EXHIBIT 10.21
CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
THIS CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT (this "AGREEMENT")
dated as of March 21, 2005, is entered into between 3Pea Technologies, Inc., a
Nevada corporation (the "COMPANY" or "3PEA"), and Xxxxx X. Xxxxxxx ("Investor").
WHEREAS, 3PEA is seeking $2,500,000 in loans in the form of
convertible promissory notes; and
WHEREAS, Investor desires to invest in 3PEA by purchasing a
convertible promissory notes upon the terms and subject to the conditions set
forth in this Agreement, and 3PEA desires such an investment; and
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"TRANSACTION DOCUMENTS" means this Agreement, the Note, the Accredited
Investor Certificate attached hereto as EXHIBIT B and all other certificates,
documents, agreements and instruments delivered to Investor under or in
connection with this Agreement.
ARTICLE II
PURCHASE AND SALE OF NOTE
SECTION 2.01 SALE AND ISSUANCE OF NOTE. Subject to the terms and
conditions of this Agreement, Investor agrees to purchase at the Closing, and
the Company agrees to sell and issue to Investor at the Closing, one Note in the
principal amount of Twelve Thousand Five Hundred Dollars ($12,500.00) (the
"NOTE") upon receipt of such amount.
SECTION 2.02 CLOSING. At the Closing, the Company shall deliver to
Investor the Note against payment of the purchase price therefore by check, wire
transfer, or a combination thereof.
ARTICLE III
TERMS OF THE NOTE
SECTION 3.01 INTERESTS. Interest shall accrue on the unpaid principal
amount of each Note from the date of such Note until the maturity thereof, at a
rate of 6.0% per annum. Interest shall be computed as simple annual interest on
the basis of a year of 360 days for the actual number of days occurring in the
period for which such interest is payable. Interest accrued on a particular Note
will be forgiven upon conversion of such Note into shares of Common Stock.
SECTION 3.02 REPAYMENT OF THE NOTES. The principal amount and
accrued interest outstanding under each Note hereunder shall be due and payable
on or before the second anniversary of the date of issuance of such Note (the
"MATURITY DATE"), unless earlier prepaid under Section 3.03, converted under
Section 3.05 (in which event interest will be forgiven).
SECTION 3.03 PREPAYMENTS. 3PEA may, upon prior notice to Investor not
later than 10 Business Days prior to the date of prepayment, prepay the
outstanding principal amount and interest under the Note, without premium or
penalty. The notice given of any prepayment shall specify the date and amount of
the prepayment and the date of the Note to which such prepayment shall be
applied. The Investor shall have the right to convert note upon notice of
prepayment within the notice period.
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SECTION 3.04 PAYMENTS. 3PEA shall make payment under the Notes,
unconditionally and in full without set-off, counterclaim or other defense, not
later than 5:00 p.m. (Pacific Standard Time) on the Maturity Date in Dollars and
in immediately available funds, at the address of Investor (as set forth in
Section 8.02 below, which may be amended from time to time in accordance
therewith), or to such other office and account of Investor as it from time to
time shall designate in a written notice to 3PEA.
SECTION 3.05 CONVERSIONS OF NOTES.
(a) RIGHT TO CONVERT. Investor may convert note between March 21, 2006
and March 21, 2007 subject to and upon compliance with the provisions of this
Agreement. Investor shall have the right, at its option, to convert the
outstanding principal amount under the Note, into the number of fully paid and
non-assessable shares of 3PEA Common Stock. This number is obtained by dividing
the principal amount under such Note surrendered for conversion by the
Conversion Price (as defined below).
(b) EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK
ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS. In order to exercise the
right to conversion with respect to a Note, Investor shall surrender the Note
and shall give written notice of conversion to 3PEA that Investor elects to
convert the Note in said notice. Such notice shall also state the name or names
(with address) in which the certificate or certificates for shares of 3PEA
Common Stock which shall be issued.
As promptly as practicable, but in no event more than 15 Business Days
after satisfaction of the requirements for conversion set forth above, 3PEA
shall issue and shall deliver to Investor, a certificate or certificates for the
number of full shares issuable upon conversion. A check or cash will be issued
for any fractional shares.
