.   WEB Channel
shall at all times and at its own expense maintain and keep, or cause to be
maintained and kept, the Collateral in good repair, working order, and
condition; pay and discharge when due all taxes, license fees, levies and other
charges upon it; and not permit it to be used in violation of any applicable
law, regulation or policy of insurance.

    

    (d)         
  Secured
Party’s Right to Take Action.  If WEB Channel fails
to perform or observe any of its covenants or agreements set forth in this
Section 5, or if WEB Channel notifies Secured Party that it intends to abandon
any part of the Collateral, Secured Party may (but need not) perform or observe
such covenant or agreement or take steps to prevent such intended abandonment on
behalf and in the name, place and stead of WEB Channel (or, at Secured Party’s
option, in Secured Party’s own name) and may (but need not) take any and all
other actions which Secured Party may reasonably deem necessary to cure or
correct such failure or prevent such intended abandonment.

    

    (e)           Costs and
Expenses.
 Except to the extent that the effect of such payment would be to
render any loan or forbearance of money usurious or otherwise illegal under any
applicable law, WEB Channel shall pay Secured Party on demand the amount of all
moneys expended and all costs and expenses (including reasonable attorneys’ fees
and disbursements) incurred by Secured Party in connection with or as a result
of Secured Party’s taking action under subsection 5(d) above or exercising its
rights under Section 7 below, together with interest thereon from the date
expended or incurred by Secured Party.

    

    (f)          
 Power of
Attorney.
 To facilitate Secured Party’s taking action under
subsection 5(d) above and exercising its rights under Section 7 below, WEB
Channel hereby irrevocably appoints (which appointment is coupled with an
interest) Secured Party, or its representatives or agents, as the
attorney-in-fact of WEB Channel with the right (but not the duty) from time to
time to create, prepare, complete, execute, deliver, endorse, or file, in the
name and on behalf of WEB Channel, any and all instruments, documents,
applications, financing statements, and other agreements and writings required
to be obtained, executed, delivered or endorsed by WEB Channel under this
Section 5, or, necessary for Secured Party, after an Event of Default, to
enforce or use the Collateral, or to sell, assign, transfer, pledge, encumber or
otherwise transfer title in or dispose of the Collateral to any third
party.  WEB Channel hereby ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof.  The power of
attorney granted herein shall terminate upon the payment in full and performance
of all Obligations.

    

    6.           Events of
Default. Each of the following
occurrences shall constitute an event of default under this Agreement (herein
called “Event of
Default”):

    

    (a)           an
Event of Default, as defined in the Note, shall occur; or

    

    (b)           WEB
Channel shall fail promptly to observe or perform any covenant or agreement
herein binding on it; or

    

    (c)           There
is any levy, seizure, or attachment of all or any portion of the Collateral;
or

    

    (d)           Any
of the representations or warranties contained in Section 4 above shall prove to
have been incorrect in any material respect when made.

    

    7.           Remedies. Upon the occurrence of
an Event of Default and at any time thereafter, Secured Party may, at its
option, take any or all of the following actions:

     

    (a)           Exercise
any or all remedies available under this Agreement or the Note; or

     

    (b)           Sell,
assign, transfer, pledge, encumber, or otherwise dispose of the Collateral;
or

     

    (c)           Incur
expenses, including attorneys' fees at the regular hourly rates of Secured
Party's counsel from time to time in effect, legal expenses and costs for the
exercise of any right or power under this Security Agreement, which expenses are
secured by this Security Agreement.

     

    8.           Miscellaneous.  Time is of the essence
in this Agreement.  This Agreement may be waived, modified, amended,
terminated or discharged, and the Security Interest may be released, only
explicitly in a writing signed by Secured Party.  A waiver signed by
Secured Party shall be effective only in the specific instance and for the
specific purpose given.  Mere delay or failure to act shall not
preclude the exercise or enforcement of any of Secured Party’s rights or
remedies.  All rights and remedies of Secured Party shall be
cumulative and may be exercised singularly or concurrently, at Secured Party’s
option, and the exercise or enforcement of any one such right or remedy shall
neither be a condition to nor bar the exercise or enforcement of any
other.  Secured Party shall not be obligated to preserve any rights
WEB Channel may have against prior parties, to realize on the Collateral at all
or in any particular manner or order, or to apply any cash proceeds of the
Collateral in any particular order of application.  This Agreement
shall be binding upon and inure to the benefit of WEB Channel and Secured Party
and their respective participants, successors, and assigns and shall take effect
when signed by WEB Channel and Secured Party, and WEB Channel waives notice of
Secured Party’s acceptance hereof.  This Agreement shall be governed
by the internal law of the State of Florida without regard to conflicts of law
provisions.  If any provision or application of this Agreement is held
unlawful or unenforceable in any respect, such illegality or unenforceability
shall not affect other provisions or applications which can be given effect and
this Agreement shall be construed as if the unlawful or unenforceable provision
or application had never been contained herein or prescribed
hereby.  All representations and warranties contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement and the creation and payment of the Obligations.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    9.           Waiver of
Jury Trial: WEB CHANNEL HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT WEB CHANNEL MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF EITHER PARTY.  THIS
PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY ENTERING INTO THIS
AGREEMENT.

    

    IN WITNESS WHEREOF, the
parties have duly executed and delivered this Security Agreement as of the date
and year first written above.

