COMMERCIAL PROMISSORY NOTE
$50,000 Dated: May 22, 2002
FOR VALUE RECEIVED, the undersigned, Tonga Capital Corporation, a
Colorado corporation (hereinafter "Maker"), promises to pay to Vaughn R. Junkeat
such other place as the Holder may designate in writing, the principal sum of
FIFTY THOUSAND DOLLARS ($50,000), together with interest at 4% thereon, due
December 31, 2004. During term of this note Maker shall pay $4.00 on each unit
sold from all inventory sales made to holder, monthly, as a credit against
principal and interest due. Maker shall account monthly to holder for all sales
by the 10th of the following month.
Maker has the right to prepay this Note in whole or in part at any time
during the term of this Note without premium or penalty.
In event Maker shall (i) default in the performance of any of the
obligations, covenants or agreements legally imposed by the terms of this Note,
or (ii) apply for or consent in writing to the appointment of a receiver,
trustee, or liquidator of Maker or (iii) file a voluntary petition in
bankruptcy, or admit in writing Maker's inability to pay Maker's debts as they
come due, or (iv) make general assignments for the benefit of creditors, or (v)
file a petition or answer seeking reorganization or rearrangement with creditors
or taking advantage of any insolvency law, or (vi) file an answer admitting the
material allegations of a petition filed against Maker in any bankruptcy,
reorganization, insolvency or similar proceedings, at the option of the Holder,
the whole indebtedness evidenced hereby may be declared due and payable
whereupon the entire unpaid principal balance of this Note and all interest
accrued thereon from last payment date @ 18% per annum shall thereupon at once
mature and become due and payable without presentment or demand for payment or
notice of the intent to exercise such option or notice of the exercise of such
option by the Holder, or notice of any kind, all of which are hereby expressly
waived by Maker and may be collected by suit or other legal proceedings.
If all or any part of the amount of this Note be declared due in
accordance with the other provisions hereof, or if any installment herein
provided is not paid when due, the principal balance as the case may be, shall
bear interest at the lesser of (i) eighteen percent (18%) per annum, or (ii) the
Maximum Rate allowed under applicable law until paid in full or until the Note
is reinstated. Notice of Default shall be given, in writing, to Maker, after
five days after occurrence of default. Maker shall have 10 days after written
Notice of Default, within which to cure the default plus interest at default
rate, legal fees and costs incurred.
Except as otherwise provided herein, the undersigned and all sureties,
guarantors and endorsers of this Note severally waive all notices, demands,
presentments for payment, notices of non-payment, notice of intention to
accelerate the maturity, notices of acceleration, notices of dishonor, protest
and notice of protest, diligence in collecting or bringing suit as to this Note
and as to each, every and all installments hereof and all obligations hereunder
and against any party hereto and to the application of any payment on this
obligation, or as an offset hereto, and agree to all extensions, renewals,
partial payments, substitutions or evidence of indebtedness and the taking,
release or substitution of all or any part of the security or the release of any
party liable hereon with or without notice before or after maturity.
Holder shall have the right, but not the obligation to convert this
note into common stock of the corporation from date hereto to date of payment @
the conversion price of $1.00 per share as shares are constituted on date of
conversion, by giving written notice to maker of conversion right exercise.
It is the intention of the parties hereto to comply with the usury laws
applicable to this loan if any, accordingly it is agreed that notwithstanding
any provision to the contrary in this Note or in any of the documents securing
payment hereof no such provision shall require the payment or permit the
collection of interest in excess of the maximum permitted by law. If any excess
of interest is provided for, contracted for, charged for or received, then the
provisions of this paragraph shall govern and control and neither the Maker
hereof nor any other party liable for the payment hereof shall be obligated to
pay the amount of such excess interest. Any such excess interest which may have
been collected shall be, at the Holder's option, either applied as a credit
against the then unpaid principal amount hereof or refunded to Maker. The
effective rate of interest shall be automatically subject to reduction to the
maximum lawful contract rate allowed under the usury laws as now or hereafter
construed. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged for, or received
under this Note which are made for the purposes of determining whether such rate
exceeds the maximum lawful rate, shall be made, to the extent permitted by law,
by amortizing, prorating, allocating and spreading in equal parts during the
full stated term of this Note, all interest contracted for, charged for or
received from the Maker or otherwise by the Note Holder.
In the event this Note is placed in the hands of an attorney for
collection (whether or not suit is filed), or in the event it is collected by
suit or through bankruptcy, probate, receivership or other legal proceedings
(including foreclosure), the undersigned hereby agrees to pay to the Holder as
attorney's fees a reasonable amount in addition to the principal and interest
then due hereon, and all other costs of collection.
This note is secured by a Pledge Agreement of the assets known as "Stud
Marker".
IN WITNESS WHEREOF, Maker has fully executed this Note as of the date
first above written.
Tonga Capital
a Colorado Corporation
Corporate Seal
by: /s/ Roger K. Juhnke
-------------------------------
President
Attest:
by: /s/ Roger K. Juhnke
-------------------------------
Secretary
EXHIBIT A
EQUIPMENT: ARBURG ALLROUNDER 221 MODEL # 221-258-75,
SERIAL # 78227
(28 ton, 230 volt, 1 oz. Injection molding machine) New 7/99
230 unit
(Non-Desiccant Dehumidifying Hopper Dryer for plastic pellets)
New 7/99
TAPE REEL PUNCHING MACHINE. 30 FOOT LONG AND CUSTOM MADE
PATENT: NUMBER 5,416,978
MOLDS: 7 RELATED INJECTION MOLDS
(Molds for internal casing, and interior catridge roller &
trigger)
INVENTORY: 8600 FINISHED STUD MARKER TAPES, BOXED ON OR HANG CARDS.
RAW MATERIALS: PLASTIC PELLETS, TAPE REELS, SHIPPING CONTAINERS AND BOXES.
(Misc. Parts)
Tonga will additionally pay the seller $75 per month for space rental.