LOAN AND SECURITY AGREEMENT
between
VECTOR AEROMOTIVE CORPORATION
"Borrower"
and
TRADELINK INTERNATIONAL LIMITED
"Lender"
Dated: July 22, 1997
TABLE OF CONTENTS
Section
Number
1. Definitions
Defined Terms ...................................... 1.1
Financial Terms .................................... 1.2
2. Representations and Warranties
Valid Existence and Power .......................... 2.1
Authority .......................................... 2.2
Financial Condition ................................ 2.3
Litigation ......................................... 2.4
Agreements, Etc. ................................... 2.5
Authorizations ..................................... 2.6
Title .............................................. 2.7
Collateral ......................................... 2.8
Location ........................................... 2.9
Taxes .............................................. 2.10
Withholding Taxes .................................. 2.11
Labor Law Matters .................................. 2.12
Accounts ........................................... 2.13
Use and Location of Collateral ..................... 2.14
Judgment Liens ..................................... 2.15
Intent and Effect of Transactions .................. 2.16
Subsidiaries ....................................... 2.17
Hazardous Materials ................................ 2.18
ERISA .............................................. 2.19
3. The Loan
Line of Credit I .................................... 3.1
Line of Credit II ................................... 3.2
Limitations on Advances ............................ 3.3
Notice and Manner of Borrowing ..................... 3.4
Calculation of Interest ............................ 3.5
Overdue Payments .................................... 3.6
Sales Tax .......................................... 3.7
4. Conditions Precedent to Borrowing
Conditions Precedent to Initial Advance ............ 4.1
Conditions Precedent to Each Advance ............... 4.2
Waiver and Application of Conditions................ 4.3
5. Covenants of the Borrower
Use of Loan Proceeds ............................... 5.1
Maintenance of Business and Properties ............. 5.2
Insurance .......................................... 5.3
Notice of Default .................................. 5.4
Inspections ........................................ 5.5
Financial Information .............................. 5.6
Debt ............................................... 5.7
Liens .............................................. 5.8
Merger, Sale, Etc. ................................. 5.9
Loans and Other Investments ........................ 5.10
Change in Business ................................. 5.11
Accounts ........................................... 5.12
No Change in Name, Offices; Removal of Collateral .. 5.13
No Sale, Leaseback ................................. 5.14
Payment of Taxes, Etc. ............................. 5.15
Compliance; Hazardous Materials .................... 5.16
Subsidiaries ....................................... 5.17
Withholding Taxes .................................. 5.18
Further Assurances ................................. 5.19
6. Default
Events of Default .................................. 6.1
Remedies ........................................... 6.2
7. Security Agreement
Security Interest .................................. 7.1
Remedies ........................................... 7.2
Power of Attorney .................................. 7.3
Entry .............................................. 7.4
Deposits; Insurance ................................ 7.5
Other Rights ....................................... 7.6
Accounts ........................................... 7.7
Tangible Collateral ................................ 7.8
Waiver of Marshalling .............................. 7.9
Waiver of Automatic Stay ........................... 7.10
8. Miscellaneous
No Waiver, Remedies Cumulative ..................... 8.1
Survival of Representations ........................ 8.2
Expenses ........................................... 8.3
Notices ............................................ 8.4
Governing Law ...................................... 8.5
Successors and Assigns ............................. 8.6
Counterparts ....................................... 8.7
No Usury ........................................... 8.8
Powers ............................................. 8.9
Approvals .......................................... 8.10
Jurisdiction; Service of Process ................... 8.11
Multiple Borrowers ................................. 8.12
Waiver of Jury Trial ............................... 8.13
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement"), dated
as of July 22, 1997, between VECTOR AEROMOTIVE CORPORATION, a
Nevada corporation (the "Borrower"), and TRADELINK
INTERNATIONAL CORPORATION, LIMITED, a corporation organized
under the laws of The Bahamas (the "Lender");
W I T N E S S E T H :
In consideration of the premises and of the mutual
covenants herein contained and to induce the Lender to extend
credit to the Borrower, the parties agree as follows:
1. Definitions. In addition to terms defined elsewhere in
this Agreement, the following terms have the meanings
indicated:
