PROMISSORY NOTE
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Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$440,000.00 06-30-1997 07-01-2007 07 66 JTL
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References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
Borrower: Xxxxx Engines & Competition Components, Inc. Lender: Century Bank
(TIN: 00-0000000) 0000 Xxxx Xxxx Xxxxxx Xxxxx X000
0000 Xxxxx Xxxxxx Xxxx XX XXX 0000
Xxxxx, XX 00000-1856 Carefree, AZ 85377
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Principal Amount: $440,000.00 Initial Rate: 9.500% Date of Note: June 30, 1997
PROMISE TO PAY. Xxxxx Engines & Competition Components, Inc. ("Borrower")
promises to pay to CENTURY BANK ("Lender"), or order, in lawful money of the
United States of America, the principal amount of Four Hundred Forty Thousand &
00/100 Dollars ($440,000.00), together with interest on the unpaid principal
balance from June 30, 1997, until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in 119 regular payments of $4,101.00 each and one
irregular last payment estimated at $330,726.71. Xxxxxxxx's first payment is due
August 1, 1997, and all subsequent payments are due on the same day of each
month after that. Xxxxxxxx's final payment due July 1, 2007, will be for all
principal and all accrued interest not yet paid. Payments include principal and
interest. Interest on this Note is computed on a 365/360 simple interest basis;
that is, by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender at
Xxxxxx'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 any unpaid collection costs and any late charges, then to any
unpaid interest, and any remaining amount to principal.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the Wall Street
Journal Prime Rate (the "Index"). The Index is not necessarily the lowest rate
charged by Lender on its loans. If the Index becomes unavailable during the term
of this loan, Xxxxxx may designate s substitute index after notice to Xxxxxxxx.
Lender will tell Borrower the current Index rate upon Xxxxxxxx's request.
Borrower understands that Lender may make loans based on other rates as well.
The interest rate change will not occur more often than each daily. The Index
currently is 8.500% per annum. The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of 1.000 percentage point over
the Index, resulting in an initial rate of 9.500% per annum. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law. Whenever increases occur in the interest rate,
Lender, at its option, may do one or more of the following: (a) increase
Borrower's payments to insure Borrower's loan will pay off by its original final
maturity date, (b) increase Borrower's payments to cover accruing interest, (c)
increase the number of Borrower's payments and (d) continue Borrower's payments
at the same amount and increase Borrower's final payment.
PREPAYMENT; MINIMUM INTEREST CHARGE. Xxxxxxxxx agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that Lender is entitled to a
minimum interest charge of $100.00 other than Borrower's obligation to pay any
minimum interest charge, 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 Xxxxxx in writing, relieve Xxxxxxxx of Xxxxxxxx's obligation to continue
to make payments under the payment schedule. Rather, they will reduce the
principal balance due and may result in Borrower making fewer payments.
LATE CHARGE. If payment is 10 days or more late, Borrower will be charged 5.000%
of the regularly scheduled payment of $25.00, whichever is greater.
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 obligation under this Note or any of the Related Documents. (d) any
representation or statement made or furnished to Lender by Borrower or on
Xxxxxxxx's behalf is false or misleading in any material respect, either now or
at the time made or furnished. (e) Xxxxxxxx becomes insolvent, a receiver is
appointed for any part of Xxxxxxxx's property, Xxxxxxxx makes an assessment 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 Xxxxxxxx's property on or in which Xxxxxx has a lien or security
interest. This includes a garnishment of any of Xxxxxxxx's accounts with Xxxxxx.
(g) any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Xxxxxx believes the
prospect of payment or performance of the Indebtedness is impaired. (i) Lender
in good xxxxx xxxxx itself insecure.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breech of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within fifteen (15) days; or (b) if
the cure requires more than fifteen (15) days, immediately initiates steps which
Xxxxxx deems in Xxxxxx's sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Xxxxxx may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then the Borrower will pay that amount. Upon default, including
failure to pay upon final maturity, Lender, at its option, may also, if
permitted under applicable law, increase the variable interest rate on this note
to 18.000% per annum. The interest rate will not exceed the maximum rate
permitted by applicable law. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Xxxxxxxx also will pay Lender that amount.
This includes, subject to any limits under applicable law, Xxxxxx's attorneys'
fees and Xxxxxx's legal expenses whether or not there is a lawsuit, including
attorney's fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. If not prohibited by applicable
law, Xxxxxxxx also will pay any court costs, in addition to all other sums
provided by law. This Note has been delivered to Lender and accepted by Xxxxxx
in the State of Arizona. If there is a lawsuit, Xxxxxxxx agrees upon Xxxxxx's
request to submit to the jurisdiction of the courts of MARICOPA County, the
State of Arizona. Xxxxxx and Xxxxxxxx hereby waive the right to any jury trial
in any action, proceeding, or counterclaim brought by either Xxxxxx or Borrower
against the other. Subject to the provisions on arbitration, this Note shall be
governed by and construed in accordance with the laws of the State of Arizona.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $20.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
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, Xxxxxxxx's accounts
with Lender (whether checking, savings, or some other
06-30-1997 PROMISSORY NOTE Page 2
Loan No 10024 (Continued)
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account), including without limitation all accounts held jointly with someone
else and all accounts Borrower may open in the future, excluding however, all
IRA and Xxxxx accounts, and all trust accounts for which the grant of a security
interest would be prohibited by law. Borrower authorizes Xxxxxx, to extend
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 Deed of Trust dated June 30, 1997 to a
trustee in favor of Xxxxxx on a real property located in MARICOPA County, State
of Arizona, all the terms and conditions of which are hereby incorporated and
made a part of this Note.
ARBITRATION. Xxxxxx and Xxxxxxxx agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
arising from this Note or otherwise, including without limitation contract and
tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association, upon request of either party. No act to take or dispose
of any Collateral securing this note shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising any
rights relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act, or exercise of any right, concerning
any Collateral securing this Note, including any claim to rescind, reform, or
otherwise modify any agreement relating to the Collateral securing this Note,
shall also be arbitrated, provided however that no arbitrator shall have the
right or the power to enjoin or restrain any act of any party. Judgment upon any
award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Note shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and enforcement
of this arbitration provision.
CHANGE IN INTEREST RATES. Lender reserves the right to increase the monthly
payment in the event of an increase in the rate of interest.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guaranties or endorses this Note, to the extent allowed by law, waive
presentment demand for payment, protest and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, 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 party or guarantor or collateral; or impair, fails to realize upon
or perfect Xxxxxx's security interest in the lateral; and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All such
parties also agree that Xxxxxx may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
EFFECTIVE RATE. Borrower agrees to an effective rate of interest that is the
rate specified in this Note plus any additional rate resulting from any other
charges in the nature of interest paid or to be paid in connection with this
Note.
PRIOR TO SIGNING THIS NOTE, XXXXXXXX READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. XXXXXXXX AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS NOTE.
BORROWER:
Xxxxx Engines & Competition Components, Inc.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx Xxxxxxxxx
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Xxxxxx X. Xxxxx, President Xxxxxx Xxxxxxxxx, Secretary
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