Exhibit 10.02
Neither this Note nor the securities issuable on conversion hereof
have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or under any
state securities laws. These securities are subject to
restrictions on trans- ferability and resale and may not be
transferred, sold, offered for sale,
pledged, or hypothecated in the absence of a registration statement
in effect with respect to these securities under the Securities Act
securities laws or an opinion of counsel reasonably satisfactory
to or applicable state the Company that any proposed
compliance with the Securities Act and any
applicable transfer or resale is in state
securities laws.
$223,713.97 February 1, 2003
PROMISSORY NOTE
DO NOT DESTROY THIS NOTE.
When paid, this Note must be surrendered for cancellation.
FOR VALUE RECEIVED, the undersigned, SCHIMATIC Cash Transactions
Xxxxxxx.xxx, Inc., a Florida corporation ("Company"), whose mailing address and
principal office is 000 Xxxx 0000 Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000,
hereby promises to pay to Kruse, Landa, Xxxxxxx & Xxxxx, L.L.C., a Utah limited
liability company ("Holder"), or order, whose mailing address is P. O. Box
45561, Salt Lake City, Utah 84145-0561, the aggregate unpaid amount due to
Holder by Company as evidenced by regular monthly statements for professional
services rendered and costs advanced sent by Holder to Company in accordance
with Xxxxxx's regular billing practices, with the amount of Two Hundred
Twenty-Three Thousand, Seven Hundred Thirteen Dollars and Ninety-Seven Cents
($223,713.97) due and payable as of January 31, 2003, together with interest
(calculated on the basis of the actual number of days elapsed but computed as if
each year consisted of 360 days) on the unpaid principal balance from time to
time outstanding at an annual gross rate of twelve percent (12%) per annum.
The entire unpaid principal and all accrued and unpaid interest shall
be due and payable on or before 30 days after demand. Payments hereunder shall
be made in lawful money of the United States of America to Holder at the
Holder's principal place of business. This Note may be prepaid at any time, in
whole or in part, without prior notice to Holder.
This Note is subject to the following further terms and conditions to
which the Holder hereof, by the acceptance of this Note, agrees:
1. Conversion. At any time, and prior to payment in full of the entire
outstanding principal balance of this Note plus accrued interest hereunder,
Xxxxxx shall have the right, at the Holder's option, to convert the principal
and accrued interest on this Note, in whole or in part, into shares of common
stock of the Company, par value $0.001 per share (the "Conversion Stock"), at a
rate equal to $0.05 per share. Conversion under this section 1 shall occur only
upon surrender of this Note for conversion at the principal offices of the
Company. This Note may be prepaid in full at any time without penalty upon 10
days' written notice to Xxxxxx.
2. Issuance of Conversion Stock. As soon as practicable after
conversion of this Note, the Company, at its expense, will cause to be issued in
the name of and delivered to the Holder of this Note, a certificate or
certificates for the number of shares of Conversion Stock to which the Holder
shall be entitled upon such conversion (bearing such legends as may be required
by applicable state and federal securities laws in the opinion of legal counsel
of the Company), together with any other securities and property to which the
Holder is entitled upon such conversion under the terms of this Note. Such
conversion shall be deemed to have been made (a) under section 1 above and (b)
immediately prior to the close of business on the date that the Note shall have
been surrendered for conversion. No fractional shares will be issued upon
conversion of this Note. If upon any conversion of this Note a fraction of a
share would otherwise result, then, in lieu of such fractional share, the
Company will pay the cash value of that fractional share, calculated on the
basis of the applicable Note Conversion Price.
3. Adjustment of Number of Shares. The number and character of shares
of Conversion Stock issuable upon conversion of this Note (or any shares of
stock or other securities or property at the time receivable or issuable upon
conversion of this Note) are subject to adjustment upon the occurrence of any of
the following events:
(a) Adjustment for Stock Splits, Stock Dividends,
Recapitalizations, etc. In the event that the Company shall fix a
record date for the determination of holders of securities affected by
any stock split, stock dividend, reclassification, recapitalization, or
other similar event that will, in the future, affect the number of
outstanding shares of the Company's capital stock, then, and in each
such case, the Holder, upon conversion of this Note at any time after
the Company shall fix the record date for such event, shall receive, in
addition to the shares of Conversion Stock issuable upon conversion on
the date on which the Holder exercises its right to convert this Note
into the Conversion Stock, the right to receive the securities of the
Company to which such holder would have been entitled if such Holder
had converted this Note immediately prior to such record date (all
subject to further adjustment as provided in this Note).