1.1 Defined Terms.
"Account" shall mean any account receivable, any
rights of payment for goods sold or leased or for services
rendered, which is not evidenced by an instrument or
chattel paper, whether or not it has been earned by
performance, together with all guaranties, letters of
credit and other security therefor and all other debts,
obligations and liabilities in whatever form, owing to
Borrower from any person, firm or corporation or any other
legal entity, whether now existing or hereafter arising,
now or hereafter received by or belonging or owing to
Borrower, however otherwise established or created, all
right, title and interest of Borrower in the merchandise
or services that gave rise to any of the foregoing,
including the rights of reclamation and stoppage in
transit and all rights of an unpaid seller of merchandise
or services and monies, securities and other property and
the proceeds of such property, now or hereafter held or
received by, or in transit to, Lender from or for
Borrower, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all of
Borrower's credits and balances with Lender at any time
existing.
"Account Debtor" shall mean a Person who is
obligated under any Account, Chattel Paper, General
Intangible or instrument (as instrument is defined in the
Code).
"Advance" shall mean an advance of proceeds of
the Loan to the Borrower pursuant to this Agreement, on
any given Advance Date.
"Advance Date" shall mean the date as of which
an Advance is made.
"Advance Request" shall mean the written request
for an Advance under the Loan as identified in Section 3.3
("Notice and Manner of Borrowing") hereof.
"Affiliate" of a named Person shall mean (a) any
Person owning 5% more of the voting stock or rights of
such named Person or of which the named Person owns 5% or
more of such voting stock or rights; (b) any Person
controlling, controlled by or under common control with
such named Person; (c) any officer or director of such
named Person or any Affiliates of the named Person; and
(d) any family member of the named Person or any Affiliate
of such named Person.
"Business Day" shall mean a weekday on which
commercial banks are open for business in Jacksonville,
Florida.
"Chattel Paper" shall mean all writing or
writings which evidence both a monetary obligation and a
security interest in or the lease of specific goods and in
addition includes all property included in the definition
of "chattel paper" as used in the Code, together with any
guaranties, letters of credit and other security therefor,
whether now owned or hereafter acquired or received by or
belonging to Borrower.
"Code" shall mean the Florida Uniform Commercial
Code, as in effect from time to time.
"Collateral" means the following property of the
Borrower, wherever located and whether now owned by
Borrower or hereafter acquired: (a) all Inventory; (b) all
General Intangibles; (c) all Accounts and Chattel Paper
and any other instrument or intangible representing
payment for goods or services; (d) all Equipment;(e) to
the extent not named above, all personal property of the
Borrower, whether now owned or hereafter acquired or
received by or belonging to Borrower and wherever located;
(f) all books and records (including without limitation
computer tapes and data files) related to all property in
which Debtor grants a security interest under the Security
Agreement or any other agreement between Borrower and the
Lender, whether now owned or hereafter acquired or
received by or belonging to Borrower and wherever located,
and all replacements and substitutions for such books and
records; (g) all parts, replacements, substitutions,
profits, products and cash and non-cash proceeds of any of
the foregoing (including insurance proceeds payable by
reason of loss or damage thereto and tax refunds) in any
form and wherever located; and (h) all replacements and
substitutions for or accessing to all such property.
Collateral shall include all written or electronically
recorded records relating to any such Collateral and other
rights relating thereto.
"Conversion Date" shall mean the day that is
immediately after the fifth consecutive day that the
principal balance under Line of Credit I is equal to or
exceeds the Maximum Loan Amount ($1,250,000).
