EXHIBIT 10.17
PROMISSORY NOTE
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Principal Loan Date Maturity Loan No. Initials
$1,000,000.00 6/17/99 1/17/00 102
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References in the shaded areas are for Lender's use only and do not limit
applicability of this document to any particular loan or item.
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Borrower: ACE Motor Company Lender: AutoPrime, Inc.
(formerly known as Suburba 0000 Xxxxx Xxxxxx Xxxxxxx
Acquisition Company, Inc. Suite 100
d/b/a ACE Motor Co.) Xxxxxx, XX 00000-0000
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Principal Amount: $1,000,000 Initial Rate: 14.250% Note: 6/17/99
PROMISE TO PAY. ACE Motor Company (formerly known as Suburba Acquisition
Company, Inc. d/b/a ACE Motor Co.) ("Borrower") promises to pay AutoPrime, Inc.
("Lender"), or order, in lawful money of the United States of America, the
principal amount of One Million and 00/100 Dollars ($1,000,000.00) or so much as
may be outstanding together with interest on the unpaid outstanding principal
balance as advanced from time to time under this Note. Interest shall be
calculated from the date of each advance until repayment of each advance or
maturity, whichever occurs first.
CHOICE OF USURY CEILING AND INTEREST RATE. The interest rate on this note has
been implemented under the "Weekly Rate" as referred to in Section 303.201 of
the Texas Financial Code and Articles ID.002 and ID.003 of the Texas Credit
Title. The terms, included in the rate, or index, formula or provision of law
used to compute the rate on the Note, will be subject to revision as to current
and future balances, from time to time by notice from Lender in compliance with
Section 303.403 of the Texas Financial Code.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in one
payment of all outstanding principal plus all accrued unpaid interest on January
17, 2000. In addition, Borrower will pay regular monthly payments of accrued
unpaid interest beginning July 1, 1999, and all subsequent interest payments are
due on the same day of each month after that. Interest on this Note is computed
on a 365/365 simple interest basis; that is, by applying the ratio of the annual
interest rate over the number of days in a year, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges. Notwithstanding any other provision on this Note, Lender
will not charge interest on any undisbursed loan proceeds. No scheduled payment,
whether of principal or interest or both, will be due unless sufficient loan
funds have been disbursed by the scheduled payment date to justify the payment.
VARIABLE INTEREST RATE. The interest on this Note is subject to change from time
to time based on changes in an index known at the WALL STREET JOURNAL PRIME RATE
(the "Index"). The Index is not necessarily the lowest rate charged by Lender on
its loans and is set by Lender in its sole discretion. If the Index becomes
unavailable during the term of this loan, Lender may designate a substitute
index after notifying Borrower. Lender will tell Borrower the current Index rate
upon Borrower's request. Borrower understands that Lender may make loans based
on other rates as well. The interest rate change will not occur more often that
each day. The Index currently is 7.75% per annum. The interest rate to be
applied prior to maturity to the unpaid principal balance of this Note will be
at a rate of 6.5 percentage points over the Index, resulting in an initial rate
of 14.25% per annum. Notice: Under no circumstances will the interest rate on
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this Note be more than the maximum rate allowed by applicable law. For purposes
of this Note, the "maximum rate allowed by applicable law" means the lesser of
(a) the greater of the maximum rate of interest permitted under federal or other
law applicable to the indebtedness evidenced by this Note, or (b) the "Weekly
Rate" as referred to in Section 303.201 of the Texas Finance Code and Articles
ID.002 and ID.003 of the Texas Credit Title.
REPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower or Borrower's obligation to continue to make payments
of accrued unpaid interest. Rather, they will reduce the principal balance due.
POST MATURITY RATE. The Post Maturity Rate on this Note is the maximum rate
allowed by applicable law. Borrower will pay interest on all sums due after
final maturity, whether by acceleration or otherwise, at that rate, with the
exception of any amounts added to the principal balance of this Note based on
Lender's payment of insurance premiums, which will continue to accrue interest
at the pre-maturity rate.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due; (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender; (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents; (d) any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished; (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws; (f) any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest, including a garnishment of any of Borrower's accounts with Lender; (g)
any of the events described in this default section occurs with respect to any
general partner of Borrower or any guarantor of this Note; (h) a material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospects of payment or performance of the indebtedness is impaired; or (i)
Lender in good xxxxx xxxxx itself insecure. LENDER'S RIGHTS. Upon default,
Lender may declare the entire indebtedness, including the unpaid principal
balance on this Note, all accrued unpaid interest, and all other amounts, costs
and expenses for which Borrower is responsible under this Note or any other
agreement with Lender pertaining to this loan, immediately due, without notice,
and then Borrower will pay that amount. Lender may hire an attorney to help
collect this Note if Borrower does not pay, and Borrower will pay Lender's
reasonable attorney's fees. Borrower also will pay Lender (i) all other amounts
actually incurred by Lender as court costs, lawful fees for filing, recording,
or releasing to any public office any instrument securing this loan, (ii) the
reasonable cost actually expended for repossessing, storing, preparing for sale,
and selling any security and (iii) any fees for noting a lien on or transferring
a certificate to title to any motor vehicle offered as security for this loan,
or premiums or identifiable charges received in connection with the sale of
authorized insurance. This Note has been delivered to Lender and accepted by
Lender in the State of Texas. If there is a lawsuit, Borrower agrees upon
Lender's request to submit to the jurisdiction of the courts of Dallas County,
the State of Texas. This Note shall be governed by and construed in accordance
with the laws of the State of Texas and applicable Federal laws.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding, however, all XXX and Xxxxx accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
COLLATERAL. This Note is secured by a blanket lien on vehicle inventory.