    
    

     

    
      	 “WEB
      Channel”	 "Secured
      Party"
	The
      WEB Channel Network, Inc.	The WEB Channel
      Network, LLC
	 	 
	 	 
	 	 
	By:  /s/Robert V.
      Rudman                     
         	By:  /s/ Robert W.
      Singerman                      
	Robert
      V. Rudman, President	
              Robert
      W. Singerman, Operating Manager

            

    

     

     

    
      
        	 “Seller”	
                “Manager”

              
	The WEB Channel
      Network, LLC	 
	 	 
	 	 
	 	 
	By:   /s/ Robert W.
      Singerman                         
      	/s/ Robert W.
      Singerman                                         
	Robert W. Singerman
      Operating Manager	Robert
      W. Singerman

      

       

    

    SCHEDULE
A

    

    Collateral

    

    (a)           All
accounts, consisting of every right to payment for goods or other property of
any kind sold or leased or for services rendered or for any other transaction,
whether or not the right to payment has been earned by performance, and
including without limitation every account receivable, all purchase orders, all
interest in goods the sale or lease of which gives rise to the right to payment
(including returned or repossessed goods and unpaid seller's rights), and the
rights pertaining to such goods, including the right to stoppage in transit,
every right to payment under any contract, and every lien, guaranty, or security
interest that secures a right to payment for any of the foregoing ("Accounts");

    

    (b)           All
chattel paper, consisting of a writing or writings evidencing both a monetary
obligation and a security interest in or lease of goods, together with any
guarantees, letters of credit, and other security therefore ("Chattel
Paper");

    

    (c)           Deposit
Accounts, as that term is defined in the Revised Uniform Commercial Code, as in
effect in the State of Florida (the “UCC”);

    

    (d)           All
inventory of whatever kind, as that term is used in the UCC (“Inventory”),
including without limitation all goods held by the Company for sale or lease,
goods furnished or to be furnished under a contract for service, and supplies,
packaging, raw materials, goods in transit, work-in-process, and materials used
or consumed or to be used or consumed in the Company’s business, or in the
processing, packaging, or shipping of same, all finished goods, and all
property, the sale or lease of which has given rise to Accounts, Chattel Paper,
or Instruments, and that has been returned to the Company or repossessed by the
Company or stopped in transit, and all warranties and related claims, credits,
setoffs, and other rights of recovery with respect to any of the
foregoing;

     

    (e)           All
equipment, including without limitation all equipment, machinery, and other
property held for use in or purchased for the Company’s business, together with
all increases, parts, fittings, accessories, repair equipment, and special tools
now or later affixed to, or used in connection with, that property, all
transferable rights of the Company to the licenses and warranties (express and
implied) received from Sellers and manufacturers of the foregoing property, all
related claims, credits, setoffs, and other rights of recovery (“Equipment”);

     

    (f)           All
instruments, including without limitation every instrument of any kind, as that
term is used in the UCC, and includes every promissory note, negotiable
instrument, certificated security, or other writing that evidences a right to
payment of money, that is not a lease or security agreement, and that is
transferred in the ordinary course of business by delivery with any necessary
assignment or endorsement (“Instruments”);

     

    (g)           Investment
Property, as that term is defined in the UCC (“Investment
Property”);

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (h)           All
documents, including without limitation any paper that is treated in the regular
course of business as adequate evidence that the person in possession of the
paper is entitled to receive, hold, and dispose of the goods the paper covers,
including warehouse receipts, bills of lading, certificates of title, and
applications for certificates of title (“Documents”);

     

    (i)           All
general intangibles of any kind, as that term is used in the UCC (“General
Intangibles”), and includes without limitation all intangible personal
property other than Accounts, Documents, Instruments, and Chattel Paper, and
includes without limitation money, contract rights, corporate or other business
records, deposit accounts, inventions, designs, formulas, patents, patent
applications, service marks, trademarks, trade names, trade secrets, engineering
drawings, goodwill, rights to prepaid expenses, registrations, franchises,
copyrights, licenses, customer lists, computer programs and other software,
source code, tax refund claims, royalty, licensing and product rights, all
claims under guarantees, security interests or other security held by or granted
to Debtor to secure payment of any of the Accounts by an Account Debtor, all
indemnification rights, and rights to retrieval from third parties of
electronically processed and recorded data pertaining to any Collateral, things
in action, items, checks, drafts, and orders in transit to or from Debtor,
credits or deposits of Debtor (whether general or special) that are held by
Secured Party;

     

    (j)           
 Supporting obligations, as that term is defined in the UCC (“Supporting
Obligations”); and

     

    (k)           To
the extent not listed above as original collateral, proceeds and products of the
foregoing.

     

    Without
in any way limiting the generality of the foregoing, the Collateral includes all
intellectual property of the Company, including its Copyrights (as defined
below), Patents (as defined below), and Trademarks (as defined
below).

     

    “Copyrights”
means all types of protective rights granted (or applications therefor) for any
work that constitutes copyrightable subject matter recognized under federal law
and all comparable rights recognized in foreign jurisdictions or conventions or
by treaty.

     

    “Patents”
means all types of exclusionary or protective rights granted (or applications
therefor) for inventions, patents, patent applications, and all reissues and
extensions thereof and all renewals, divisions, continuations and
continuations-in-part thereof, recognized under federal law and all comparable
rights recognized in foreign jurisdictions or conventions or by
treaty.

     

    “Trademarks”
means (a) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, internet domain
names and other sources of business identifiers used in any country in the
world, whether registered or unregistered, and the goodwill associated
therewith, now existing or hereafter acquired, and (b) all registrations,
recordings and renewals thereof, and all applications in connection therewith,
issued by, filed in or otherwise recognized by a national, state, or foreign
governmental authority or any foreign jurisdiction or convention or by
treaty.

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