(c) CONVERSION PRICE. The "CONVERSION PRICE" shall be $1.00,
unless the Company has, during the offering period, sold its capital stock for a
lower price in which case such Note will convert at the lower of $1.00 or such
lower price, and
(d) EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any of the following events occur, namely (i) any consolidation, merger or
combination of 3PEA with another corporation as a result of which holders of
3PEA Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock (a "Merger"), or (ii) any sale or conveyance of the properties and
assets of 3PEA as, or substantially as, an entirety to any other corporation as
a result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock (an "Asset Sale"). In this event, 3PEA or the
successor or purchasing corporation, as the case may be, shall execute with
Investor an amendment to this Agreement providing that all issued and
outstanding Note shall be convertible into the kind and amount of shares of
stock and other securities or property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance by a holder of a number of shares of Common Stock issuable upon
conversion of such Notes immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance.
(e) RESERVATION OF SHARES; SHARES TO BE FULLY PAID. 3PEA shall
provide, free from preemptive rights, out of its authorized but unissued shares
or shares held in treasury, sufficient shares to provide for the conversion of
the Notes as such Notes are presented for conversion. From the execution of this
Agreement, 3PEA will take all corporate action which may, in the opinion of its
counsel, be necessary in order that 3PEA may validly and legally issue shares of
such 3PEA Common Stock at such adjusted Conversion Price.
3PEA covenants that all shares of 3PEA Common Stock which may be
issued upon conversion of Notes will upon issue be fully paid and non-assessable
by 3PEA.
SECTION 3.06 ISSUANCE OF FUTURE WARRANT in order to induce the
Purchaser to enter into the aforesaid loan transaction and to make said loan to
the Borrowers, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties covenant and agree as
follows:
(a) Issuance of Warrant at conversion date of Note or upon repayment
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(b) The Warrant will represent one share for each dollar invested.
(c) Upon the Note conversion date between March 21, 2006 and March 21,
2007, the Company will issue to the Investor a warrant (the "WARRANT") to
purchase shares of Common Stock of the Company (such shares of Common Stock
shall be available at $1.50 with an exercise period between March 21, 2006 and
March 21, 2008.
SECTION 3.07 TAXES ON PAYMENTS. 3PEA will not be responsible for any
income tax of Investor for interest due on the Note, or stamp duty or other tax
due on conversion of the Note into shares of Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF 3PEA. 3PEA hereby
represents and warrants to Investor that:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has all requisite corporate power and authority
to carry on its business as now conducted. The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity. The Company is not a participant in any
joint venture, partnership, or similar arrangement.
(b) CAPITALIZATION AND VOTING RIGHTS. The authorized capital
of the Company consists, or will consist immediately prior to the Closing, of:
(i) COMMON STOCK. 100,000,000 shares of Common Stock of
which, 20,394,800 shares are outstanding.
(ii) The outstanding shares of Common Stock have all been
duly and validly authorized and issued, fully paid and nonassessable, and were
issued in accordance with the registration or qualification provisions of the
Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom.
(c) AUTHORIZATION. The execution, delivery and performance of
the Transaction Documents and any other agreement contemplated hereunder by 3PEA
have been duly authorized by all necessary corporate action of 3PEA. The shares
of Common Stock to be issued upon conversion of the Notes have been or will be
duly authorized by all necessary corporate action of 3PEA, and, upon issuance
and payment therefor, will be validly issued, fully paid and non-assessable, and
issued, upon Investor making appropriate written investment representations to
3PEA upon the conversion of each Note into shares of Common Stock as provided in
this Agreement, in compliance with the qualification and registration
requirements or exemptions therefrom under all applicable state and federal
securities laws.
(d) APPROVALS AND CONSENTS. No approval, consent or
authorization of any natural person, firm, corporation or Governmental Authority
which has not heretofore been obtained is necessary for the execution or
delivery of this Agreement.
(e) OFFERING. Subject in part to the truth and accuracy of
Investor's representations set forth in Section 4.02 of this Agreement, the
offer, sale and issuance of the Notes as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
(f) LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company. The Company
is not a party or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality. There
is no action, suit, proceeding or investigation by the Company currently pending
or that the Company intends to initiate.
(g) DISCLOSURE. The Company has provided Investor with all the
information that it has requested for deciding whether to purchase the Notes.
(h) TITLE TO PROPERTY AND ASSETS. The Company owns its
property and assets free and clear of all Liens.
