Document:

ex10-3.htm

Exhibit 10.3

 

THIS IS A BALLOON NOTE AND THE FINAL PRINCIPAL PAYMENT OR THE PRINCIPAL BALANCE DUE UPON MATURITY IS $26,129.69, TOGETHER WITH ACCRUED INTEREST, IF ANY, AND ALL ADVANCEMENTS MADE BY THE MAKER UNDER THE TERMS OF THIS INSTALLMENT PROMISSORY NOTE.

 

BALLOON INSTALLMENT PROMISSORY NOTE

	
$30,000.00

	
Tampa, Florida

	  	
October 26 , 2011

 

FOR VALUE RECEIVED, the undersigned K9 BYTES, INC., an Illinois corporation, ("Maker"), promises to pay to the order of K9 BYTES, INC., a Florida corporation, ("Holder") at 13383 Arbor Pointe Circle, #204, Tampa, FL 33617, or at such other office within the United States of America which Holder from time to time may designate in writing, the principal sum of Thirty Thousand and 00/100 ($30,000.00) Dollars, lawful money of the United States of America, together with interest at the rate of six (6.00%) percent per annum, as follows: The Maker shall make monthly payments to the Holder in the amount of $333.06, the first of which shall be due on or before
November 26, 2011, and continuing on or before the 26 day of each and every succeeding month thereafter until and including October 26 , 2014 at which time all amounts due hereunder shall be paid in full.

 

Maker shall have the privilege to prepay the indebtedness evidenced hereby, in whole or in part, without penalty. Any partial prepayment shall not postpone the due date of any subsequent monthly installment. Prepayments shall not affect or vary the duty of Maker to make all payments when due, nor shall such prepayments affect or impair the rights of Holder to pursue all remedies available to Holder hereunder.

 

If the Payee has not received the full amount of any installment by the end often (10) calendar days after the date it is due, Makers will pay a late charge of five (5%) percent of the overdue installment

 

It is agreed by Maker that time is of the essence of this obligation and should any amount of principal and/or interest not be paid for a period of thirty (30) days from the date the same shall be due, the entire unpaid principal sum evidenced by this Note, together with all accrued interest thereon shall, at the option of Holder, become due and payable and may be collected forthwith. It is further agreed that the failure of Holder to exercise this right of accelerating the maturity of the debt, or any indulgence granted from time to time, shall in no event be considered as a waiver of such right of acceleration or estop Holder from exercising such right.

 

Payment of this Note is secured by a Stock Pledge Agreement of even date herewith from Epazz, Inc. to Holder, as Secured Party (the "Stock Pledge Agreement"). Reference is hereby made to the Stock Pledge Agreement for a description of events of default and rights of acceleration of the maturity date in the event of default. It is expressly agreed that all of the covenants, conditions and agreements of Epazz, Inc. under the Stock Pledge Agreement are made a part of this Note and shall be included in the interpretation of this Note. Upon the occurrence of certain conditions specified in the Stock Pledge Agreement or this Note, the entire unpaid principal balance of this obligation, together with accrued interest,
may become due and payable prior to the maturity date stated in this Note.

 

  

  

  

This Balloon Installment Promissory Note and Stock Pledge Agreement are subordinate and inferior to the loan by and between K9 BYTES, INC., an Illinois corporation and NEWTEK SMALL BUSINESS FINANCE, INC. dated even date hereof, in the original principal amount of $175,000.00, and is subject to the Standby Agreement of even date herewith, which is incorporated herein by reference.

 

Nothing herein contained nor any transaction related hereto shall be construed or shall operate so as to require Maker or any person liable for the repayment hereof to pay interest in an amount or at a rate greater than the maximum allowed, from time to time, by applicable laws, if any. Should any interest or other charges paid by Maker or any party liable for any payment of the indebtedness evidenced hereby result in a computation or earning of interest in excess of the maximum legal rate of interest permitted under applicable law in effect while such interest is being earned, then any and all of that excess shall be and is hereby waived by Holder of this Note and all of that excess shall be automatically
credited against and in reduction of the principal balance, and any portion of the excess that exceeds the principal balance shall be paid by Holder to Maker or to any party liable for the payment of the indebtedness evidenced by this Note, as applicable, it being the intent of the parties hereto that under no circumstances shall Maker or any party liable for the payment of the indebtedness evidenced hereby be required to pay interest in excess of the maximum rate allowed by the applicable laws, if any. The provisions of this Note and the Stock Pledge Agreement are hereby modified to the extent necessary to conform with the limitations and provisions of this paragraph, and this paragraph shall govern over all other provisions in any document or agreement now or hereafter existing. This paragraph shall never be superseded or waived unless there is a written document executed by Holder of
this Note and Maker, expressly declaring the usury limitation of this Note to be null and void, and no other method or language shall be affected to supersede or waive this paragraph.

