PROMISSORY NOTE AND SECURITY AGREEMENT
PROMISSORY NOTE
$263,329.14 June 30, 2000
Phoenix, Arizona
FOR VALUE RECEIVED, the adequacy and sufficiency of which are hereby expressly
acknowledged, the undersigned Brian Smith and Abcon, Inc, jointly and severally,
(the "MAKERS") promises and agrees to pay to the order of OPEC CORP, a Colorado
corporation and FutureOne, Inc., a Nevada corporation ("HOLDERS"), at such place
as Holders may designate from time to time in writing, the principal amount of
TWO HUNDRED SIXTY THREE THOUSAND, THREE HUNDRED TWENTY NINE & 14/100 DOLLARS
($263,329.14) payable as follows:
SEVENTY THOUSAND SEVEN HUNDRED EIGHTY NINE & 00/100 DOLLARS ($70,789.00) with no
interest, on or before July 20, 2000.
ONE HUNDRED FIFTY NINE THOUSAND, ONE HUNDRED NINETY THREE & 17/100 DOLLARS
($159,193.17) with no interest, on or before July 31, 2000.
The balance of THIRTY THREE THOUSAND, THREE HUNDRED FORTY SIX & 97/100 DOLLARS
($33,346.97)or so much thereof as may be outstanding hereunder from time to
time, with interest to accrue on the unpaid principal balance at a rate of
FIFTEEN PERCENT (15%%) per annum, with principal and accrued interest thereon
payable monthly on the 25th of each month in the amount of FIVE THOUSAND &
00/100 Dollars ($5,000.00) until the entire unpaid principal and accrued
interest thereon is paid in full. At Maker's election, payments may be made by
bank wire transfer at Maker's expense and Holder shall furnish the requisite
information.
To secure payment and performance, this Note is secured by certain business
equipment and all accounts, including accounts receivable and contract rights of
Maker ("Collateral"), all in accordance with the Security Agreement of even date
herewith.
This Note shall evidence a portion of the Purchase Price payable pursuant to
Section 3(d) of that certain Stock Purchase Agreement between the Maker and the
Holder (as amended from time to time, the "Stock Purchase Agreement"). The Maker
shall have the right to prepay this Note in full or in part at any time without
penalty, premium or notice. All payments and prepayments shall be applied first
to any Expenses (as defined below), second to accrued and unpaid interest, and
third to principal. Principal and interest shall be payable in lawful money of
the United States of America.
Maker agrees that upon the occurrence of an Event of Default (as hereinafter
defined) hereunder, (a) the Maker will pay all costs and expenses of collection
of this Note, including reasonable attorney's fees ("Expenses"); (b) at the
option of the Holder, the unpaid principal balance of this Note along with
accrued and unpaid interest shall become due and payable immediately without
notice; and (c) Holder may utilize any available remedies, including without
limitation any remedies available against the Collateral, under Arizona law
and/or under the Uniform Commercial Code, at law or in equity, in such order
and/or combination as Holder may elect in its sole and absolute discretion. For
purposes of this Note, an "Event of Default" shall mean (a) any failure by Maker
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to pay when due any installment or principal or interest under this Note, which
failure is not cured within ten (10) days of written notice thereof by Holder to
the Maker, (b) any general assignment by Maker for the benefit of creditors, (c)
any filing of a voluntary bankruptcy petition by Maker, and (d) any filing of
any involuntary bankruptcy petition against Maker, which filing is not dismissed
within 90 days thereof.
Failure of the Holder to exercise any option hereunder shall not constitute a
waiver of the right to exercise the same in the event of any subsequent default
or breach, or in the event of continuance of any existing default or breach
after demand for performance thereof.
The Maker, sureties, guarantors and endorsers, if any, severally waive demand,
diligence, presentment for payment, protest and notice of demand, protest,
nonpayment and exercise of any option hereunder. The granting without notice of
any extension or extensions of time for payment of any sum or sums due
hereunder, or the taking or release of security shall in no way release or
discharge the liability of Maker or any surety, guarantor or endorser.
No provision of this Note is intended to or shall require or permit Holder,
directly or indirectly, to take, collect or receive in money, goods or in any
other form, any interest in excess of that permitted by applicable law. If any
amount due from or paid by Maker shall be determined by a court of competent
jurisdiction to be interest in excess of such maximum rate, Maker shall not be
obligated to pay such excess and, if paid, such excess shall be applied against
the unpaid principal balance of this Note, or if and to the extent that this
Note has been paid in full, such excess shall be remitted to Maker.