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(i) FINANCIAL STATEMENTS. 3PEA has furnished Investor with the
the audited balance sheets of 3PEA Technologies, Inc. (A Development Stage
Company) as of December 31, 2003 and 2002, and the related statements of
operations, stockholders' deficit, and cash flows for the years ended December
31, 2003 and 2002 and the period from February 21, 2001 (Date of Inception)
through December 31, 2003. 3PEA has also provided investor with the interim
unaudited financial statements as of September 30, 2004
(j) TAX RETURNS, PAYMENTS AND ELECTIONS. The Company has filed
all tax returns and reports as required by law. These returns and reports are
true and correct in all material respects. The Company has paid all taxes and
other assessments due, except those contested by it in good faith. The provision
for taxes of the Company as shown in the Financial Statements is adequate for
taxes due or accrued as of the date thereof.
SECTION 4.02 REPRESENTATIONS AND WARRANTIES OF INVESTOR. Investor
hereby represents and warrants to 3PEA that:
(a) AUTHORIZATION. Investor has full power and authority to
enter into this Agreement and the Transaction Documents, and each such agreement
constitutes its valid and legally binding obligation, enforceable in accordance
with its terms.
(b) PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with Investor in reliance upon its representation to 3PEA, which by its
execution hereof Investor hereby confirms, that the Notes to be received by it,
the Common Stock issuable upon conversion of the Notes will be acquired for
investment for its own account. By executing this Agreement, Investor further
represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Securities.
(c) DISCLOSURE OF INFORMATION. Investor believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Notes. Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Notes, and the business, properties,
prospects and financial condition of the Company. The foregoing, however, does
not limit or modify the representations and warranties of the Company in Section
4.01 of this Agreement or the right of Investor to rely thereon.
(d) INVESTMENT EXPERIENCE. Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Notes. If
other than an individual, Investor also represents it has not been organized for
the purpose of acquiring the Notes.
(e) RESTRICTED SECURITIES. Investor understands that the
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act, only in certain limited circumstances. In this connection,
Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
(f) LEGENDS. It is understood that the certificates evidencing
the Securities may bear one or all of the following legends:
(i) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Securities Act or an opinion of
counsel satisfactory to the Company that such registration is not required or
unless sold pursuant to Rule 144 of such Securities Act."
(ii) Any legend required by the laws of the State of
Nevada
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ARTICLE V
CONDITIONS
SECTION 5.01 CONDITIONS OF INVESTOR AT THE CLOSING. The obligation of
Investor to purchase the Notes at the Closing shall be subject to the
satisfaction of each of the following conditions:
(a) The representations and warranties of 3PEA contained in
Section 4.01 shall be true on and as of the Closing with the same effect as
though such representations and warranties had been made on and as of the date
of such Closing.
(b) The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
SECTION 5.02 CONDITIONS OF 3PEA. The obligations of the Company to
Investor under this Agreement are subject to each of the following conditions:
(a) The representations and warranties of Investor contained
in Section 4.02 shall be true on and as of the Closing as though such
representations and warranties had been made on and as of such dates.
(b) Investor shall have funded the principal amount of the
Notes as specified in Sections 2.01
ARTICLE VI
COVENANTS
SECTION 6.01 AFFIRMATIVE COVENANTS. So long as any of the Notes shall
remain unpaid, 3PEA agrees that:
(a) PRESERVATION OF EXISTENCE. 3PEA will maintain and
preserve, through itself or any successor to its business, its corporate
existence, its rights to transact business and all other rights, franchises and
privileges necessary or desirable in the normal course of its business and
operations and the ownership of its material properties.
(b) PAYMENT OF TAXES. 3PEA will pay and discharge all taxes..
(c) COMPLIANCE WITH LAWS. 3PEA will comply in all material
respects with the requirements of all applicable laws.
(d) MAINTENANCE OF PROPERTIES. 3PEA will use commercially
reasonable efforts to maintain and preserve all of its material properties.
(e) LICENSES. 3PEA will use commercially reasonable efforts to
obtain and maintain all licenses.
