EXHIBIT 10.6
SUBSCRIPTION AGREEMENT
3PEA TECHNOLOGIES, INC.
COMMON STOCK
Enclosed herewith are the documents necessary to subscribe for shares of common
stock of 3Pea Technologies, Inc., a Nevada corporation ("3Pea"). The 3Pea Shares
are being offered to Xx. Xxxxxxx Xxxxx ("Xxxxx"), an Accredited Investor as
defined in Rule 501(a) of Regulation D, under the Securities Act of 1933, as
amended (Rules of Securities and Exchange Commission "SEC"). Set forth herein
are instructions for the execution of the enclosed documents. The 3Pea Shares
are referred to herein as "Shares". 3Pea is referred to herein as the "Company".
Xxxxx is executing the Subscription Agreement to subscribe for the
purchase of One Hundred Seventy One Thousand One Hundred Ten (171,110) shares of
common capital stock of 3Pea for a Five Hundred Thousand and/no 100
($500,000.00) Dollar loan to Company upon the terms and conditions as set forth
in that certain Promissory Note and Personal Guaranty of even date herewith
between the Company and Xxxxx.
TABLE OF CONTENTS
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How To Subscribe:
A. Instructions
Subscription Agreement (2 copies)
Appendix A - Consideration to be Delivered
Appendix B - Accredited Investor Certificate
HOW TO SUBSCRIBE
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A. INSTRUCTIONS - SUBSCRIPTION AGREEMENT: Two copies of the form
Subscription Agreement and Appendixes A, B and C attached to the Subscription
Agreement should be completed, executed and delivered to the Company at the
address set forth below. Upon Acceptance, the Company will execute both copies
of the Subscription Agreement and return one to you for your records.
The Company shall have the right to accept or reject the subscription,
in whole or in part.
An acknowledgment of the acceptance of your subscription for Shares
subscribed will be returned to you promptly after acceptance.
PAYMENT: Payment of the amount provided in Appendix A shall be wired to
the Company immediately upon acceptance by Company and return to you of one
fully signed original of this Subscription Agreement.
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR THE SECURITIES LAWS OF ANY STATE. THERE ARE FURTHER RESTRICTIONS ON
THE TRANSFERABILITY OF THE SHARES DESCRIBED HEREIN.
THE PURCHASE OF SHARES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE
CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE
INVESTMENT.
THE COMPANY IS A DEVELOPMENT STAGE COMPANY AS THAT TERM IS DEFINED IN
THE AUDITED FINANCIAL STATEMENTS FOR THREE YEARS ENDED DECEMBER 31, 2003, AND AS
SUCH PURCHASE OF SHARES INVOLVES A HIGH DEGREE OF RISK.
SALE OF THE SHARES CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT ARE
LIMITED TO SALE TO AN ACCREDITED INVESTOR ONLY.
SUBSCRIPTION AGREEMENT
----------------------
Xxxxx understands that the Company is offering for sale to Xxxxx Shares
in the Company. Xxxxx further understands that the offering is being made
without registration of the Shares under the Securities Act of 1933, as amended
(the "Securities Act"), and is being made only to "Accredited Investors" (as
defined in Rule 501 of Regulation D under the Securities Act).
1. SUBSCRIPTION. Subject to the terms and conditions hereof the Xxxxx
hereby subscribes for Shares in Company with a combined value of Five Hundred
Thousand Dollars $500,000.00 which is payable as described in Section 4 hereof.
The Xxxxx acknowledges that the Shares if issued by the Company, will be subject
to restrictions on transfer pursuant Section 6(d) below, and as may hereafter be
agreed to among and between the shareholders of the Company should the
shareholders enter into a Buy-Sell Agreement and/or Stock Redemption Agreement
among each of the holders of the Shares and the Company, and as further set
forth in the Agreement.
2. ACCEPTANCE OF SUBSCRIPTION AND ISSUANCE OF SHARES. It is understood
and agreed that the Company shall have the sole right, at its complete
discretion, to accept or reject the subscription, in whole or in part, for any
reason and that the same shall be deemed to be accepted by the Company only when
it is signed by a duly authorized officer of the Company and delivered to the
Xxxxx at the Closing referred to in Section 3 hereof. Notwithstanding anything
in the Agreement to the contrary, the Company shall have no obligation to issue
any of the Shares to any person who is a resident of a jurisdiction in which the
issuance of Shares would constitute a violation of the securities, "blue sky" or
other similar laws of such jurisdiction (collectively referred to as the "State
Securities Laws").