"Debt" shall mean all liabilities of a Person as
determined under generally accepted accounting principles
and all obligations which such Person has guaranteed or
endorsed or is otherwise secondarily or jointly liable,
and shall include, without limitation (a) all obligations
for borrowed money or purchased assets, (b) obligations
secured by assets whether or not any personal liability
exists, (c) the capitalized amount of any capital or
finance lease obligations, (d) the unfunded portion of
pension or benefit plans or other similar liabilities,
(e) obligations as a general partner, (f) contingent
obligations pursuant to guaranties, endorsements, letters
of credit and other secondary liabilities, and
(g) obligations for deposits.
"Default Rate" shall mean the highest lawful
rate of interest per annum specified in any Note to apply
after a default under such Note or, if no such rate is
specified, a rate equal to the lesser of (a) five (5)
percentage points above the rate on the Loan otherwise in
effect from time to time, or (b) the highest rate of
interest allowed by law.
"Equipment" shall mean all machinery, furniture,
computer equipment and related accessories, fixtures,
leasehold improvements, equipment, motor vehicles, rolling
stock and other tangible property of a Person of every
description, except Inventory and in addition includes
all property included in the definition of "equipment" as
used in the Code, whether now owned or hereafter acquired
and wherever located, and all replacements and
substitutions for such goods or accessions to such goods.
"Event of Default" shall mean any event
specified as such in Section 6.1 hereof ("Events of
Default"), provided that there shall have been satisfied
any requirement in connection with such event for the
giving of notice or the lapse of time, or both; "Default"
or "default" shall mean any of such events, whether or not
any such requirement for the giving of notice or the lapse
of time or the happening of any further condition, event
or act shall have been satisfied.
"General Intangibles" shall mean all intangible
personal property (including things in action) except
Accounts, Chattel Paper and instruments (as defined in
the Code), including all contract rights, copyrights,
trademarks, trade names, service marks, patents, patent
drawings, licenses, designs, formulas, rights to a
Person's name itself, customer lists, chooses-in-action
(whether they arise in tort or contract), rights to all
prepaid expenses, marketing expenses, rights to receive
future contracts, fees, commissions and orders relating in
any respect to any business of a Person, all licenses and
permits, all computer programs and other software owned by
a Person, or which a Person has the right to use, and all
rights for breach of warranty or other claims for funds
to which a Person may be entitled, and in addition
includes all property included in the definition of
"general intangibles" as used in the Code, in all cases
whether now owned or hereafter acquired or received by or
belonging to Borrower, whether or not excluded from
coverage under the Code by Section 679.104 or similar
provisions.
"Indebtedness" shall mean all obligations now or
hereafter owed to the Lender by the Borrower, whether
related or unrelated to the Loan, including, without
limitation, amounts owed or to be owed under the terms of
the Loan Documents, or arising out of the transactions
described therein, including, without limitation, the
Loan, sums advanced to pay overdrafts on any account
maintained by the Borrower with the Lender, reimbursement
obligations for outstanding letters of credit or banker's
acceptances issued to the account of the Borrower, amounts
paid by the Lender under letters of credit or drafts
accepted by the Lender for the account of the Borrower,
together with all interest accruing thereon, all fees, all
costs of collection, attorneys' fees and expenses of or
advances by the Lender which the Lender pays or incurs in
discharge of obligations of the Borrower or to repossess,
protect, preserve, store or dispose of any Collateral,
whether such amounts are now due or hereafter become due,
direct or indirect, absolute or contingent, and whether
such amounts due are from time to time reduced or entirely
extinguished and thereafter re-incurred or reinstated.
"Inventory" means all goods, parts, merchandise
and other personal property of a Person which is held for
sale or lease or furnished or to be furnished under a
contract for services or raw materials, and all work in
process and materials used or consumed or to be used or
consumed in a Person's business, and in addition, includes
all property included in the definition of "inventory" as
used in the Code, whether manufactured, assembled or
commingled, finished goods and products, and other
tangible personal property, whether now owned or hereafter
acquired, received by or belonging to Borrower.