(b) Adjustment for Dividends and Distributions. In the event
that the Company shall make or issue, or shall fix a record date for
the determination of eligible holders of securities entitled to
receive, a dividend or other distribution payable with respect to the
Conversion Stock (or any shares of stock or other securities at the
time issuable upon conversion of this Note) that is payable in (i)
securities of the Company other than capital stock, or (ii) any other
assets, then, and in each such case, the Holder, upon conversion of
this Note at any time after the consummation, effective date, or record
date of such event, shall receive, in addition to the shares of
Conversion Stock (or such other stock or securities) issuable upon such
conversion prior to such date, the securities or such other assets of
the Company to which such Holder would have been entitled upon such
date if such Holder had converted this Note immediately prior thereto
(all subject to further adjustment as provided in this Note).
(c) Adjustment for Reorganization, Consolidation, Merger. In
the event of any reorganization of the Company (or any other
corporation the stock or other securities of which are at the time
receivable upon the conversion of this Note) after the date of this
Note, or in the event, after such date, the Company (or any such
corporation) shall consolidate with or merge into another corporation
or convey all or substantially all of its assets to another
corporation, then, and in each such case, the Holder, upon the
conversion of this Note (as provided in section 1) at any time after
the consummation of such reorganization, consolidation, merger, or
conveyance, shall be entitled to receive, in lieu of the stock or other
securities and property receivable upon the conversion of this Note
prior to such consummation, the stock or other securities or property
to which such Holder would have been entitled upon the consummation of
such reorganization, consolidation, merger, or conveyance if such
Holder had converted this Note immediately prior thereto, all subject
to further adjustment as provided in this section 3, and the successor
or purchasing corporation in such reorganization, consolidation,
merger, or conveyance (if other than the Company) shall duly execute
and deliver to the Holder a supplement hereto acknowledging such
corporation's obligations under this Note. In each such case, the terms
of the Note shall be applicable to the shares of stock or other
securities or property receivable upon the conversion of this Note
after the consummation of such reorganization, consolidation, merger,
or conveyance.
(d) Conversion of Stock. In the event that all of the
authorized Conversion Stock of the Company is converted, pursuant to
the Company's Articles of Incorporation, as amended, into other capital
stock or securities or property, or the Conversion Stock otherwise
ceases to exist, then the Holder, upon conversion of this Note at any
time after the date on which the Conversion Stock is so converted or
ceases to exist (the "Termination Date"), shall receive, in lieu of the
number of shares of Conversion Stock that would have been issuable upon
such conversion immediately prior to the Termination Date (the "Former
Number of Shares of Conversion Stock"), the stock and other securities
and property to which such Holder would have been entitled to receive
upon the Termination Date if such Holder had converted this Note with
respect to the Former Number of Shares of Conversion Stock immediately
prior to the Termination Date (all subject to further adjustment as
provided in this Note).
(e) Notice of Adjustments. The Company shall promptly give
written notice of each adjustment or readjustment of the number of
shares of Conversion Stock or other securities issuable upon conversion
of this Note, by first class mail, postage prepaid, to the registered
holder of this Note at the Holder's address as shown on the Company's
books. The notice shall describe the adjustment or readjustment and
show in reasonable detail the facts on which the adjustment or
readjustment is based.
(f) No Change Necessary. The form of this Note need not be
changed because of any adjustment in the number of shares of Conversion
Stock issuable upon its conversion.
4. Fully Paid Shares. All shares of Conversion Stock to be issued upon
the conversion of this Note shall be validly issued, fully paid, and
nonassessable.
5. No Rights or Liabilities as Stockholder. This Note does not by
itself entitle the Holder to any voting rights or other rights as a stockholder
of the Company. In the absence of conversion of this Note, no provisions of this
Note, and no enumeration herein of the rights or privileges of the Holder, shall
cause such Holder to be a stockholder of the Company for any purpose.
6. Corporate Action; No Impairment. The Company will not, by amendment
of its Articles of Incorporation or bylaws, or through reorganization,
consolidation, merger, dissolution, issue or sale of securities, repurchase of
securities, sale of assets, or any other action, avoid or seek to avoid the
observance or performance of any of the terms of this Note, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder under this Note against wrongful impairment.
7. Default. Upon the occurrence and during the continuance of any one
or more of the events hereinafter enumerated, the unpaid balance of the
principal and all interest then accrued on this Note shall become immediately
due and payable, without presentation, demand, protest, notice of protest, or
other notice of dishonor, all of which are hereby expressly waived by the
Company, such events being as follows:
(a) The failure or refusal of the Company to pay principal of
or interest on the Note when the same becomes due in accordance with
the terms thereof and such failure or refusal is not cured within five
calendar days after the Company has notice thereof.