3. THE CLOSING. The closing of the subscription for purchase of the
Shares (the "Closing") shall take place upon acceptance of the Subscription
Agreement by the Board of Directors of the Company and signing of the
Subscription Agreement by the Chief Executive Officer of the Company where
indicated "ACCEPTED AND APPROVED." Upon acceptance of the Subscription Agreement
the Company agrees to return one fully signed Subscription Agreement signed by
the Chief Executive Officer of the Company where indicated "ACCEPTED AND
APPROVED" to the Xxxxx, and the Xxxxx agrees to immediately wire transfer the
agreed upon funds in purchase of the shares to the Company. Thereafter, the
Company shall have Ten (10) days within which to deliver the Shares to the
Xxxxx. In the event the Closing shall not have occurred within Twenty (20) days
from the date of receipt by the Company of the Subscription Agreement from the
Xxxxx, the Subscription Agreement shall be null and void, and of no further
effect.
4. PAYMENT FOR SHARES. The Xxxxx agrees to wire transfer to the Company
the amount as set forth in Appendix A hereto in payment for the Shares
immediately following the Company signing the Acceptance below and returning one
fully signed original of this Subscription Agreement to the Xxxxx.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As of the Closing,
the Company represents and warrants that:
(a) The Company is duly incorporated or organized, validly
existing and in good standing under the laws of the States of Nevada, with full
power and authority to conduct its business as it is currently being conducted
and to own its assets; and have secured all other authorizations, approvals,
permits and orders required by law for the conduct by the Company of its
business as it is currently being conducted.
(b) The authorized capital stock of the Company consists of
Common stock; $0.001 par value; 2,000,000 shares authorized, 912,500 shares
issued and outstanding; Company has reserved 456,250 shares to be issued,
342,220 for $1,000,000.00 new capital contribution, and 114,030 shares for
services, following which 1,363,750 total shares will be issued and outstanding,
of which the 171,110 shares subscribed by Xxxxxxx Xxxxx will equal approximately
12.5% of all issued and outstanding shares of Company.
(c) As of the date of this Subscription Agreement there are no
outstanding rights of first refusal or offer, preemptive rights, other Stock
Purchase Rights or other agreements, either directly or indirectly, for the
purchase or acquisition from the Company or any of its shareholders of any
shares of Company Capital Stock or any securities convertible into or
exchangeable for shares of Company Capital Stock.
(d) The Company is not under any contractual or other
obligation to register any of its presently outstanding securities or any of its
securities that may hereafter be issued.
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(e) The Board of Directors of the Company will have duly
authorized the issuance and sale of the Shares upon the terms of the
Subscription Agreement and will have completed all requisite corporate action.
(f) The Shares, when issued and paid for, will represent
validly authorized, duly issued and fully paid and nonassessable Shares of the
Company, and the issuance thereof will not conflict with the certificate of
incorporation, articles of incorporation, bylaws of the Company, or operational
agreements of the Company.
(g) No representation or warranty by the Company in the
Agreement, and no statement by an officer of the Company contained in any
document, certificate or other writing furnished to the Xxxxx in connection with
the transactions contemplated hereby, when taken as a whole, contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements herein or therein not misleading in light of the circumstances
in which they are made.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE XXXXX. The Xxxxx
hereby represents and warrants to and covenants with the Company and each of
them, and each officer, director, member and agent of the Company that:
(a) GENERAL:
(i) The Xxxxx has all requisite authority to enter
into this Agreement and to perform all the obligations
required to be performed by the Xxxxx hereunder.
(ii) The Xxxxx is a resident of the State of Arizona.
(b) INFORMATION CONCERNING THE COMPANY:
(i) The Xxxxx has been given the opportunity to have
full access to the business plan and all operational and
financial statements of the Company and all books, records,
documents and other data concerning the Company and has relied
only on the information contained therein.
