Exhibit 10.7.10
THIS UNSECURED PROMISSORY NOTE ("THE NOTE") HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR UNDER ANY APPLICABLE STATE LAW. THIS NOTE MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW, OR (2) AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT REQUIRED.
UNSECURED PROMISSORY NOTE
$300,000.00 May 23, 2006
FOR VALUE RECEIVED, Tradestar Services, Inc., a Nevada corporation
having an address of 3451 Candelaria, NE, Suite A, Albuquerque, New Mexico 87107
(the "Corporation"), hereby promises to pay to the order of Clarence Downs,
having an address of 3451 Candelaria, NE, Suite A, Albuquerque, New Mexico 87107
("Holder"), the principal sum of THREE HUNDRED THOUSAND DOLLARS ($300,000.00)
(the "Principal Amount") together with interest thereon in cash or currency of
the United States of America on the following basis: (i) the Corporation will
pay the interest earned on the Principal Amount monthly commencing July 1, 2006,
and on the first day of each succeeding month thereafter and (ii)
notwithstanding the prior clauses, the Corporation will pay the entire Principal
Amount and interest accrued thereon no later than 12 months from the issuance
date of this Note (the earlier of such date of subclause (i) and (ii) is the
"Maturity Date").
1. Interest and Principal Payments. The unpaid principal amount of this
Note shall bear interest from the date hereof at a fixed rate per annum prior to
the date this Note is paid in full equal to the lesser of (x) the maximum rate
permitted by applicable law, or (y) 10% per annum. At the election of the
Corporation, unpaid principal and any accrued interest thereon may be paid by
the Corporation to Holder at any time prior to the Maturity Date, in whole or in
part, without penalty or premium. Interest will be computed on the outstanding
daily principal balance for the actual number of days that such amount is
outstanding hereunder based on a 365-day year.
2. Mergers and Sales of Assets by the Corporation. The Corporation may not
consolidate or merge with or into any other entity ("Person") or directly, or
indirectly, convey, transfer, sell, lease or otherwise dispose of its properties
and assets substantially as an entirety to any Person, and the Corporation may
not permit any Person to consolidate or merge with or into the Corporation or
convey transfer, sell, lease or otherwise dispose of such Person's properties
and assets substantially as an entirety to the Corporation, unless:
(a) Assumption of Obligation under this Note. The Holder of the Note
shall consent in writing (which consent cannot be unreasonable withheld)
and the Person formed by such consolidation or into or with which the
Corporation is merged or the Person to which the properties and assets of
the Corporation are so conveyed, transferred, sold, leased or otherwise
disposed of is a corporation, limited liability corporation, partnership or
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trust organized and existing under the laws of the United States, any state
thereof or the District of Columbia and has expressly assumed the due and
punctual payment of the principal of, premium, if any, and interest on this
Note and the performance of the other covenants of the Corporation under
this Note;
(b) No Event of Default. Immediately after giving effect to such
transaction, no Event of Default, as defined below, and no event which,
after notice or lapse of time or both, would become an Event of Default,
shall have occurred and be continuing; and
(c) Compliance Certificate or Opinion. The Corporation has provided to
the Holder an officer's certificate or an opinion of counsel stating that
the Corporation is in compliance with (a) and (b) above.
3. Representations and Warranties. The Corporation represents and warrants
to Holder that:
(a) Organization, Qualification, Standing. The Corporation is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, has the corporate power to own its properties
and to carry on its businesses as the same are now being conducted and is
duly qualified to do business and is in good standing in each jurisdiction
in which the character of the properties owned by it or the nature of its
businesses makes such qualification necessary.
(b) Litigation. There is no action, suit or proceeding at law or in
equity or by or before any governmental instrumentality or agency or any
arbitrator now pending or, to the Corporation's knowledge, threatened,
against, or affecting the Corporation, or any of its properties or rights,
which, if adversely determined, might, either in any case or in the
aggregate result in a material adverse change, or result in any substantial
liability not adequately covered by insurance, or for which adequate
reserves are not maintained on the Corporation's balance sheet.
(c) Due Authorization and Compliance with Other Instruments. This Note
has been duly and validly authorized by all requisite corporate proceeding
and constitutes a valid and legally binding obligation of the Corporation
enforceable against the Corporation in accordance with its terms except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium, or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that availability
of equitable remedies are subject to the discretion of courts before which
any proceeding therefor may be brought.
