OPERATIONS & ASSETS NOTE
------------------------
(SECURED)
$5,230,000.00 JUNE 30, 2006
------------- -------------
FOR VALUE RECEIVED, Gateway Distributors, Ltd., (hereinafter called
"Maker") promises to pay to the order of Xxxxxxxx Distributing, L.L.C., a Utah
limited liability company, and EMS Business Development, Inc., a California
corporation, or assignee (hereinafter called Payee), the principal sum of Five
Million Two Hundred Thirty and No/100 Dollars ($5,230,000.00) without interest
on or before September 1, 2007.
All payments shall be made in full and in a timely manner without deduction
or set off.
The Maker shall have the right to prepay this Operations & Assets Note
(hereafter the "Note) in whole or in part at any time, without the prior written
consent of the Payee and without premium or penalty.
This Note is secured by certain collateral (the Collateral) described in
the Security Agreement and UCC-1 Financing Statement of even date herewith.
If default be made in the payment, in whole or in part, of any sum provided
for herein when due; or, if default shall be made with respect to any covenant
or obligation to be performed by Maker as provided in that certain Contract for
Sale of Business and Assets dated as of June 30, 2006, between Maker, Payee and
Xxxxx X. Xxxxxxx (the "Agreement") and such default has not been cured within
fifteen (15) days after written notice thereof; then Payee may, at its option,
without further notice or demand, declare the unpaid principal balance and any
accrued interest on this Note at once due and payable and pursue any and all
rights, remedies and recourses available to Payee, or pursue any combination of
the foregoing, all remedies hereunder, at law or in equity being cumulative.
In the event of any default hereunder, Maker shall pay to Payee a late
charge equal to ten percent (10%) of the installment or amount in default and
unpaid principal balance of this Note shall bear interest from June 30, 2006
until such default has been fully cured at the rate of ten percent (10%) per
annum.
Failure to exercise any of the foregoing options upon the happening of one
or more defaults shall not constitute a waiver of the right to exercise the same
or any other option at any subsequent time in respect to the same or any other
default. The acceptance by Payee of any payment hereunder that is less than
payment in full of all amounts due and payable at the time of such payment shall
not constitute a waiver of the right to exercise any of the foregoing options at
that time or at any subsequent time or nullify any prior exercise of any such
option without the express written consent of the Payee.
Page 1 of 3
All amounts payable hereunder are payable in lawful money of the United
States of America. Checks are deemed payment when received by Xxxxx. Maker
agrees to pay all costs of collection hereof when incurred, including reasonable
attorneys fees, whether or not any legal action shall be instituted to enforce
this Note.
It is expressly stipulated and agreed to be the intent of Maker and Payee
at all times to comply with the applicable Nevada law governing the maximum rate
or amount of interest payable on this Note or the indebtedness evidenced hereby
(or applicable United States federal law to the extent that it permits the Payee
to contract for, charge, take, reserve or receive a greater amount of interest
than under Nevada law). If the applicable law is ever judicially interpreted so
as to render usurious any amount called for under this Note or contracted for,
charged, taken, reserved or received with respect to such indebtedness, or if
Payees exercise of the option herein contained to accelerate the maturity of
this Note, or if any prepayment by Maker results in Maker having paid any
interest in excess of that permitted by applicable law, then it is Makers and
Payees express intent that all excess amounts theretofore collected by Payee be
credited on the principal balance of this Note (or, if this Note has been or
would thereby be paid in full, refunded to Maker), and the provisions of this
Note immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder and thereunder.
All sums paid or agreed to be paid to Payee for the use, forbearance or
detention of the indebtedness evidenced hereby shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of such indebtedness until payment in full so that the rate or amount of
interest on account of such indebtedness does not exceed the usury ceiling from
time to time in effect and applicable to such indebtedness evidenced hereby for
so long as any debt is outstanding.
All notices hereunder shall be given at the following addresses:
If to Maker: 0000 Xxxx Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx, 00000.
If to Payee: 0000 Xxxx Xxxxxxxxx Xxx, Xxxx Xxxx Xxxx, Xxxx, 00000
and 0000 X. Xxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxx, 00000.
Either party may change their address for notice purposes upon giving thirty
(30) days prior notice thereof to the other party in accordance with this
paragraph. All notices given hereunder shall be in writing and shall be
considered properly given if mailed by first class United States Mail, postage
prepaid, registered or certified with return receipt requested, or by delivering
same in person to the intended addressee or by prepaid telegram. Any notice
mailed as above provided shall be effective two (2) business days after its
deposit in the custody of the United States Postal Service; all other notices
shall be effective upon receipt by the addressee.
Page 2 of 3
This Note shall be governed, construed and enforced according to the laws
of the State of Nevada.
EXECUTED as of the date and year first above written.
Gateway Distributors, Ltd.
a Nevada corporation
By:
-------------------------------
Its:
---------------------------
Page 3 of 3