(ii) The Xxxxx is familiar with the business and
financial condition, properties, operations and prospects of
the Company, all as generally described in the documents
described above. The Xxxxx has been given the opportunity to
obtain any information necessary to verify the accuracy of the
information set forth in the documents and has been furnished
all such information so requested.
(iii) The Xxxxx understands that, unless the Xxxxx
notifies the Company in writing to the contrary at or before
the Closing, all the Xxxxx'x representations and warranties
contained in the Agreement will be deemed to have been
reaffirmed and confirmed as of the Closing, taking into
account all information received by the Xxxxx.
(iv) The Xxxxx understands that the purchase of the
Shares involves a high degree of risk, including but not
limited to those outlined in the Agreement.
(v) The Xxxxx understands that no federal or state
agency has passed upon the Shares or made any finding or
determination concerning the fairness or advisability of the
investment.
(vi) The Xxxxx understands that estimates and
projections like those contained in the documents, by their
nature, involve significant elements of subjective judgment
and analysis that may or may not be correct; that there can be
no assurance that such projections or goals will be attained;
and that the projections and estimates contained in the
documents should not be relied upon as a promise or
representation of the future performance of the Company.
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(vii) The Xxxxx understands that the investment
contains a high degree of risk as it pertains to investment in
a development company with limited track record and business
history.
(c) STATUS OF XXXXX:
(i) The Xxxxx has such knowledge, skill and
experience in business, financial and investment matters so
that she is capable of evaluating the merits and risks of an
investment in the Shares. To the extent necessary, the Xxxxx
has retained, at her own expense, and relied upon, appropriate
professional advice regarding the investment, tax and legal
merits and consequences of the Agreement and owning Shares.
(ii) The Xxxxx is an "Accredited Investor" as defined
in Rule 501(a) of Regulation D under the Securities Act. The
Xxxxx agrees to furnish any additional information requested
to assure compliance with applicable federal and state
securities laws in connection with the purchase and sale of
the Shares. The Xxxxx acknowledges that she has completed the
Accredited Investor Certificate contained in Appendix B and
that the information contained therein is complete and
accurate as of the date thereof and is she hereby affirmed as
of the date hereof.
(d) RESTRICTIONS ON TRANSFER OR SALE OF SHARES:
(i) The Xxxxx is acquiring the Shares solely for her
own beneficial account, for investment purposes, and not with
a view to, or for resale in connection with, any distribution
of the Shares. The Xxxxx understands that the Shares and have
not been registered under the Securities Act or any State
Securities Laws by reason of specific exemptions under the
provisions thereof which depend in part upon the investment
intent of the Xxxxx and of the other representations made by
the Xxxxx in the Agreement. The Xxxxx understands that the
Company is relying upon the representations and agreements
contained in the Agreement (and any supplemental information)
for the purpose of determining whether the transaction meets
the requirements for such exemptions.
(ii) The Xxxxx understands that the Shares are
"restricted securities" under applicable federal securities
laws and that the Securities Act and the rules of the
Securities and Exchange Commission (the "Commission") provide
in substance that the Xxxxx may dispose of the Shares only
pursuant to an effective registration statement under the
Securities Act or an exemption therefrom, and the Xxxxx
understands that the Company has no obligation or intention to
register any of the Shares or to take action so as to permit
sales pursuant to the Securities Act (including Rule 144
thereunder). Accordingly, the Xxxxx understands that under the
Commission's rules, the Xxxxx may dispose of the Shares
principally only in "private placements" which are exempt from
registration under the Securities Act, in which event the
transferee will acquire "restricted securities" subject to the
same limitations as in the hands of the Xxxxx. As a
consequence, the Xxxxx understands that she must bear the
economic risks of the investment in the Shares for an
indefinite period of time.
(iii) The Xxxxx agrees: (A) that she will not sell,
assign, pledge, give, transfer or otherwise dispose of the
Shares or any interest therein, or make any offer or attempt
to do any of the foregoing, except pursuant to a registration
of the Shares as applicable, under the Securities Act and all
applicable State Securities Laws or in a transaction which is
exempt from the registration provisions of the Securities Act
and all applicable State Securities Laws; (B) that the
certificate(s) for the Shares will bear a legend making
reference to the foregoing restrictions; and (C) that the
Company and any transfer agent for the Shares shall not be
required to give effect to any purported transfer of such
shares except upon compliance with the foregoing restrictions.