"Lien" (collectively "Liens") shall mean any
mortgage, pledge, statutory lien or other lien arising by
operation of law, security interest, trust arrangement,
financing lease, collateral assignment or other
encumbrance, or any segregation of assets or revenues
(whether or not constituting a security interest) with
respect to any present or future assets, revenues or
rights to the receipt of income of the Person referred to
in the context in which the term is used.
"Loan" shall mean the loans, lines of credit and
other credit accommodations identified in Sections 3.1 and
3.2 hereof.
"Line of Credit I" shall mean the line of credit
converting to a term loan as described in Section 3.1
hereof.
"Line of Credit II" shall mean the line of
credit as described in Section 3.2 hereof.
"Loan Documents" shall mean this Agreement, any
other Security Agreement, any Note, the Advance Requests,
UCC-l financing statements and all other documents and
instruments now or hereafter evidencing, describing,
guaranteeing or securing the Loan or delivered in connec-
tion with this Agreement, as they may be modified.
"Maximum Loan Amount" as it refers to Line of
Credit I shall mean $1,250,000 or such other amount as the
Lender may consent to in writing from time to time and as
it refers to Line of Credit II shall mean $2,500,000 or
such other amount as the Lender may consent to in writing
from time to time.
"Note" or "Notes" shall mean one or more
Promissory Notes, as defined in Article 3, and any other
promissory note now or hereafter evidencing the Loan and
all modifications, extensions and renewals thereof. "Note
I" shall mean the Promissory Note, as defined in Section
3.1, and any other promissory note now or hereafter
evidencing Line of Credit I and all modifications,
extensions and renewals thereof. "Note II" shall mean the
Promissory Note, as defined in Section 3.2, and any other
promissory note now or hereafter evidencing Line of Credit
II and all modifications, extensions and renewals thereof.
"Permitted Debt" shall mean (a) the
Indebtedness; and (b) any other Debt listed on Exhibit
1.1C hereto (if any) and any extensions, renewals,
replacements, modifications and refundings of any such
Debt if, and to the extent, permitted by Exhibit 1.1C;
provided, however, that the principal amount of such Debt
may not be increased from the amount shown as outstanding
on such exhibit; and (c) such other Debt as the Lender may
consent to in writing from time to time.
"Permitted Liens" shall mean (a) Liens securing
the Indebtedness; (b) Liens for taxes and other statutory
Liens, landlord's Liens and similar Liens arising out of
operation of law (provided they are subordinate to the
Lender's Liens on Collateral) so long as the obligations
secured thereby are not past due or are being contested as
permitted herein; (c) Liens described on Exhibit 1.1D
hereto (if any), provided, however, that no debt not now
secured by such Liens shall become secured by such Liens
hereafter and such Liens shall not encumber any other
assets; and (d) such other Liens as the Lender may consent
to in writing from time to time.
"Person" shall mean any natural person,
corporation, unincorporated organization, trust,
joint-stock company, joint venture, association, company,
limited or general partnership, any government, or any
agency or political subdivision of any government, which
includes where applicable the Borrower.
"Purchase Agreement" shall mean that certain
Share Purchase Agreement between Lender and Borrower dated
the date of this Agreement.
"Security Agreement" shall mean this Agreement
as it relates to a security interest in the Collateral,
and any other mortgage, security agreement or similar
instrument now or hereafter executed by the Borrower or
other Person granting the Lender a security interest in
any Collateral to secure the Indebtedness.
"Subsidiary" shall mean any corporation,
partnership or other Person in which the Borrower,
directly or indirectly, owns more than fifty percent (50%)
of the stock, capital or income interests, or other
beneficial interests, or which is effectively controlled
by the Borrower.
1.2 Financial Terms. All financial terms used
herein shall have the meanings assigned to them under generally
accepted accounting principles unless another meanings shall be
specified.
