FORM OF NOTE
THE SECURITIES, IN THE FORM OF THE PROMISSORY NOTE OF ELITE LOGISTICS, INC.,
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY STATE SECURITIES LAWS. SUCH SECURITIES CANNOT BE SOLD, TRANSFERRED, ASSIGNED
OR OTHERWISE DISPOSED, EXCEPT IN ACCORDANCE WITH THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS.
PROMISSORY NOTE
Freeport, Texas
[DateofNote], 2001
FOR VALUE RECEIVED, ELITE LOGISTICS, INC., a Idaho corporation, 1201 N
Ave H, Freeport, TX 77541, and its successors and assigns, (the "Company")
promises to pay to the order of [Name] ("Holder"), at [Address1], or at such
other place as Holder may from time to time designate in writing, the principal
sum of [Amtfull] Dollars ($[Amt]) in lawful money of the United States of
America, together with interest on so much thereof as is from time to time
outstanding at the rate hereinafter provided, and payable as hereinafter
provided. This Note is one of a series of Notes containing the same terms as
this Note.
1. Interest Rate. The unpaid principal balance of this Note shall bear
interest at the rate of ten percent (10%) per annum, simple interest.
Interest shall be paid in cash at the Maturity of the Note.
2. Payment/Maturity Date. The total outstanding principal balance hereof,
together with accrued and unpaid interest, shall be due and payable on
December 31, 2001; or the Company may extend the Payment Date to March
31, 2002, by providing notice to the Holder at least five days prior to
the Payment Date; and by issuing the Holder warrants to purchase shares
of its Common Stock in accordance with paragraph 6 hereunder.
3. Conversion. The Notes will automatically convert as described in the
Summary of Terms attached to the Subscription Agreement.
4. Default Interest and Attorney Fees. Upon declaration of a default
hereunder, the balance of the principal remaining unpaid, interest
accrued thereon, and all other costs, and fees shall bear interest at
the rate of eighteen percent (18%) per annum from the date of default,
or the date of advance, as applicable. In the event of default, the
Company and all other parties liable hereon agree to pay all costs of
collection, including reasonable attorneys' fees.
5. Interest Calculation. Daily interest shall be calculated on a 365-day
year and the actual number of days in each month.
6. Issuance of Additional Warrants. The Company has issued the Holder
warrants to purchase shares of its Common Stock on the basis of 10,000
shares for each $10,000 principal amount Note. If the Company extends
the Payment Date of the Note in accordance with paragraph 2, it shall
issue Holder an additional 10,000 shares per each $10,000 principal
amount of the Note outstanding, pro rata for any amount less than
$10,000.
7. Prepayment. This Note may be prepaid in whole or in part.
8. Costs of Collection. Company agrees that if, and as often as, this Note
is placed in the hands of an attorney for collection or to defend or
enforce any of Holder's rights hereunder or under any instrument
securing payment of this Note, Company shall pay to Holder its
reasonable attorneys' fees and all court costs and other expenses
incurred in connection therewith, regardless of whether a lawsuit is
ever commenced or whether, if commenced, the same proceeds to judgment
or not. Such costs and expenses shall include, without limitation, all
costs, reasonable attorneys' fees, and expenses incurred by Holder in
connection with any insolvency, bankruptcy, reorganization,
foreclosure, deed in lieu of foreclosure or similar proceedings
involving Company or any endorser, surety, guarantor, or other person
liable for this Note which in any way affect the exercise by Holder of
its rights
and remedies under this Note, or any other document or instrument
securing, evidencing, or relating to the indebtedness evidenced by this
Note.
9. Default. At the option of Holder, the unpaid principal balance of this
Note and all accrued interest thereon shall become immediately due,
payable, and collectible, with written notice of default and demand,
and with five days notice to cure any default, upon the occurrence at
any time of any of the following events, each of which shall be deemed
to be an event of default hereunder:
a. Company's failure to make any payment of principal, interest,
or other charges on or before the date on which such payment
becomes due and payable under this Note.
b. Company's breach or violation of any agreement or covenant
contained in this Note, or in any other document or instrument
securing, evidencing, or relating to the indebtedness
evidenced by this Note.
c. Dissolution, liquidation or termination of Company.