(iv) The Xxxxx has not offered or sold any portion of
her Shares and has no present intention of dividing her Shares
with others or of reselling or otherwise disposing of any
portion of her Shares either currently or after the passage of
a fixed or determinable period of time or upon the occurrence
or nonoccurrence of any predetermined event or circumstance.
(v) The Xxxxx acknowledges that neither the Company
nor any other person offered to sell the Shares to him by
means of any form of general advertising, such as media
advertising or seminars.
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(vi) The Xxxxx acknowledges that the Company has the
right in its sole and absolute discretion to abandon this
private placement at any time prior to Closing.
(vii) The Xxxxx has not used any person as a
"Purchaser Representative" within the meaning of SEC
Regulation D to represent her in determining whether she
should purchase the Shares.
7. CONDITIONS TO OBLIGATIONS OF THE XXXXX AND THE COMPANY. The
obligations of the Xxxxx to purchase and pay for the number of Shares specified
herein and of the Company to sell the Shares are subject to the satisfaction at
or prior to the Closing of the following conditions precedent: the
representations and warranties of the Company contained in Section 5 hereof and
of the Xxxxx contained in Section 6 hereof shall be true and correct on and as
of the Closing in all respects as if made at the Closing.
8. OBLIGATIONS REVOCABLE. The obligations of the Xxxxx hereunder shall
be revocable at any time prior to Closing.
9. LEGEND. Each certificate for Shares (sold pursuant to the Agreement)
will be imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED OR
OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO
SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL, SUCH
REGISTRATION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES
LAWS IS NOT REQUIRED."
10. BROKERS. Xxxxx has not entered into any agreement to pay any
broker's or finder's fee to any person with respect to the Agreement or the
transactions contemplated hereby.
11. WAIVER, AMENDMENT. Neither the Agreement nor any provisions hereof
shall be modified, changed, discharged or terminated except by an instrument in
writing, signed by the party against whom any waiver, change, discharge or
termination is sought.
12. ASSIGNABILITY. Neither the Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the Xxxxx without the prior written consent
of the other party.
13. APPLICABLE LAW. The Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
14. SECTION AND OTHER HEADINGS. The section and other headings
contained in the Agreement are for reference purposes only and shall not affect
the meaning or interpretation of the Agreement.
15. COUNTERPARTS. The Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
16. NOTICES. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) If to the Company, at its office at the following address:
3Pea Technologies, Inc.
0000 X. Xxxxxx Xxxx, Xxxxx 0
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Chief Executive Officer
(b) If to Xxxxx, at the following address:
Xxxxxxx Xxxxx
0000 X. Xxxxxx Xxxx Xxxxx X-0
XXX #000
Xxxxxxxxxx, XX 00000
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or at such other address as any party shall have specified by notice in writing
to the other.
17. BINDING EFFECT. The provisions of the Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
19. SURVIVAL. All representations, warranties and covenants contained
in the Agreement shall survive (i) the acceptance of the subscription by the
Company, (ii) changes in the transactions, documents and instruments which are
not material or which are to the benefit of the Xxxxx, and (iii) the death or
disability of the Xxxxx.
20. PREEMPTIVE RIGHTS AND FORWARD OR BACKWARD STOCK SPLITS. The Company
agrees that should the Company hereafter sell or offer to sell (other than as
set forth in the Company's Confidential Memorandum previously provided to
Xxxxx), or accept an offer to buy from the Company, shares of stock of the
Company, or do a public stock offering, then in such event the Company agrees to
give the Xxxxx sixty (60) days advance written notice of the terms and
conditions of such pending stock sale, and the Xxxxx shall have the right to
purchase a pro rata share of such stock sale or offering equal to the percentage
of shares which the Xxxxx owns in the Company, for a share price which is equal
to the per share price at which the shares are offered or agreed to be sold.
Further, should the Company do (1) a forward or reverse split of stock, (2) a
re-capitalization of the Company, (3) issue limited amounts of shares for
services to other than independent third parties, or (4) issue shares for less
than fair value, the Company agrees that the Xxxxx'x proportionate share of the
ownership of the Company shall remain the same and not be affected by any of the
foregoing.