(f) PLACE OF BUSINESS. The Company shall provide Investor
prompt written notice of any change in the location of its principal place of
business and its chief executive office from 0000 X. Xxxxxx Xxxx, Xxxxx 0, Xxx
Xxxxx, Xxxxxx 00000
(h) VISIT RIGHTS. The Company shall permit Investor, at
Investor's expense, to visit the Company's office, and to discuss the Company's
affairs, finances and accounts with its officers upon mutually acceptable
arrangements.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01 EVENTS OF DEFAULT. Any of the following events that shall
occur shall constitute an "EVENT OF DEFAULT":
(a) PAYMENTS. 3PEA shall fail to pay when due any amount of
principal of, or interest on, any Note, or any other amount payable under any
Transaction Document, and such failure shall remain unremedied by 3PEA for a
period of 30 days following the date of notice that such payment is due.
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(b) REPRESENTATIONS AND WARRANTIES. Any representation or
warranty by 3PEA in the Transaction Documents shall prove to have been incorrect
in a material respect when made or deemed made.
(c) FAILURE BY 3PEA TO PERFORM CERTAIN COVENANTS. 3PEA shall
fail to perform or observe any material term, covenant or agreement contained in
this Agreement and any such failure shall remain unremedied for a period of 30
days from the notice by Investor of the occurrence thereof.
SECTION 7.02 CURES. Upon each of such Event of Default, the Company
shall have thirty (30) days to cure such default after receipt of written notice
of default from Investor specifying the nature of the Company's default. If the
Company is unable to cure its default within such thirty (30) day period,
Investor may, at its option, accelerate repayment of the Outstanding Balance in
which case the Outstanding Balance shall be due and payable immediately. Upon
any default of the Company hereunder, Investor may pursue any remedies that are
available to it.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of 3PEA and Investor.
SECTION 8.02 NOTICES. Except as may be otherwise provided herein, all
notices, requests, waivers and other communications made pursuant to this
Agreement shall be in writing. All notices shall be sent via FedEx Standard
overnight delivery with signature confirmation to the address below or as
revised in writing by the parties.
To Investor:
To: Xxxxx X. Xxxxxxx
Address: 0000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx
To the Company:
3Pea Technologies, Inc.
0000 X. Xxxxxx Xxxx, Xxxxx 0
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Fax: (000) 000-0000
SECTION 8.03 SURVIVALS. All covenants, agreements, representations and
warranties made herein shall, except to the extent otherwise provided herein,
survive the execution and delivery of this Agreement, the execution and delivery
of the Notes, and shall continue in full force and effect so long as Investor
has any commitment, any Notes remain outstanding or unpaid or any obligation to
perform any other act under this Agreement or the Transaction Documents
otherwise remains unsatisfied.
SECTION 8.04 BENEFITS OF AGREEMENT. The Transaction Documents are
entered into for the sole protection and benefit of the parties hereto and their
successors and assigns, and no other person shall be a direct or indirect
beneficiary of, or shall have any direct or indirect cause of action or claim in
connection with, any Transaction Document.
SECTION 8.05 BINDING EFFECT; ASSIGNMENT. This Agreement shall become
effective when it shall have been executed by 3PEA and Investor and thereafter
shall be binding upon, inure to the benefit of and be enforceable by 3PEA,
Investor and their respective successors and assigns.
SECTION 8.06 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with the law of the State of Nevada.
SECTION 8.07 ENTIRE AGREEMENTS. This Agreement and the documents
referred to herein constitute the entire agreement between the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.
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SECTION 8.08 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
SECTION 8.09 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute but one and the same agreement.
SECTION 8.10 PUBLIC ANNOUNCEMENTS. Neither party shall use the other's
name nor refer to the other directly or indirectly in connection with the
investment contemplated herein in any advertisement, news release or
professional or trade publication, or in any other manner, unless otherwise
required by law, or with prior written consent.
SECTION 8.11 DISPUTE RESOLUTION. The parties agree to negotiate in good
faith to resolve any dispute between them regarding this Agreement.
SECTION 8.12 BLUE SKY NOTICES:
IT IS ANTICIPATED THAT THE SECURITIES DESCRIBED HEREIN MAY BE OFFERED
FOR SALE IN SEVERAL STATES. THE SECURITIES BLUE SKY LAWS OF SOME OF THOSE STATES
REQUIRE THAT CERTAIN CONDITIONS AND RESTRICTIONS RELATING TO THE OFFERING BE
DISCLOSED. A DESCRIPTION OF THE RELEVANT CONDITIONS AND RESTRICTIONS REQUIRED BY
THE STATES IN WHICH THE COMPANY MAY OFFER ITS SECURITIES FOR SALE IS SET FORTH
BELOW.
