$_______________ _______________, 2001
UNSECURED PROMISSORY NOTE
FOR VALUE RECEIVED, ______________________, a Utah corporation and
wholly owned subsidiary of Dynatec International, Inc. (the "Borrower"),
promises to Sarkat International, L.L.C., a Utah limited liability company (the
"Lender"), as follows:
1. Principal and Interest. Borrower promises to pay to Lender or its
order at1455 West 00000 Xxxxx, Xxxxx Xxxxxx, Xxxx, in lawful money of the United
States of America, the principal sum of ___________________________ Dollars
($________________) together with simple interest on the unpaid principal
balance thereon from the date hereof up to and including the Maturity Date (as
defined below) at the rate of eight and one/half percent (8.5%) per annum and
the Lender's Premium (as defined below).
2. Nature of Indebtedness. This Promissory Note (the "Note") is for
payment of cash advanced by Lender to Borrower (the "Loan") exclusively to
enable Borrower to purchase from the manufacturer thereof certain inventory
identified on Exhibit A attached hereto (the "Inventory"). The advance of the
borrowed funds shall be accomplished by direct payment, via wire transfer, by
Lender to the manufacturer identified on Exhibit A attached hereto, and
according to the wire transfer instructions set forth thereon. As an inducement
to Lender to make the Loan, in addition to the payment of interest on the
outstanding principal balance as set forth above, Borrower shall pay Lender, on
or before the Maturity Date, twelve and one-half percent (12.5%) of the
principal amount of this Note (the "Lender's Premium"). No part of the proceeds
of this Note shall be or have been used for personal, family, household, or
consumer purposes.
3. Identification of Purchasers of Inventory. Concurrent with
Xxxxxxxx's shipment of any orders for the Inventory, Borrower shall provide to
Lender a copy of Borrower's invoice (an "Invoice") for each purchaser of such
Inventory, which Invoice shall include the customer's name, address, detailed
list of the items from the Inventory to be purchased, and total amount due
Borrower under such Invoice.
4. Consent of Secured Lender. As a condition precedent to Xxxxxx's
advancement of the principal amount of this Note and Xxxxxxxx's obligations
under this Note, Borrower shall provide written consent in form satisfactory to
Borrower and its counsel, from Xxxxx Fargo Business Credit, Inc. ("Xxxxx
Fargo"), acknowledging that Lender is extending the Loan, and acknowledging and,
to the extent necessary, consenting to the Loan and the granting by Borrower of
a purchase money security interest in the Inventory, and waiving or
subordinating any interest of Xxxxx Fargo Business Credit, Inc. in or to the
Inventory and the proceeds thereof.
5. Repayment. Unless paid in full pursuant to the terms of this Note on
an earlier date, the entire unpaid principal balance and accrued and unpaid
interest shall be due and payable in full one hundred eighty (180) days from the
date hereof (the "Maturity Date"). Prior to the Maturity Date, Borrower shall
pay outstanding principal, accrued interest and the Lender's Premium during the
term of this Note as follows: Within three business (3) days after Xxxxxxxx's
receipt of any advance of loan funds from Xxxxx Fargo made possible by any
increase in Borrower's borrowing availability from Xxxxx Fargo as a result of
the expansion of Borrower's accounts receivable from sales of the Inventory,
Borrower shall pay to Lender out of such loan advance amount the full amount of
the principal and accrued interest under this Note, and the Lender's Premium,
provided there are sufficient loan advance funds to do so.