21. NOTIFICATION OF CHANGES. The Xxxxx hereby covenants and agrees to
notify the Company upon the occurrence of any event prior to the closing of the
purchase of the Shares pursuant to the Agreement which would cause any
representation, warranty, or covenant of the Xxxxx contained in the Agreement to
be false or incorrect.
IN WITNES WSHEREOF, the Xxxxx has executed the Subscription Agreement
this 6th day of October, 2004.
XXXXX COMPANY
3PEA TECHNOLOGIES, INC.
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxx X. Xxxxxxxx
------------------------------ ------------------------------------
Xxxxxxx Xxxxx Xxxx X. Xxxxxxxx
Chief Executive Officer
ACCEPTANCE
ACCEPTED AND APPROVED as of the 6th day of October, 2004, by Company:
By: /S/ Xxxx X. Xxxxxxxx
--------------------------------
Xxxx X. Xxxxxxxx
Chief Executive Officer
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APPENDIX A
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CONSIDERATION TO BE DELIVERED
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FIVE HUNDRED THOUSAND DOLLARS ($500,000.00)
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A-1
APPENDIX B
ACCREDITED INVESTOR CERTIFICATE
-------------------------------
The Xxxxx Investor hereby certifies that she is an Accredited Investor
as that term is defined in Regulation D adopted pursuant to the Securities Act
of 1933 (the "Act"). The specific category(s) of Accredited Investor applicable
to the Xxxxx is checked below.
___X_ a. an individual whose individual net worth, or joint net
worth with that individual's spouse, exceeds $1,000,000
(including the value of homes, home furnishings and personal
automobiles);
_____ b. an individual who had an individual income in excess of
$200,000 in 2002 and 2004 or joint income with that person's
spouse in excess of $300,000 in each of those years and who
reasonably expects to reach the same income level in 2000. For
purposes of their offering, individual income shall equal
adjusted gross income, as reported in the investor's federal
income tax return, less any income attributable to a spouse or
to property owned by the spouse, and as may be further
adjusted in accordance with the rules, regulations, and
releases of the Commission;
_____ c. a bank as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended (the "Act"), or a savings
and loan association or other institution as defined in
Section 3(a)(5)(A) of the Act, whether acting in its
individual or fiduciary capacity; an insurance Company as
defined in Section 2(13) of the Act; an investment Company
registered under the Investment Company Act of 1940 (the "1940
Act") or a business development Company as defined in Section
2(a)(48) of the 1940 Act; a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of
1958; or an employee benefit plan within the meaning of Title
I of the Employee Retirement Income Security Act of 1974
("ERISA"), if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of ERISA, which is
either a bank, savings and loan association, insurance Company
or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or if a
self-directed plan, with investment decisions made solely by
persons that are accredited investors;
_____ d. a private business development Company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
_____ e. an organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring the Shares, with total assets in excess
of $5,000,000;
_____ f. an individual who is a director or executive officer of the
Company; or
_____ g. an entity in which all of the equity owners are accredited
investors as set forth above.
IN WITNESS WSHEREOF, the Xxxxx has executed the Accredited Investor
Certificate this day of September 2004.
Xxxxxxx Xxxxx
By: /S/ Xxxxxxx Xxxxx
-----------------------
Xxxxxxx Xxxxx
B-1
PROMISSORY NOTE
Phoenix, Arizona October 6th, 2004
1. BORROWER'S PROMISE TO PAY. For value received, 3Pea Technologies,
Inc., a Nevada corporation, 0000 X. Xxxxxx Xxxx, Xxxxx 0, Xxx Xxxxx, Xxxxxx
00000 ("Maker"), promises to pay to Xxxxxxx Xxxxx, 0000 X. Xxxxxx Xxxx, C-4 PMB
487, Xxxxxxxxxx, XX 00000, or Order, or the holder of this Note ("Payee"), the
principal sum of Five Hundred Thousand Dollars and No/100 ($500,000.00), with
principal and interest payable in the manner as provided in paragraphs 2 and 3
below.