The provisions of this Note shall be binding upon and inure to the benefit of
the heirs, personal representatives, successors and assigns of the parties
hereto.
This Note shall be governed by and construed in accordance with the laws of the
State of Arizona without regard to conflicts of law principles.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first stated
above.
MAKERS" (JOINTLY AND SEVERALLY)
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Brian Smith
ABCON, INC.
By:
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Name:
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Title:
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SECURITY AGREEMENT
DEBTOR:
Name: Abcon, Inc.
Address: PO Box 2198, Chandler, AZ 85244-2198
Attn: Brian Smith, President
and
Name: Brian Smith
Address: 21108 South 196th Street
Queen Creek, Arizona 85242
SECURED PARTY:
Name: OPEC CORP, a Colorado corporation
Address: 5930 Paonia Court
Colorado Springs, CO 80915
and
Name: FutureOne, Inc.
Address: 4250 East Camelback Road, Suite K124
Phoenix, AZ 85018
DATE: June 30, 2000.
Debtor, for good and sufficient consideration, the receipt of which is hereby
acknowledged, hereby grants to Secured Party a security interest in the
following property and any and all additions, accessions and substitutions
thereto or thereof (hereinafter referred to as the "Collateral"):
All of Debtor's accounts (including accounts receivable and contract
rights) whether now owned or hereafter acquired, whether now existing or
hereafter arising, together with all records and data relating to Debtor's
accounts including Debtor's rights in and to all computer software required
to utilize, create, maintain, and process such records or data on
electronic media.
All Equipment, if any, as may be noted on any attached Exhibit A to this
Security Agreement
TO SECURE PAYMENT AND PERFORMANCE UNDER THAT CERTAIN PROMISSORY NOTE OF EVEN
DATE HEREWITH, PAYABLE TO THE SECURED PARTY.
1. DEBTOR WARRANTS AND COVENANTS. Debtor expressly warrants and covenants as
follows:
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a. That except for the security interest granted hereby Debtor is, or to the
extent that this agreement states that the Collateral is to be acquired after
the date hereof, will be, the owner of the Collateral free from any adverse
lien, security interest or encumbrances; and that Debtor will defend the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein.
b. The Collateral issued or bought is primarily for use in business.
c. Promptly to notify Secured Party of any change in the location of the
Collateral.
d. To pay all taxes and assessments of every nature which may be levied or
assessed against the Collateral.
e. Not to permit or allow any adverse lien, security interest or encumbrance
whatsoever upon the Collateral and not to permit the same to be attached or
replevined.
f. That the Collateral is in good condition, and that Debtor will, at Debtor's
own expense, keep the same in good condition. The Secured Party may examine and
inspect the Collateral at any reasonable time upon notice.
g. That the Debtor will not use the Collateral in violation of any applicable
statutes, regulations or ordinances.
h. That the Debtor will keep the Collateral at all times insured against risks
of loss or damage by fire (including so-called extended coverage), theft and
such other casualties as the Secured Party may reasonable require, including
collision in the case of any motor vehicle, all in such amounts, under such
forms of policies, upon such terms, for such periods and written by such
companies or underwriters as the Secured Party may approve, losses in all cases
to be payable to the Secured Party and the Debtor as their interests may appear.
All policies of insurance shall provide for at least ten days' prior written
notice of cancellation to the Secured Party; and the Debtor shall furnish the
Secured Party with certificates of such insurance or other evidence satisfactory
to the Secured Party as to compliance with the provisions of this paragraph.
Secured Party may act as an attorney for the Debtor in making, adjusting and
settling claims under or canceling such insurance and endorsing the Debtor's
name on any drafts drawn by insurers of the Collateral.
2. PERFECTION OF SECURITY INTEREST. DEBTOR HEREBY APPOINTS SECURED PARTY AS ITS
IRREVOCABLE ATTORNEY-IN-FACT FOR THE PURPOSE OF EXECUTING ANY DOCUMENTS
NECESSARY TO PERFECT OR TO CONTINUE THE SECURITY INTEREST GRANTED IN THIS
AGREEMENT. DEBTOR WILL REIMBURSE SECURED PARTY FOR ALL EXPENSES FOR THE
PERFECTION AND THE CONTINUATION OF THE PERFECTION OF SECURED PARTY'S SECURITY
INTEREST IN THE COLLATERAL.
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3. NO VIOLATION. The execution and delivery of this Agreement will not violate
any law or agreement governing Debtor or to which Debtor is a party, and will
not cause Debtor to be in default of any agreement to which it is a party.
4. ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, the Collateral is enforceable
in accordance with its terms, is genuine, and complies with applicable laws
concerning form, content and manner of preparation and execution, and all
persons appearing to be obligated on the Collateral have authority and capacity
to contract and are in fact obligated as they appear to be on the Collateral. At
the time any account becomes subject to a security interest in favor of Secured
Party, the account shall be a good and valid account representing an undisputed,
bona fide indebtedness incurred by the account debtor, for merchandise held
subject to delivery instructions and theretofore shipped or delivered pursuant
to a contract of sale, or for services theretofore performed by Debtor with or
for the account debtor; there shall be no setoffs or counterclaims against any
such account; and no agreement under which any deductions or discounts may be
claimed shall have been made with the account debtor except those disclosed to
Secured Party in writing.
5. TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Debtor's business, or as otherwise agreed
between the Parties, Debtor shall not sell, offer to sell, or otherwise transfer
or dispose of the Collateral. While Debtor is not in default under this
Agreement, Debtor may sell inventory, but only in the ordinary course of its
business and only to buyers who qualify as a buyer in the ordinary course of
business. A sale in the ordinary course of Debtor's business does not include a
transfer in partial or total satisfaction of a debt or any bulk sale. Debtor
shall not pledge, mortgage, encumber or otherwise permit the Collateral to be
subject to any lien, security interest or encumbrance, other than the security
interest provided for in this Agreement, without the prior written consent of
Secured Party. This includes security interests even if junior in right to the
security interests granted under this Agreement. Unless waived by Secured Party,
all proceeds from any disposition of the Collateral (for whatever reason) shall
be held in trust for Secured Party and shall not be commingled with any other
funds; provided, however, this requirement shall not constitute consent by
Secured Party to any sale or other disposition. Upon receipt, Debtor shall
immediately deliver any such proceeds to Secured Party.
6. COLLATERAL SCHEDULES AND LOCATIONS. As often as Secured Party shall require,
and insofar as the Collateral consists of accounts and general intangibles,
Debtor shall deliver to Secured Party schedules of such Collateral, including
such information as Secured Party may require, including without limitation
names and address of account debtors and agings of accounts and general
intangibles. Insofar as the Collateral consists of inventory and equipment,
Debtor shall deliver to Secured Party, as often as Lender shall require, such
lists, descriptions, and designations of such Collateral as Secured Party may
require to identify the nature, extent, and location of such Collateral. Such
information shall be submitted for Debtor and each of its subsidiaries or
related companies.
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7. DEBTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default, Debtor
may have possession of the tangible personal property and beneficial use of all
the Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Promissory Note, provided that Debtor's right to possession and
beneficial use shall not apply to any Collateral when possession of the
Collateral by Secured Party is required by law to perfect Secured Party's
security interest in such Collateral. Until otherwise notified by Secured Party,
Debtor may collect any of the Collateral consisting of accounts. If Secured
Party at any time has possession of any Collateral, whether before or after an
Event of Default, Secured Party shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral if Secured Party takes
such action for that purpose as Debtor shall request or as Secured Party, in
Secured Party's sole discretion, shall deem appropriate under the circumstances,
but failure to honor any request by Debtor shall not of itself be deemed to be a
failure to exercise reasonable care. Secured Party shall not be required to take
any steps necessary to preserve any rights in the Collateral against prior
parties, nor to protect, preserve or maintain any security interest given to
secure the indebtedness.
8. EXPENDITURES BY SECURED PARTY. If not discharged or paid when due, Secured
Party may (but shall not be obligated to) discharge or pay any amounts required
to be discharged or paid by Debtor under this Agreement, including without
imitation all taxes, liens, security interests, encumbrances, and other claims,
at any time levied or placed on the Collateral. Secured Party also may (but
shall not be obligated to) pay all costs for insuring, maintaining and
preserving the Collateral. All such expenditures incurred or paid by Secured
Party for such purposes will then bear interest at the rate charged under the
Promissory Note from the date incurred or paid by Secured Party to the date or
repayment by Debtor. All such expenses shall become a part of the indebtedness
and, at Secured Party's option, will (a) be payable on demand, (b) be added to
the balance of the Note and be apportioned among and by payable with any
installment payments to become due during either (i) the term of any applicable
insurance policy or (ii) the remaining term of the Note, or (c) be treated as a
balloon payment which will be due and payable at the Note's maturity. This
Agreement also will secure payment of these amounts. Such right shall be in
addition to all other rights and remedies to which Secured Party may be entitled
upon the occurrence of an Event of Default.