10. Application of Payments. Any payment made against the indebtedness
evidenced by this Note shall be applied against the following items in
the following order: (1) costs of collection, including reasonable
attorney's fees incurred or paid and all costs, expenses, default
interest, late charges and other expenses incurred by Holder and
reimbursable to Holder pursuant to this Note (as described herein); (2)
default interest accrued to the date of said payment; (3) ordinary
interest accrued to the date of said payment; and (4) finally,
outstanding principal.
11. Assignment and Transferability of Note. Company may assign this Note to
any entity that acquires Company or substantially all of Company's
assets. Holder may not transfer the Note in any manner without the
written agreement of the Company.
12. Non-Waiver. No delay or omission on the part of Holder in exercising
any rights or remedy hereunder shall operate as a waiver of such right
or remedy or of any other right or remedy under this Note. A waiver on
any one or more occasion shall not be construed as a bar to or waiver
of any such right and/or remedy on any future occasion.
13. Maximum Interest. In no event whatsoever shall the amount paid, or
agreed to be paid, to Holder for the use, forbearance, or retention of
the money to be loaned hereunder ("Interest") exceed the maximum amount
permissible under applicable law. If the performance or fulfillment of
any provision hereof, or any agreement between Company and Holder shall
result in Interest exceeding the limit for Interest prescribed by law,
then the amount of such Interest shall be reduced to such limit. If,
from any circumstance whatsoever, Holder should receive as Interest an
amount that would exceed the highest lawful rate, the amount that would
be excessive Interest shall be applied to the reduction of the
principal balance owing hereunder (or, at the option of Holder, be paid
over to Company) and not to the payment of Interest.
14. Purpose of Loan. Company certifies that the loan evidenced by this Note
is obtained for business or commercial purposes and that the proceeds
thereof will not be used primarily for personal, family, household, or
agricultural purposes.
15. Governing Law. As an additional consideration for the extension of
credit, Company and each endorser, surety, guarantor, and any other
person who may become liable for all or any part of this obligation
understand and agree that the loan evidenced by this Note is made in
the State of Colorado and the provisions hereof will be construed in
accordance with the laws of the State of Colorado, and such parties
further agree that in the event of default this Note may be enforced in
any court of competent jurisdiction in the State of Colorado, and they
do hereby submit to the jurisdiction of such court regardless of their
residence or where this Note was executed or any endorsement hereof may
be executed.
16. Arbitration. If at any time during the term of this Note any dispute,
difference, or disagreement shall arise upon or in respect of the Note,
and the meaning and construction hereof, every such dispute,
difference, and disagreement
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shall be referred to a single arbiter agreed upon by the parties, or if
no single arbiter can be agreed upon, an arbiter or arbiters shall be
selected in accordance with the rules of the American Arbitration
Association and such dispute, difference, or disagreement shall be
settled by arbitration in accordance with the then prevailing
commercial rules of the American Arbitration Association, and judgment
upon the award rendered by the arbiter may be entered in any court
having jurisdiction thereof.
17. Binding Effect. The term "Company" as used herein shall include the
original Company of this Note and any party who may subsequently become
liable for the payment hereof as an assumer with the consent of the
Holder, provided that Holder may, at its option, consider the original
Company of this Note alone as Company unless Holder has consented in
writing to the substitution of another party as Company. The term
"Holder" as used herein shall mean Holder or, if this Note is
transferred, the then Holder of this Note.
18. Relationship of Parties. Nothing herein contained shall create or be
deemed or construed to create a joint venture or partnership between
Company and Holder. Holder is acting hereunder as a lender only.
19. Severability. Invalidation of any of the provisions of this Note or of
any paragraph, sentence, clause, phrase, or word herein, or the
application thereof in any given circumstance, shall not affect the
validity of the remainder of this Note.
20. Amendment. This Note may not be amended, modified, or changed, except
only by an instrument in writing signed by both of the parties.
21. Time of the Essence. Time is of the essence for the performance of each
and every obligation of Company hereunder.
IN WITNESS WHEREOF, the undersigned has executed this Note as of
[Date of Note], 2001.
ELITE LOGISTICS, INC.
an Idaho corporation
By:
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Joseph Smith, CEO
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