EXHIBIT 3
SECURED PROMISSORY NOTE
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Maturity Date: January 1, 2007
January 1, 2001 Pittsburgh, Pennsylvania
FOR VALUE RECEIVED, the undersigned, Pinnacle Business Management. Inc., a
Nevada corporation ("Maker"), hereby promises to pay to the order of Xxxxxxx X.
and Xxx Xx Xxxxxx, the holders (collectively the "Holder") of this Promissory
Note (this "Note"), a principal amount equal to the Formula Amount (as defined
in that certain Stock Purchase Agreement dated December 27, 2000 among Holder,
Maker and Xxxxxxx Xxxxxx and Xxxxxxx Xxxx (the "Stock Purchase Agreement"))
together with all accrued interest on such outstanding advanced and unpaid
balance, in accordance with the terms and provisions of this Note. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
to such terms in the Stock Purchase Agreement.
1. Interest. Interest shall accrue on the outstanding principal balance
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of this Note from the date hereof (the "Issuance Date") on the unpaid principal
amount at rate equal to 6% per annum. Beginning March 1, 2001.
2. Payment. The unpaid principal amount of this Note, together with all
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accrued but unpaid interest thereon, shall be due and payable as follows: Maker
shall make payments of accrued interest on the unpaid principal amount of this
Note beginning April 1, 2001, and continuing thereafter on the first day of each
July, October, and January (each such date, an "Installment Date"). Beginning
April 1, 2002 and continuing thereafter on each subsequent Installment Date
through and including January 1, 2007, the Maker shall make a principal payment
equal to 1/20th of the Formula Amount (the "Principal Installments").
3. Stock Purchase Agreement. This Note is given pursuant to the terms
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of the Stock Purchase Agreement, and the Holder is entitled to the rights
provided to the Holder therein.
4. Prepayment. Maker shall have the right to prepay this Note upon ten
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days prior written notice to Xxxxxx.
5. Events of Default. The occurrence of any one of the following shall
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constitute an "Event of Default" hereunder:
(a) Maker's failure to make any required payment of principal or
any other payment called for under this Note, and the continuance of such
failure to pay for a period of fifteen (15) days after the date on which such
payment was due under this Note (a "Payment Default"); It is understood
nonpayment of interest is not a form of Default for the first year from
disbursements.
(b) Maker's failure to perform any other obligation (other than
one that can
be satisfied with the payment of money) required under this Note, and the
continuation of such failure for a period of thirty (30) days after Xxxxxx gives
Maker written notice of such failure to perform;
(c) The occurrence of an Event of Default under the terms of the
Pledge Agreement or
(d) Maker's failure to perform any obligation required under the
terms of the Stock Purchase Agreement, and the continuation of such failure for
a period of thirty (30) days after Xxxxxx gives Maker written notice of such
failure to perform
6. Remedies.
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(a) Upon the occurrence and continuation of an Event of Default
under this Note, the entire unpaid balance of this Note shall, at the option of
the Holder, become immediately due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything contained herein to the contrary notwithstanding, and the Holder may
exercise and shall have any and all remedies accorded to Holder by law. Such
acceleration of maturity, once claimed hereunder by Xxxxxx, may at Xxxxxx's
option be rescinded by written acknowledgment to that effect, but the tender and
acceptance of partial payment or partial performance alone shall not in any way
affect or rescind such acceleration of maturity.
(b) In case any one or more Events of Default shall occur, the
Holder may proceed to protect and enforce Xxxxxx's rights or remedies either by
suit in equity or by action at law, or both, for the specific performance of any
covenant, agreement or other provision contained herein or in any Related
Agreement, or proceed to enforce the payment of this Note or any other legal,
equitable or statutory right or remedy. No right or remedy herein conferred upon
the Holder or in any Related Agreement is intended to be exclusive of any other
right or remedy contained herein and every such right or remedy contained herein
or now or hereafter existing at law or in equity or by statute, or otherwise,
may be exercised separately or in any combination. No course of dealing between
the Maker and the Holder or any failure or delay on the Holder's part in
exercising any rights of remedies hereunder shall operate as a waiver of any
rights or remedies of the Holder and no single or partial exercise of any rights
or remedies hereunder shall operate as a waiver or preclude the exercise of any
other rights or remedies hereunder.
(c) This Note is secured by a Pledge Agreement in favor of the Holder
of even date herewith covering 1,000 shares of capital stock of La Castro &
Associates, Inc., a Pennsylvania corporation (the "Collateral".) Notwithstanding
any provisions of this Note to the contrary, and except as hereinafter provided,
in any action commenced to enforce the obligations of the Maker created or
arising hereunder, the judgment shall not be enforceable against the Maker or
against any assets the undersigned other than the Collateral. Recourse for any
violation or breach of the terms of the Note or this Pledge Agreement shall be
only against the Collateral and any such judgment shall not be subject to
execution on, nor be a lien on any other assets of the Pledgor.
7. Governing Law. The provisions of this Note shall be governed and
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construed according to the laws of the Commonwealth of Pennsylvania, without
giving effect to its conflicts of laws provisions.
8. Notices. Any notice or demand required or permitted by or in
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connection with this Note shall be given in writing in accordance with Section
8.2 of the Stock Purchase Agreement. All notices and demands for payment from
Xxxxxx actually received in writing by Maker regardless of the procedure or
method utilized to accomplish delivery thereof to Maker shall be deemed given
upon receipt or refusal of delivery.
9. Modifications; Assignment. This Note may be modified or amended only
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in a writing signed by the Holder and the Maker. This Note may not be assigned,
transferred, encumbered or pledged by the Holder and any such assignment,
transfer, encumbrance or pledge will be void.
10. Severability. In the event that any one or more of the provisions
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of this Note shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Note, and this Note shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
11. Limitations of Applicable Law. In the event the operation of any
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provision of this Note results in an effective rate of interest which exceeds
the limit of the usury laws or any other law applicable to the loan evidenced
hereby, all sums in excess of those lawfully collectible as interest for the
period in question shall, without further agreement or notice by any party to
this Note, be applied to the unpaid principal balance of this Note immediately
upon receipt of such monies by Xxxxxx, with the same force and effect as though
Maker had specifically designated such extra sums to be so applied to the unpaid
principal balance and Holder had agreed to accept such extra payment(s) as a
prepayment.
12. Captions. The captions herein are for convenience and reference
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only and in no way define or limit the scope or content of this Note or in any
way affect its provisions.
13. Debtor-Creditor Relationship. Holder shall in no event be construed
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for any purpose to be a partner, joint venturer or associate of Maker, it being
the sole intention of the parties to establish a relationship of debtor and
creditor.
IN WITNESS WHERE OF, Xxxxx has executed this Promissory Note as of the 1st
day of January, 2001.
MAKER
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PINNACLE BUSINESS MANAGEMENT, INC.
By:
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