9. APPOINT RECEIVER. To the extent permitted by applicable law, Secured Party
shall have the following rights and remedies regarding the appointment of a
receiver: (a) Secured Party may have a receiver appointed as a matter of right,
(b) the receiver may be an employee of Secured Party and may serve without bond,
and (c) all fees of the receiver and his or her attorney shall become part of
the Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the Note rate from date of expenditure until repaid. The receiver
may be appointed by a court of competent jurisdiction upon ex parte application
and without notice, notice being expressly waived.
10. POWER OF ATTORNEY. Debtor hereby appoints Secured Party as its true and
lawful attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover all
sums of money or other property which may now or hereafter become due, owing or
payable form the Collateral; (b) to execute, sign and endorse any and all
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claims, instruments, receipts, checks, drafts or warrants issued in payment for
the Collateral; (c) to settle or compromise any and all claims arising under the
Collateral, and, in the place and stead of Debtor, to execute and deliver its
release and settlement for the claim; and (d) to file any claim or claims or to
take any action or institute or take part in any proceedings, either in its own
name or in the name of Debtor, or otherwise, which in the discretion of Secured
Party may seem to be necessary or advisable. This power is given as security for
the Indebtedness, and the authority hereby conferred is and shall be irrevocable
and shall remain in full force and effect until renounced by Secured Party.
UNTIL DEFAULT DEBTOR MAY HAVE POSSESSION OF THE COLLATERAL AND USE IT IN ANY
LAWFUL MANNER, AND UPON DEFAULT, SECURED PARTY SHALL HAVE THE IMMEDIATE RIGHT TO
THE POSSESSION OF THE COLLATERAL.
11. EVENTS OF DEFAULT. Debtor under this Agreement upon the happening of any of
the following events or conditions:
(a) default in the payment or performance of any obligation, covenant or
liability contained or referred to in this Security Agreement herein, the Note
or in any document evidencing the same;
(b) the making or furnishing of any warranty, a representation or statement to
Secured Party by or on behalf of Debtor which proves to have been false in any
material respect when made or furnished;
(c) loss, theft, damage, destruction, sale or encumbrance to or of any of the
Collateral, or the making of any levy seizure or attachment thereof or thereon;
(d) death, dissolution, termination of existence, insolvency, business failure,
appointment of a receiver of any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceedings under any
bankruptcy or insolvency laws of, by or against Debtor or any guarantor or
surety for Debtor.
Upon such default and at any time thereafter, or if it deems itself insecure,
Secured Party may declare all Obligations secured hereby immediately due and
payable and shall have the remedies of a secured party under Article 9 of the
Arizona Uniform Commercial Code. Secured Party may require Debtor to assemble
the Collateral and deliver or make it available to Secured Party at a place to
be designated by Secured Party which is reasonable convenient to both parties.
Expenses of retaking, holding, preparing for sale, selling or the like shall
include Secured Party's reasonable attorney's fees and legal expenses.
No waiver by Secured Party of any default shall operate as a waiver of any other
default or of the same default on a future occasion. The taking of this security
agreement shall not waive or impair any other security said Secured Party may
have or hereafter acquire for the payment of the above indebtedness, nor shall
the taking of any such additional security waive or impair this security
agreement; but said Secured Party may resort to any security it may have in the
order it may deem proper, and notwithstanding any collateral security, Secured
Party shall retain its rights of set-off against Debtor.
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All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns; and all promises and duties of Debtor shall bind his
heirs, executors or administrators or his or its successors or assigns. If there
be more than one Debtor, their liabilities hereunder shall be joint and several.
Dated this 30th day of June, 2000.
DEBTOR: DEBTOR
By: Abcon, Inc. By: Brian Smith
Name: Name:
------------------------------ ------------------------------
Title:
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RESIGNATIONS
I hereby resign as an Officer and/or Director of Abcon, Inc. effective as of the
Closing Date of the Stock Purchase Agreement of which this exhibit is made a
part hereof.
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Earl J. Cook
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Donald D. Cannella
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Bradley G. Black
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OTHER SETTLEMENT ITEMS
OPEC Loan to Abcon $39,000.00
Loan payments made by OPEC on behalf of Abcon:
Truck #33 (3 Months) $ 2,570.70
Truck #45 (3 Months) 2,224.08
Truck #47 (4 Months) 3,959.88
Truck #50 (3 Months) 2,571.99
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11,326.65
FICA on 12-31-99 stock paid by OPEC 2,669.49
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52,996.14
Less: Invoices from Abcon to OPEC 37,306.40
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Net due OPEC to be added to purchase Note $15,689.74
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