Promissory Note - WebSideStory Inc. and John Hentrich
SECURED, NON-RECOURSE PROMISSORY NOTE
NEGOTIABLE
US$69,735.00 March 23, 2000
San Diego, California
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to the order of
WebSideStory, Inc., a corporation organized under the laws of the state of
California ("Holder"), at 10182 Telesis Court, San Diego, California or at such
other place as the Holder hereof may from time to time designate, the principal
sum of SIXTY-NINE THOUSAND SEVEN HUNDRED THIRTY-FIVE dollars ($69,735.00), with
interest on the unpaid principal balance from time to time outstanding, computed
on the basis of a three hundred sixty (360) day year, actual days elapsed, at a
rate (the "Interest Rate") equal to 6.5% per annum. Payment of principal and
interest shall be made in the lawful money of the United States which shall be
legal tender for public and private debts at the time of payment. The entire
outstanding principal balance and all accrued but unpaid interest shall be due
and payable on the third anniversary of this note (the "Due Date"). Each payment
hereunder shall be credited first to interest then accrued and the remainder to
unpaid principal, and interest shall thereupon cease upon the principal so
credited. Maker shall have the right to repay all or a portion of the
outstanding principal and/or interest hereunder at any time or times prior to
the Due Date, without penalty.
This note shall automatically become due and payable prior to the Due Date,
without notice or demand and without the need for any action or election by the
Holder hereof, upon the occurrence at any time of any of the following events of
default:
(1) The making of an assignment for the benefit of creditors by any
party liable for the payment of this note, whether as maker, endorser,
guarantor, surety, or otherwise, or the voluntary appointment (at the request of
any such party or with the consent of any such party) of a receiver, custodian,
liquidator or trustee in bankruptcy of any such party's property or the filing
by any such party of a petition in bankruptcy or other similar proceeding under
law for relief of debtors; or
(2) The filing (other than by Holder) against any party liable for the
payment of this note, whether as maker, endorser, surety, or otherwise, of a
petition in bankruptcy or other similar proceeding under law for relief of
debtors, or the involuntary appointment of a receiver, custodian, liquidator or
trustee in bankruptcy of the property of any such party, and such petition or
appointment is not vacated or discharged within ninety (90) calendar days after
the filing or making thereof.
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If this note is not paid when due, whether at the Due Date or by acceleration,
the undersigned promises to pay all costs of collection, including without
limitation reasonable attorneys' fees, and all expenses in connection with the
protection or realization of any collateral securing this note incurred by the
Holder hereof on account of such collection, whether or not suit is filed
hereon; such costs and expenses shall include without limitation all costs,
attorneys' fees and expenses incurred by the Holder hereof in connection with
any insolvency, bankruptcy, reorganization, arrangement or other similar
proceedings involving the undersigned or involving any endorser hereof, which in
any way affect the exercise by the Holder hereof of its rights and remedies
under this note or under any security agreement, pledge agreement, cash
collateral agreement or other agreement securing this note.
Presentment, demand, protest, notices of protest, dishonor and non-payment of
this note and all notices of every kind are hereby waived. To the extent
permitted by applicable law, the defense of the statute of limitations is hereby
waived by the undersigned.
This note is secured by a stock pledge (the "Stock Pledge") of even date
herewith pursuant to which a first priority security interest has been granted
to Holder by Maker in 3,179,171 shares of common stock of Holder. Upon the
occurrence of any event of default under this note, Holder shall be entitled to
exercise its rights under the Stock Pledge, including the exercise of any and
all rights and remedies available to Holder as a secured party under the
California Uniform Commercial Code or other applicable law, including the right
to sell the pledged stock in a public or private sale (in accordance with the
California Uniform Commercial Code) and the right to accept the pledged stock in
discharge of Maker's obligations hereunder. In the event of any recapitalization
of Holder, Holder's security interest shall automatically attach to the shares
into which the pledged stock shall have been converted. If Maker fails to make a
payment due under this note, Holder's only recourse will be against any
collateral securing the obligations represented by this note, including shares
pledged pursuant to the Stock Pledge, and Holder will have no recourse against
other assets of Maker.
No single or partial exercise of any power hereunder or under any security
agreement, pledge agreement, cash collateral agreement or other agreement
securing this note shall preclude other or further exercise thereof or the
exercise of any other power. The Holder hereof shall at all times have the right
to proceed against any portion of the security held for this note in such order
and in such manner as the Holder may deem fit, without waiving any rights with
respect to any other security. No delay or omission on the part of the Holder
hereof in exercising any right hereunder shall operate as a waiver of such right
or of any other right under this note. The release of any party liable on this
note shall not operate to release any other party liable hereon.
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This note may be prepaid in whole or in part at any time without premium or
penalty. Partial prepayments of principal shall not postpone or delay the date
of any subsequent payments of principal or change the amount of such payments.
The payment obligations of both principal and interest represented by this note
will be forgiven in full, and this note will be returned to Maker promptly, if
and when any of the following events occurs on or before the Due Date:
1 a voluntary sale by Holder's shareholders of a majority of the Holder's
common stock;
2 a voluntary sale of substantially all assets of Holder;
3 Holder has cash and cash equivalents in aggregate in excess of $4 million;
4 Constructive Termination as defined in the Stock Option Agreement of
December 20, 1999 between Maker and Holder.
Notwithstanding the fact that Holder has cash and cash equivalents in excess of
$4 million (the "Liquidity Condition"), if Holder shall have completed an
initial public offering of its equity securities prior to the occurrence of the
Liquidity Condition; then such payment obligations shall not be forgiven upon
occurrence of the Liquidity Condition, but rather such obligations shall be
forgiven on a pro-rata basis over twelve months commencing the date such public
offering is completed or January 1, 2001, whichever is earlier.
Any notices required to be given hereunder shall be deemed delivered five (5)
days after such notice in writing is placed in the United States Mail, postage
prepaid to the following addresse(s):
If to Holder:
WebSideStory
10182 Telesis Court
San Diego, CA 92121
Attn: legal department
If to Maker:
John Hentrich
4778 Keswick Court
San Diego CA 92130
The term "Holder" shall include all of Holder's successors and assigns to whom
the benefits of this note shall inure.
In the event any provision of this note is held to be invalid, illegal or
otherwise unenforceable in any respect, such provision shall be construed as
containing the
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maximum valid, legal and enforceable terms and conditions, and all other
provisions of this note shall remain in full force and effect to the maximum
extent permitted by law.
Any provision of this note that 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 of this note, and such prohibition or unenforceability in any
jurisdiction shall not invalidate, or render unenforceable such provision in any
other jurisdiction.
This note has been executed and delivered by the undersigned in the State of
California and is to be governed by and construed in accordance with the laws of
the State of California without regard to its conflicts of laws rules. In any
action brought under or arising out of this note, the undersigned hereby
consents to the jurisdiction of any competent court within the State of
California and consents to service of process by any means authorized by the law
of that State. This note may be modified, amended or terminated only by a
writing signed by both the Holder and the Maker.
"MAKER"
/s/ John Hentrich
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John Hentrich
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