 

All parties hereto waive protest and agree that, in the event a default occurs and this Note is placed in the hands of an attorney for collection, Maker will pay all costs incurred including any reasonable attorneys and paralegal fees. The words "any party hereto" or "all parties hereto" shall, in addition to the undersigned, include endorsers, sureties and guarantors of this Note, and the word "undersigned" shall include the singular as well as the plural number.

 

THIS IS A BALLOON NOTE AND THE FINAL PRINCIPAL PAYMENT OR THE PRINCIPAL BALANCE DUE UPON MATURITY IS $26,129.69, TOGETHER WITH ACCRUED INTEREST, IF ANY, AND ALL ADVANCEMENTS MADE BY THE MAKER UNDER THE TERMS OF THIS INSTALLMENT PROMISSORY NOTE.

 

Executed on the date written above.

 

	
Maker's Address:

	
"MAKER"

	 	 
	
309 West Washington Street

	
K9 BYTES, INC., an Illinois corporation

	
Suite 1225

Chicago, IL 60606

	  
	  	BY: /s/ Shaun Passley
	  	SHAUN PASSLEY, Presidentex10-4.htm

Exhibit 10.4

Loan #47782

 

 

 

U.S. Small Business Administration

 

note

 

	

SBA Loan #

	

PLP 49267850-04

	

SBA Loan Name

	

K9 Bytes, inc.

	

Date

	

October                    ,2011

	

Loan Amount

	

$235,000,00

	

Interest Rate

	

WSJ Prime + 2.75% Variable Rate

	

Borrower

	

Epazz, Inc. & K9 Bytes, Inc.

	

Operating Company

	

N/A

	

Lender

	

Newtek Small Business Finance, Inc.

 

1.     PROMISE TO PAY:

 

In return for the Loan, Borrower promises to pay to the order of Lender the amount of Two Hundred Thirty-Five Thousand Dollars and. No Cents ($235,000.00), interest on the unpaid principal balance, and all other amounts required by this Note.

 

2.     DEFINITIONS:

 

"Collateral" means any property taken as security for payment of this Note or any guarantee of this Note.

"Guarantor" means each person or entity that signs a guarantee of payment of this Note.

"Loan" means the loan evidenced by this Note.

"L,oan Documents" means the documents related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.

"SBA" means the Small Business Administration, an Agency of the United States of America.

 

  

  

  

 

Loan #47782 

3.   PAYMENT TERMS:

 

Borrower must make all payments at the place Lender designates. The payment terms for this Note are:

 

NOTE TERMS:

 

The interest rate on this Note will fluctuate. The initial interest rate is 6.00% per year. This initial rate is the prime rate in effect on the first business day of the month in which SBA received the loan application, plus 2.75%. The initial interest rate must remain in effect until the first change period begins unless reduced in accordance with. SOP 50 10,

 

Borrower must pay one payment of interest only on the disbursed principal balance one month from the month this Note is dated; payment must be made on the first calendar day in the month it is due.

 

Borrower must pay principal and interest payments of $2,608.98 every month, beginning two months from the month this Note is dated; payments must be made on the first calendar day in the months they are due.

 

Lender will apply each installment payment first to pay interest accrued to the day Lender receives the payment, then to bring principal current, then to pay any late fees, and will apply any remaining balance to reduce principal.

 

The interest rate will be adjusted every calendar quarter (the "change period").

 

The "Prime Rate" is the prime rate in effect on the first business day of the month, (as published in a national financial newspaper or website) in which SBA received the application, or any interest rate change occurs. Base Rates will be rounded to two decimal places with .004 being rounded down and .005 being rounded up.

 

The adjusted interest rate will be 2.75% above the Prime Rate. Lender will adjust the interest rate on the first calendar day of each change period. The change in interest rate is effective on that day whether or not Lender gives Borrower notice of the change.

 

The spread as identified in the Note may not be changed during the life of the Loan without the written agreement of the Borrower.

 

For variable rate loans, the interest rate adjustment period may not be changed without the written consent of the Borrower.

 

Lender must adjust the payment amount at least annually as needed to amortize principal over the remaining term of the note.

 

If SBA purchases the guaranteed portion of the unpaid principal balance, the interest rate becomes fixed at the rate in effect at the time of the earliest uncured payment default. If there is no uncured payment default, the rate becomes fixed at the rate in effect at the time of purchase.