6. Events of Default. An Event of Default shall occur if any of the
following events shall occur:
a. Failure to pay Lender, in accordance with Section 5, after
Xxxxxxxx's receipt of and loan advance funds from Xxxxx Fargo if such loan
advance funds are attributable to an increase in Borrower's borrowing
availability resulting from sales of the Inventory;
b. Failure to pay Lender the outstanding principal balance, accrued
interest thereon, and all Lender's Premiums on or before the Maturity Date;
c. Filing by Borrower of a voluntary petition in bankruptcy or a
voluntary petition seeking reorganization, adjustment, readjustment of debts or
any other relief under the Bankruptcy Code as amended or any insolvency act or
law, state or federal, now or hereafter existing;
d. Filing of an involuntary petition against Borrower in bankruptcy
or seeking reorganization, arrangement, readjustment of debts or any other
relief under the Bankruptcy Code as amended or under any other insolvency act or
law, state or federal, now or hereafter existing, and the continuance thereof
for sixty (60) days undismissed, unbonded, or undischarged;
e. All or any substantial part of the property of Borrower shall be
condemned, seized or otherwise appropriated or custody or control of such
property shall be assumed by any governmental agency or any court of competent
jurisdiction and shall be retained for a period of thirty (30) days; or
f. There is a material default in any term, condition, or covenant
hereof, or the Security Agreement executed by the parties in connection
herewith.
7. Remedies. Upon default by Borrower as defined above and if Borrower
fails to cure such default within fifteen (15) business days after written
notice thereof from Lender, Xxxxxx may declare the entire unpaid balance
(including any Lender's Premium arising from sales for which Borrower has
received payment in full), to be immediately due and payable without
presentment, demand, protest or other notice of any kind. To the extent
permitted by law, Borrower waives any rights to presentment, demand, protest, or
notice of any kind in connection with this Note. No failure or delay on the part
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of Lender in exercising any right, power, or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power,
or privilege provided at law, in equity, or by contract. The rights and remedies
provided herein are cumulative and not exclusive of any other rights or
remedies. Xxxxxxxx agrees to pay all costs of collection incurred by reason of
the default, including court costs, and reasonable attorney's fees, including
such expenses incurred before legal action or bankruptcy proceedings, during the
pendency thereof, and continuing to all such expenses in connection with appeals
to high courts arising out of matters associated herewith.
8. Waivers. Borrower and any other person who have obligations under
this Note waive the rights of presentment, notice of dishonor, notice of protest
and notices of every other kind and nature. Xxxxxxxx also waives any defense
based upon an election of remedies.
9. General Provisions. This Note shall be binding upon Borrower, its
successors and assigns. Nothing set forth herein or in any instrument, agreement
or writing made or given in connection herewith shall create an agency or
partnership relationship between Borrower and Lender. Time is of the essence
hereof.
10. Governing Law; Jurisdiction; Venue. This Note and all acts and
transactions hereunder and all rights and obligations of Xxxxxx and Borrower
shall be governed by, and construed in accordance with, the laws of the State of
Utah, without regard to its conflict of laws principles. Any undefined term used
in this Note that is defined in the Utah Uniform Commercial Code shall have the
meaning assigned to that term in the Utah Uniform Commercial Code. As a material
part of the consideration to Lender to enter into this Note, Borrower (i) agrees
that all actions and proceedings relating directly or indirectly hereto shall at
Lender's option, be litigated in courts located within Utah, and that the
exclusive venue therefor shall be, at Lender's option, Salt Lake County; (ii)
consents to the jurisdiction and venue of any such court and consents to service
of process in any such action or proceeding by persona delivery of any other
method permitted by law; and (iii) waives any and all rights Borrower may have
to object to the jurisdiction of any such court, or to transfer or change the
venue of any such action or proceeding.
11. Usury. Xxxxxxxx acknowledges and agrees that the agreement to pay
to Xxxxxx the Lender's Premium is not usurious under Utah law.
12. Entire Agreement in Writing. This written agreement, and any other
documents executed in connection herewith, are the final expression of the
agreement and understanding of Xxxxxxxx and Xxxxxx with respect to the general
subject matter hereof and supersede any previous understanding, negotiations or
discussions, whether written or oral. This written agreement, and any other
documents executed in connection herewith, may not be contradicted by evidence
of any alleged oral agreement.
[REMAINDER OF XXXX INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE FOLLOWS IMMEDIATELY]
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DATED as of the date first above written.
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a Utah corporation
By:
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Its:
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EXHIBIT A
Inventory
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Name and Address of Manufacturer
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Wire Transfer Instructions for Manufacturer
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