(d) Tax Returns and Payments. The Corporation has filed all required
information and tax returns and reports and has paid, or adequately
provided for the payment of, all taxes, assessments and other governmental
charges that are material in amount imposed upon it or upon any of its
assets, income or franchises, other than any such charges which are
currently payable without penalty or interest.
4. Holder Representations.
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(a) Investment Purposes. The Holder is acquiring the Note for
investment purposes and not with a view to the resale or distribution of
all or any part thereof. The Holder acknowledges that the Note has not been
registered under the Securities Act, or the securities or "blue sky" laws
of any state or other domestic or foreign jurisdiction, and that none of
such securities may be sold, transferred or otherwise disposed of except
pursuant to an effective registration statement thereunder or an applicable
exemption therefrom.
(b) Accredited Investor. The Holder (i) has such knowledge and
experience in financial and business matters that such Holder is capable of
evaluating the merits and risks of his or her investment in the Note and
has the financial ability to assume the monetary risk associated therewith;
(ii) is able to bear the complete loss of his or her investment in the
Note; (iii) has received such documents and information from the
Corporation as such Holder has requested, has had the opportunity to ask
questions of and receive answers from the Corporation concerning the terms
and conditions of the offering and has had the opportunity to obtain
additional information; (iv) is an "accredited investor" as defined in Rule
501(a) of Regulation D promulgated under the Securities Act; and (v) is not
relying upon any statements or instruments made or issued by any person
other than the Corporation in making a decision to invest in the Note.
5. Events of Default. The following will be "Events of Default" under this
Note:
(a) failure to pay the principal amount of this Note when and as the
same shall become due and payable, either at maturity or by acceleration or
otherwise and such failure shall continue uncured for a period of ten (10)
days after written notice from the Holder of such failure;
(b) failure to pay any interest on this Note when due when the same
becomes due and payable and such failure shall continue uncured for a
period of ten (10) days after written notice from the Holder of such
failure;
(c) failure to perform any other covenant of the Corporation in this
Note, continuing for a period of thirty (30) days after written notice from
the Holder of such failure;
(d) default shall be made if a material breach shall exist in any
representation or warranty herein contained, and such default or material
breach shall have continued for a period of 30 days after written notice
thereof to the Corporation from the Holder; provided, however, that if any
such default or material breach shall be such that it cannot be cured or
corrected within such 30-day period, such period shall be extended for such
additional period of time (not exceeding 30 additional days) as shall be
necessary to effect such cure or correction if curative or corrective
action is instituted within said 30-day period and thereafter diligently
pursued;
(e) final unsatisfied judgments not covered by insurance aggregating
in excess of $250,000, at any one time rendered against the Corporation or
any of its subsidiaries and not stayed, bonded or discharged within 30
days, or
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(f) if the Corporation (i) applies for or consents to the appointment
of, or if there shall be a taking of possession by, a receiver, custodian,
trustee or liquidator for the Corporation or any of its properties; (ii)
becomes generally unable to pay its debts as they become due; (iii) makes a
general assignment for the benefit of creditors or becomes insolvent; or
(iv) files any petition for relief under the United States Bankruptcy Code
or any similar federal or state statute, or is served with a petition for
relief under any such statute and such petition is not dismissed within 60
days of filing.
At any time after a declaration of acceleration has been made but before a
judgment or decree based on acceleration, the holder of the Note may
rescind and annul such acceleration, if all Events of Default, other than
the nonpayment of accelerated principal and interest, have been cured or
waived as provided in this Note.
6. Notices. Any notice, demand or other communication required or permitted
to be given to the Corporation or the Holder shall be in writing and shall be:
(a) Hand Delivery. Personally delivered to the Corporation or the
Holder or any director or officer of the Corporation or the Holder;
(b) Delivery by Mail. Except during a period of strike, lock-out or
other postal disruption, sent by registered mail, postage prepaid to the
address of the Corporation or the Holder as set forth on the first page
hereof; or
(c) Telecopier. Sent by telegraph, telecopier or telex or similar
communication tested prior to sending and confirmed by prepaid registered
or certified mail to the address of the Corporation or the Holder as set
forth on the first page hereof; and, in each case described above, shall be
deemed to have been received by the Corporation or the Holder on the
earliest of: the date of delivery under subsection (a); the actual date of
receipt where mailed under subsection (b); and the day following the date
of communication under subsection (c) unless delivered by certified mail,
in which case the actual date of receipt shall apply. The Corporation or
the Holder may give written notice to the other of a change of address to
some other address, in which event any communication shall thereafter be
given to the Corporation or the Holder as hereinbefore provided, at the
last such changed address of which the Corporation or the Holder
communicating has received written notice.