(b) The failure or refusal of the Company punctually and
properly to perform, observe, and comply with any other covenant or
agreement contained in this Note and such failure or refusal is not
cured or remedied within 30 days after the Company has notice thereof.
(c) The Company shall (i) become insolvent, (ii) fail to pay
its debts generally as they become due, (iii) voluntarily seek, consent
to, or acquiesce in the benefit or benefits of any Debtor Relief Law
(defined hereinafter), or (iv) become a party to (or be made the
subject of) any proceeding provided for by any Debtor Relief Law, other
than as a creditor or claimant, that could suspend or otherwise
adversely affect the Rights (defined hereinafter) of the Holder granted
herein (unless, in the event such proceeding is involuntary, the
petition instituting same is dismissed within 60 days of the filing of
same). "Debtor Relief Law" means the Bankruptcy Code of the United
States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments, or similar Laws
from time to time in effect affecting the Rights of creditors
generally. "Rights" means rights, remedies, powers, and privileges.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of any state, commonwealth,
nation, territory, possession, county, parish, municipality, or
Tribunal. "Tribunal" means any court or governmental department,
commission, board, bureau, agency, or instrumentality of the United
States or of any state, commonwealth, nation, territory, possession,
county, parish, or municipality, whether now or hereafter constituted
and/or existing.
(d) The failure to have discharged within a period of 30 days
after the commencement thereof any attachment, sequestration, or
similar proceeding against any of the assets of the Company, or the
loss, theft, or destruction of, or occurrence of substantial damage to,
a material part of the assets of the Company, except to the extent
adequately covered by insurance.
(e) The Company fails to pay any money judgment against it at
least 10 days prior to the date on which any of the Company's assets
may be lawfully sold to satisfy such judgment.
(f) The discovery by the Holder that any statement,
representation, or warranty herein or in any writing delivered to the
Holder pursuant to this Note is false, misleading, or erroneous in any
material respect.
If any one or more of the Events of Default specified above shall have happened,
the Holder may, at its option, reduce any claim to judgment or proceed to
protect and enforce its rights either by suit in equity and/or by action of law,
or by other appropriate proceedings, whether for the specific performance of any
covenant or agreement contained in this Note, or in aid of the exercise granted
by this Note of any right, or to enforce any other legal or equitable right or
remedy of the Holder of the Note.
8. Waiver and Amendment. Any provision of this Note may be amended,
waived, modified, discharged, or terminated solely upon the written consent of
both the Company and the Holder.
9. Assignment; Binding upon Successors and Assigns. The Company may not
assign any of its obligations hereunder without the prior written consent of
Xxxxxx. The terms and conditions of this Note shall inure to the benefit of and
be binding upon the successors and permitted assigns of the parties.
10. Waiver of Notice; Attorneys' Fees. The Company and all endorsers of
this Note hereby waive notice, demand, notice of nonpayment, presentment,
protest, and notice of dishonor. If any action at law or in equity is necessary
to enforce this Note or to collect payment under this Note, the Holder shall be
entitled to recover, as an element of the costs of suit and not as damages,
reasonable attorneys' fees, costs, and necessary disbursements in addition to
any other relief to which it may be entitled. Holder will be entitled to recover
its costs of suit, regardless of whether such suit proceeds to final judgment.
11. Construction of Note. The terms of this Note have been negotiated
by the Company, the original Holder of this Note, and their respective
attorneys, and the language hereof will not be construed for or against either
Company or Holder. Unless otherwise explicitly set forth, a reference to a
section will mean a section in this Note. The titles and headings herein are for
reference purposes only and will not in any manner limit the construction of
this Note, which will be considered as a whole.
12. Notices. Any notice or other communication required or permitted to
be given under this Note shall be in writing, shall be delivered by hand or
overnight courier service, by certified mail, postage prepaid, or by facsimile,
and will be deemed given upon delivery, if delivered personally, one business
day after deposit with a national courier service for overnight delivery, or one
business day after transmission by facsimile with confirmation of receipt, and
three days after deposit in the mail, if mailed, to the addresses set forth in
the introductory paragraph above, or to such other address as may have been
furnished to the other party in writing pursuant to this section 12, except that
notices of change of address shall only be effective upon receipt.
13. Governing Law. This Note shall be governed by and construed under
the internal laws of the United States and the state of Utah as applied to
agreements among Utah residents entered into and to be performed entirely within
Utah, without reference to principles of conflict of laws or choice of laws.
IN WITNESS WHEREOF, the Company has caused this Note to be signed in
its name as of the date first above written.
SCHIMATIC CASH TRANSACTIONS XXXXXXX.xxx, INC.
By: /s/ Xxxxx Xxxxx / Chairman
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