 

Loan Prepayment:

 

Notwithstanding any provision in this Note to the contrary:

 

Borrower may prepay this Note. Borrower may prepay 20% or less of the unpaid principal balance at any time without notice. If Borrower prepays more than 20% and the Loan has been sold on the secondaiy market, Borrower must: (a) Give Lender written notice; (b) Pay all accrued interest; and (c) If the prepayment is received less than 21 days from the date Lender receives the notice, pay an amount equal to 21 days' interest from the date lender receives the notice, less any interest accrued during the 21 days and paid under subparagraph b., above.

 

If Borrower does not prepay within 30 days from, the date Lender receives the notice, Borrower must give Lender a new notice.

 

All remaining principal and accrued interest is due and payable 10 years from date of Note.

 

Late Charge: If a payment on this Note is more than 10 days late, Lender may charge Borrower a late fee of up to 5.00% of the unpaid portion of the regularly scheduled payment. 

  

  

  

Loan #47782

 

4.     DEFAULT:

 

Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower or Operating Company:

 

A. Fails to do anything required by this Note and other Loan Documents;

B. Defaults on any other loan with Lender;

C. Does not preserve, or account to Lender's satisfaction for, any of the Collateral or its proceeds;

D. Does not disclose, or anyone acting on their behalf does not disclose, any material fact to Lender or SB A;

	
E.

	
Makes, or anyone acting on their behalf makes, a materially false or misleading representation to Lender or SBA;

	
F.

	
Defaults on any loan or agreement with another creditor, if Lender believes the default may materially affect Borrower's ability to pay this Note;

G. Fails to pay any taxes when due;

H. Becomes the subject of a proceeding under any bankruptcy or insolvency law;

I. Has a receiver or liquidator appointed for any part of their business or property;

J. Makes an assignment for the benefit of creditors;

K. Has any adverse change in financial condition or business operation that Lender believes may materially affect Borrower's ability to pay this Note; 

L. Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without Lender's prior written consent; or 

M. Becomes the subject of a civil or criminal action that Lender believes may materially affect Borrower's ability to pay this Note.

 

5.     LENDER'S RIGHTS IF THERE IS A DEFAULT:

 

Without notice or demand and without giving up any of its rights, Lender may:

 

	
A.

	
Require immediate payment of all amounts owing under this Note;

	
B.

	
Collect all amounts owing from any Borrower or Guarantor;

	
C.

	
File suit and obtain judgment;

	
D.

	
Take possession of any Collateral; or

	
E.

	
Sell, iease, or otherwise dispose of, any Collateral at public or private sale, with or without advertisement.

 

  

  

  

Loan #47782 

 

 

6.   LENDER'S GENERAL POWERS:

 

Without notice and without Borrower's consent, Lender may:

 

A. Bid on or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses;

	
B.

	
Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may include payments for property taxes, prior liens, insurance, appraisals, environmental remediation costs, and reasonable attorney's fees and costs. If Lender incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal balance;

C. Release anyone obligated to pay this Note;

D. Compromise, release, renew, extend or substitute any of the Collateral; and

E. Take any action necessary to protect the Collateral, or collect amounts owing on this Note.

 

7. WHEN FEDERAL LAW APPLIES:

 

When. SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or Socal control, penalty, tax. or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.

 

8.     SUCCESSORS AND ASSIGNS:

 

Under this Note, Borrower and Operating Company include the successors of each, and Lender includes its successors and assigns.

 

9.     GENERAL PROVISIONS:

 

A. All individuals and entities signing this Note are jointly and severally liable.

B. Borrower waives ail suretyship defenses.

	
C.

	
Borrower must sign all documents necessary at any time to comply with the Loan. Documents and to enable Lender to acquire, perfect, or maintain Lender's liens on Collateral.

	
D.

	
Lender may exercise any of its rights separately or together, as many times and in any order it chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.

E.  Borrower may not use an oral statement of Lender or SBA to contradict or alter the written terms of this Note.

F. If any part of this Note is unenforceable, all other parts remain in effect.

	
G.

	
To the extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses based upon any claim that Lender did not obtain any guarantee; did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market value of Collateral at a sale.

  

  

  

 

Loan #47782 

 

10.    STATE-SPECIFIC PROVISIONS:

 

NONE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

Loan #47782 

 

11.   BORROWER'S NAME(S) AND SIGNATURE(S):

 

By signing below, each individual or entity becomes obligated under this Note as Borrower,

 

	
WITNESS/ATTEST

	
BORROWER:

	 	 
	  	Epazz, Inc.. (Seal)
	 	 
	  	
Shaun A. Passley, President

	 	 
	  	
K9 Bytes, Inc.

	 	 
	  	(Seal)
	  	
Shaun A. Passley, President

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