SECTION 8.13 STATE NOTICE REQUIREMENTS
NOTICE REQUIREMENTS IN STATES WHERE SHARES MAY BE SOLD ARE AS FOLLOWS:
NOTICE TO ARIZONA RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ARIZONA SECURITIES
ACT AND CANNOT BE RESOLD UNLESS THEY ARE REGISTERED UNDER SUCH ACT OR UNLESS AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
NOTICE TO CALIFORNIA RESIDENTS
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY TO ANY
INTEREST THEREIN OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
NOTICE TO ILLINOIS RESIDENTS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECRETARY
OF STATE OF ILLINOIS OR THE STATE OF ILLINOIS, NOR HAS THE SECRETARY OF STATE OF
ILLINOIS OR THE STATE OF ILLINOIS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NOTICE TO NEVADA RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER APPLICABLE SECURITIES
LAWS OF NEVADA AND THEREFORE CANNOT BE RESOLD OR TRANSFERRED UNLESS THEY ARE
SUBSEQUENTLY REGISTERED OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
NOTICE TO OHIO RESIDENTS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE OHIO SECURITIES ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER
RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY
ARE SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
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NOTICE TO TENNESSEE RESIDENTS
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED.
THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION WHEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISK OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
(COMPANY)
3PEA TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxxxx Date: March 21, 2005
------------------------------ ----------------------------
Name: Xxxx X. Xxxxxxxx
------------------------------
Title: Chief Executive Officer
------------------------------
(INVESTOR)
By: /s/ Xxxxx X. Xxxxxxx Date: March 21, 2005
------------------------------ -----------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------
Title: Individual
------------------------------
--SIGNATURE PAGE TO THE CONVERTIBLE NOTE PURCHASE AGREEMENT--
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EXHIBIT A
FORM OF CONVERTIBLE PROMISSORY NOTE
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED FOR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IS AN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
3PEA TECHNOLOGIES, INC.
CONVERTIBLE PROMISSORY NOTE
$12,500.00 March 21, 2005
Las Vegas, Nevada
FOR VALUE RECEIVED, 3 PEA TECHNOLOGIES, INC., a Nevada corporation
("MAKER" or "3PEA"), promises to pay to the order of Xxxxx X. Xxxxxxx
("HOLDER"), the principal sum of Twelve Thousand Five Hundred Dollars
($12,500.00), together with interest from the date of this Note on the unpaid
principal balance at a rate of 6.0% per annum. Interest shall be computed as
simple annual interest on the basis of a year of 360 days for the actual number
of days occurring in the period for which such commitment fee or interest is
payable. Payment shall be made by Maker to Holder at the address of 0000
Xxxxxxxx Xxxxxx, Xxxx Xxxxxx, XX 00000-0000 or to such other address of Holder
as it shall designate in a written notice to Maker.
This Note is issued pursuant to that certain Convertible Note Purchase
Agreement dated as of March 21, 2005, between Maker and Holder (the
"AGREEMENT"). Terms used herein have the meanings assigned to those terms in the
Agreement, unless otherwise defined herein.
The terms of payment of principal and accrued interest shall be in
accordance with the terms and conditions of the Agreement. Payment shall be made
in lawful tender of the United States and shall be credited first to accrued
interest then due and payable with the remainder applied to principal.
Prepayment of the principal, together with accrued interest, may be made at any
time without penalty or premium, subject to Section 3.03 of the Agreement.
The unpaid principal on this Note (or any portion thereof) shall be
convertible at the election of Holder into shares of 3PEA Common Stock pursuant
to the terms and conditions set forth in the Agreement.
If action is instituted to collect this Note, Maker will pay all costs
and expenses, including reasonable attorneys' fees, incurred in connection with
such action. Maker hereby waives notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor and all other notices or
demands relative to this instrument.
The holding of any provision of this Note to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provisions and the other provisions of this Note shall remain in full force and
effect.
This Note shall be construed in accordance with the laws of the state
of Nevada, without regard to the conflicts of law provisions of the state of
Nevada or of any other state.
The Maker has caused this Convertible Promissory Note to be issued as
of the date first above written.
3PEA TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxxx
----------------------------------
Title: Chief Executive Officer
----------------------------------
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