2. INTEREST. This Note shall bear interest at the annual rate of Eight
and One Half percent (8 1/2%) per annum from the above date until all principal
and accrued interest have been paid in full. Interest shall be paid in advance
for one year at the time of signing of this Note in the sum of $42,500.00.
Thereafter, should this Note be renewed for an additional term of one year as
provided for in paragraph 3 below, then in such event, interest shall be paid in
advance for such additional term at the date of commencement of the second year
of this Note. Interest is earned and is non-refundable when paid by Maker to
Payee regardless of any prepayment of principal by Maker to Payee.
3. PAYMENT. The principal balance of this Note shall be paid in full on
the one year anniversary date of this Note. Notwithstanding the foregoing, the
Maker, at Maker's option, shall have the right to extend the time of payment of
principal of this Note for an additional term of one year provided that the
Maker shall pay the interest in advance for the additional term at the
commencement of such additional term as provided in paragraph 2 above.
4. PLACE OF PAYMENT/NOTICE. All payments by Maker to Payee under this
Note and all notices required or provided to be sent by any party hereto shall
be made to the party entitled to receive payment, or the party to receive notice
at their address above. Any party may change its address for purposes of this
paragraph by giving written notice of such change of address to the other party
in the manner herein provided for giving notice.
5. WAIVER OF PRESENTMENT, NOTICE OF DISHONOR AND PROTEST. Maker waives
all rights to require the Payee to do the following things:
A. To demand payment of amounts due (known as "presentment");
B. To give notice that amounts due have not been paid (known as a
"notice of dishonor");
C. To obtain an official certification of nonpayment (known as a
"protest").
6. DEFAULT.
A. Notice. Should default be made in the payment of any installation
of principal or interest when due, Maker shall not be considered in default if
payment is received by Payee within five (5) days following receipt of written
notice of default by Maker. Should Maker fail to pay this Note in full within
such time, then this Note shall bear interest at the rate of eighteen (18%) per
cent per annum from the date of default until paid in full.
B. Remedies Upon Default. If Maker is considered to be in default under
this Note, Payee shall then have the right to bring suit or take any other
action available to enforce payment of this Note upon the Maker.
C. Waivers. No waiver by Payee of any default shall operate as a
waiver of any other default. No matter shall be considered waived by
implication, or expressly waived unless in writing signed by the Payee. All
remedies are cumulative, and not alternative. No right or power of Payee
hereunder shall be deemed to have been waived by any act or conduct on the part
of Payee, or by any neglect to exercise such right or power, or by any delay in
doing so; and every right or power shall continue in full force and effect
unless specifically waived or released by an instrument in writing executed by
Payee.
7. COLLECTION COSTS. In the event that Payee shall retain or engage an
attorney or attorneys' to collect, enforce, or protect its interest with respect
to this Note, or as to any collateral securing the Note, the Maker shall pay all
of the costs and expenses of such collection, enforcement, or protection,
including reasonable attorneys' fees and costs, and the Payee may take judgment
for all such amounts, in addition to the unpaid principal balance of the Note
and accrued interest thereon.
B-2
8. BINDING EFFECT. This Note shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors and assigns of the
respective parties hereto.
9. APPLICABLE LAW. This Note shall be governed by and construed in
accordance with its terms and by the laws and judicial decisions of the State of
Arizona, the courts of which state shall have exclusive jurisdiction to enforce
this Note.
10. DESCRIPTIVE HEADINGS. The descriptive headings of the paragraphs of
this Note have been inserted for convenience of reference only and shall not
control or effect the interpretation or construction of any paragraph herein.
11. TIME IS OF THE ESSENCE. Time is of the essence with respect to the
performance of all obligations under this Note.
12. GUARANTY. The payment and performance of this Note is guaranteed by
Xxxx X. Xxxxxxxx, Xxxx Xxxxxxxx, husband and wife, and Xxxxxx X. Xxxxxx, and
Xxxxxx Xxxxxx, husband and wife, each jointly and individually, Guarantors, the
terms of which are set forth in an UNCONDITIONAL CONTINUING GUARANTY OF PAYMENT
AND PERFORMANCE, entered into between Guarantors and Payee of even date with
this Promissory Note, and which is incorporated herein by reference in its
entirety.