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LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested orally by Borrower or as provided in this paragraph.
All oral requests shall be confirmed in writing on the day of the request. All
communications, instructions, or directions by telephone otherwise to Lender are
to be directed to Lender's office shown above. The following party or parties
are authorized as provided in this paragraph to request advances under the line
of credit until Lender receives from Borrower at Lender's address shown above
written notice of revocation of their authority: Xxxxxxx Xxxxxx, President.
ADVANCE REQUESTS CAN BE OBTAINED UPON NOTIFICATION IN WRITING TO LENDER.
Borrower agrees to be liable for all sums either: (a) advanced in accordance
with the instruction of an authorized person or (b) credited to any of
Borrower's accounts with Lender. The unpaid principal balance owing on this Note
at any time may be evidenced by endorsements on this Note or by Lender's
internal records including daily computer print-outs. Lender will have no
obligation to advance funds under this Note if: (a) Borrower or any guarantor is
in default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (b) Borrower or any guarantor ceases doing business or is
insolvent; (c) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor's guarantee of this Note or any other loan with
Lender; (d) Borrower has applied funds provided pursuant to the Note for
purposes other than those authorized by Lender; or (e) Lender in good xxxxx
xxxxx itself insecure under this Note or any other agreement between Lender and
Borrower. This revolving line of credit shall not be subject to Section 346 of
the Texas Financial Code.
DISHONORED CHECK CHARGE. In the event a check offered in full or partial payment
on this loan is returned unpaid, Lender may charge a fee for the purpose of
defraying the expense incident to handling such returned check, and Borrower
agrees to pay such fee. The fee shall not exceed the maximum amount permitted
under applicable law.
DOCUMENT REFERENCE. The REVOLVING CREDIT AGREEMENT FLOOR PLAN OF MOTOR VEHICLES
between Borrower and Lender is hereby referenced to and made a part of this
Promissory Note and related documents.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. If any part of this Note cannot be
enforced, this fact will not affect the rest of the note. In particular, this
section means (among other things) that Borrower does not agree to intend to
pay, and Lender does not agree or intend to contract for charge, collect, take,
reserve or receive (collectively referred to herein as "charge or collect", any
amount in the nature of interest or in the nature of a fee for this loan, which
would in any way or event (including demand, prepayment, or acceleration) cause
Lender to charge or collect more for this loan than the maximum Lender would be
permitted to charge or collect by federal law or the law of the State of Texas
(as applicable). Any such excessive interest or unauthorized feel shall, instead
of anything stated to the contrary, be applied first to reduce the principal
balance of this loan, and when that principal has been paid in full, be refunded
to Borrower. The right to accelerate maturity of sums due under this Note does
not include the right to accelerate any interest which has not otherwise accrued
on the date of such acceleration, and Lender does not intend to charge or
collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to Lender for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the loan evidenced by
this Note until payment in full so that the rate or amount of interest on
account of the loan evidenced hereby does not exceed the applicable usury
ceiling. Lender may delay or forego enforcing any of its rights or remedies
under this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest, notice of dishonor, notice of intent
to accelerate the maturity of this Note, and notice of acceleration of the
maturity of this Note. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
make, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any part, partner, or
guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral without the consent of or notice to anyone.
All such parties also agree that Lender may modify this loan without the consent
of or notice to anyone other than the party with whom the modification is made.
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RESTATEMENT OF PRIOR NOTE. This Note amends, restates, modifies, extends,
increases and replaces, but does not extinguish the indebtedness by, that
certain Promissory Note, dated October 26, 1998, in the original principal
amount of $750,000.00, executed by Borrower, payable to the order of Lender.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF
A COMPLETED COPY OF THE NOTE.
BORROWER:
ACE Motor Company
(formerly known as Suburba Acquisition Company, Inc. d/b/a ACE Motor Co.)
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
President
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