7. Attorneys' Fees. Should the indebtedness represented by this Note or any
part thereof be collected at law or in equity, or in bankruptcy, receivership or
any other court proceedings (whether at the trial or appellate level), or should
this Note be placed in the hands of attorneys for collection upon the occurrence
of an Event of Default, the Corporation agrees to pay, in addition to the
principal and interest due and payable hereon, all costs of collection,
including reasonable attorneys' fees.
8. Non-Transferable Note. This Note is not transferable in any manner, in
whole or in part, without the prior written consent of the Corporation, except
by operation of law.
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9. Waiver. Prior to the transfer of this Note, the Corporation may deem and
treat the Holder hereof as the absolute owner hereof (whether or not this Note
shall be overdue) for the purpose of receiving payment of or on account of the
principal hereof and interest hereon, and for all other purposes, and the
Corporation shall not be affected by any Notice to the contrary.
Except as expressly provided for herein, the Corporation hereby waives
presentment, demand, Notice of demand, Notice of intent to accelerate, notice of
acceleration, protest, notice of protest and Notice of dishonor and any other
Notice required to be given by law in connection with the delivery, acceptance,
performance, default or enforcement.
10. Savings Clause. In the event for any reason, any payment by or act of
the Corporation or the Holder shall result in payment of interest which would
exceed the limit authorized by or be in violation of the law of the jurisdiction
applicable to this Note, then ipso facto the obligation of the Corporation to
pay interest or perform such act or requirement shall be reduced to the limit
authorized under such law, so that in no event shall the Corporation be
obligated to pay any such interest, perform any such act or be bound by any
requirement which would result in the payment of interest in excess of the limit
so authorized. In the event any payment by or act of the Corporation shall
result in the extraction of a rate of interest in excess of a sum which is
lawfully collectible as interest, then such amount (to the extent of such excess
not returned to the Corporation) shall, without further agreement or notice
between or by the Corporation or the Holder, be deemed applied to the payment of
principal, if any, hereunder immediately upon receipt of such excess funds by
the Holder, with the same force and effect as though the Corporation had
specifically designated such sums to be so applied to principal and the Holder
had agreed to accept such sums as an interest-free prepayment of this Note. If
any part of such excess remains after the principal has been paid in full,
whether by the provisions of the preceding sentences of this Section 12 or
otherwise, such excess shall be deemed to be an interest- free loan from the
Corporation to the Holder, which loan shall be payable immediately upon demand
by the Corporation. The provisions of this Section 12 shall control every other
provision of this Note.
11. Recourse. No recourse shall be had for the payment of the principal of
or the interest on this Note, against any agent, incorporator, stockholder,
officer or director, as such, past, present or future, of the Corporation, all
such liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released. The preceding sentence
shall not be deemed to apply to any person's liability arising out of or related
to any conversion of the Corporation's assets or properties, breach of fiduciary
duty owed to the Corporation or fraud perpetrated on the Corporation or its
stockholders.
12. Governing Law. This Note and the rights, remedies, powers, covenants,
duties and obligations of the parties hereunder will be construed in accordance
with and governed by the laws of the state of Texas.
13. Severability. If any provision of this Note is or becomes invalid,
illegal or unenforceable in any respect, that fact will not affect the validity,
legality or enforceability of the remaining provisions of this Note or any
valid, legal or enforceable parts of the impugned provision.
14. Binding on Successors. This Note will inure to the benefit of and be
binding upon the Corporation and the Holder and their respective heirs,
executors, administrators, successors and permitted assigns.
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15. Amendment and Waiver. This Note may not be amended, waived, discharged
or terminated except by a document executed by the party against whom
enforcement of the amendment, waiver, discharge or termination is sought.
16. Entire Agreement. This Note, and the documents referred to herein, set
out the entire agreement and understanding of the Corporation and the Holder and
supersedes all prior agreements, undertakings and understandings, whether oral
or written, relative thereto.
17. Assumption and Novation. This Note is an assumption and novation of
that certain Secured Promissory Note dated as of July 28, 2005, by Tradestar
Construction Services, Inc., a New Mexico corporation, in favor of Clarence
Downs, in the original principal amount of THREE HUNDRED THOUSAND DOLLARS
($300,000.00).
IN WITNESS WHEREOF, Tradestar Services, Inc. has caused this Note to be
signed by its duly authorized officer on the date first above written.
Tradestar Services, Inc.,
a Nevada corporation
By: /s/ Frederick A. Huttner
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Name: Frederick A. Huttner
Title: Chief Financial Officer
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