MAKER:
3Pea Technologies, Inc.,
By: /S/ Xxxx X. Xxxxxxxx
----------------------------
Xxxx X. Xxxxxxxx
Chief Executive Officer
By: /S. Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
President
B-3
UNCONDITIONAL CONTINUING GUARANTY
OF PAYMENT AND PERFORMANCE
For valuable consideration, the undersigned (herein called
"Guarantors") jointly and severally unconditionally guaranty the payment and
performance of 3Pea Technologies, Inc., a Nevada corporation, 0000 X. Xxxxxx
Xxxx, Xxxxx 0, Xxx Xxxxx, Xxxxxx 00000, of each and every term and condition of
that certain Promissory Note of even date herewith in the face amount of Five
Hundred Thousand Dollars and No/100 ($500,000.00), between 3Pea Technologies,
Inc. (therein "Maker"), and Xxxxxxx Xxxxx, 0000 X. Xxxxxx Xxxx, C-4 PMB 487,
Xxxxxxxxxx, XX 00000 (therein "Payee"), in accordance with its terms. The
liability of Guarantors and each of them hereunder shall be for the full amount
of payment of all principal, interest and costs and attorney's fees for
collection of the Note and enforcement of this Guarantee. The obligation of each
Guarantor hereunder is independent of the obligation of every other Guarantor
hereunder or of any other Guarantor, or of Borrower, and a separate action or
actions may be brought and prosecuted against any one or more of the Guarantors
hereunder or otherwise, whether action is brought against Borrower or any other
Guarantor, or whether Borrower or any other Guarantor be joined in any such
action or actions; and Guarantors waive the benefits of any statute of
limitations affecting their liability hereunder or the enforcement thereof.
Guarantors authorize Xxxxxxx Xxxxx, Payee (herein "Xxxxx"), without notice or
demand and without affecting their liability hereunder, from time to time, to
reduce the amount of the installments of the above described note and/or to
otherwise extend the time for the payment thereof; and Xxxxx may assign this
guarantee in whole or in part. Guarantors waive any right to require Xxxxx to
proceed against Borrower or to proceed against or exhaust any security held from
Borrower or to proceed against any other Guarantor, or to pursue any other
remedy in Xxxxx'x power whatsoever. Guarantors waive any defense arising by
reason of any disability or other defense of Borrower, or by reason of the
cessation from any cause whatsoever of the liability of Borrower. Until the
above described Note of Borrower to Xxxxx shall have been paid in full,
Guarantors shall have no right of subrogation, and each of them does hereby
waive any right to enforce any remedy which Xxxxx now has, or may hereafter have
against Borrower, and waive any benefit of and any right to participate in any
security now or hereafter held by Xxxxx. Guarantors waive all presentments,
demands for performance, notices of non-performance, protests, notices of
protest, notices of dishonor, and notices of acceptance of this guarantee. It is
not necessary for Xxxxx to inquire into the powers of Borrower or its officers,
Members, or agents acting or purporting to act on its behalf, and the above
described indebtedness which was created in reliance upon the professed exercise
of such powers is hereby guaranteed. Guarantors agree to pay a reasonable
attorney's fee and all other costs and expenses which may be incurred by Xxxxx
in the enforcement of this guarantee.
Guarantors hereby irrevocably and unconditionally waive all of the
benefits and provisions of Arizona Revised Statutes, ss.12-1641, and any
amendment thereto.
Further, as inducement for Xxxxx to loan 3Pea Technologies, Inc. the
sum of $500,000.00, Guarantors agree to cause 3Pea Technologies, Inc., to have a
life insurance policy issued insuring the life of both Xxxx X. Xxxxxxxx and
Xxxxxx X. Xxxxxx as Insured under the policy and agreeing to pay a Death Benefit
to Xxxxx, as a named Beneficiary under the policy, sufficient to satisfy the
loan upon the death of Xxxx X. Xxxxxxxx and/or Xxxxxx X. Xxxxxx, until such time
as the loan owing by 3Pea Technologies, Inc. to Xxxxx is paid in full.
IN WITNESS WHEREOF the undersigned Guarantors have executed this
guarantee this 6th day of October, 2004.
By: /S/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx, Guarantor
By: /S/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Guarantor
B-4