2. Representations and Warranties. In order to induce
the Lender to enter into this Agreement and to make the Loan,
the Borrower makes the following representations and
warranties, all of which shall survive the execution and
delivery of the Loan Documents. Unless otherwise specified,
such representations and warranties shall be deemed made as of
the date hereof and as of the Advance Date of any Advance by
the Lender to the Borrower:
2.1 Valid Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization
is duly qualified or licensed to transact business in all
places where the failure to be so qualified would have a
material adverse effect on it. The Borrower and each other
Person which is a party to any Loan Document (other than the
Lender) has the power to make and perform the Loan Documents
executed by it and all such instruments will constitute the
legal, valid and binding obligations of such Person,
enforceable in accordance with their respective terms, subject
only to bankruptcy and similar laws affecting creditors' rights
generally.
2.2 Authority. The execution, delivery and
performance thereof by the Borrower and each other Person
(other than the Lender) executing any Loan Document have been
duly authorized by all necessary action of such Person, and do
not and will not violate any provision of law or regulation, or
any writ, order or decree of any court or governmental or
regulatory authority or agency or any provision of the
governing instruments of such Person, and do not and will not,
with the passage of time or the giving of notice, result in a
breach of, or constitute a default or require any consent
under, or result in the creation of any Lien upon any property
or assets of such Person pursuant to, any law, regulation,
instrument or agreement to which any such Person is a party or
by which any such Person or its respective properties may be
subject, bound or affected.
2.3 Financial Condition. All balance sheets,
financial statements, profit and loss statements, and all other
information heretofore furnished to the Lender are true and
correct and fairly reflect the financial condition of the
Borrower and its Subsidiaries, if any, as of the dates thereof,
including all Debt. Other than as disclosed in financial
statements delivered on or prior to the date hereof to the
Lender, the Borrower does not have any direct or contingent
obligations or liabilities (including any guarantees or leases)
or any material unrealized or anticipated losses from any
commitments of such Person except as described on Exhibit 2.3
(if any). The Borrower is not aware of any material adverse
fact (other than facts which are generally available to the
public and not particular to the Borrower, such as general
economic or industry trends) concerning the conditions or
future prospects of the Borrower which has not been fully
disclosed to the Lender, including any adverse change in the
operations or financial condition of such Person since the date
of the most recent financial statements delivered to the
Lender.
2.4 Litigation. Except as disclosed on Exhibit 2.4
(if any), there are no suits or proceedings pending, or to the
knowledge of the Borrower threatened, before any court or by or
before any governmental or regulatory authority, commission,
bureau of agency or public regulatory body against or affecting
the Borrower or its assets, which if adversely determined would
have a material adverse effect on the financial condition or
business of the Borrower.
2.5 Agreements, Etc. The Borrower is not a party to
any agreement or instrument or subject to any court order,
governmental decree or any charter or other corporate
restriction, adversely affecting its business, properties or
assets, operations or condition (financial or otherwise) nor is
the Borrower in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a
party, or any law, regulation, decree, order or the like.
2.6 Authorizations. All authorizations, consents,
approvals and licenses required under applicable law or
regulation for the ownership or operation of the property owned
or operated by the Borrower or for the conduct of any business
in which it is engaged have been duly issued and are in full
force and effect, and it is not in default, nor has any event
occurred which with the passage of time or the giving of
notice, or both, would constitute a default, under any of the
terms or provisions of any part thereof, or under any order,
decree, ruling, regulation, closing agreement or other decision
or instrument of any governmental commission, bureau or other
administrative agency or public regulatory body having
jurisdiction over the Borrower, which default would have a
material adverse effect on the Borrower. Except as noted
herein, no approval, consent or authorization of, or filing or
registration with, any governmental commission, bureau or other
regulatory authority or agency is required with respect to the
execution, delivery or performance of any Loan Document.
2.7 Title. The Borrower has good title to all of
the assets shown in its financial statements free and clear of
all Liens, except Permitted Liens. The Borrower alone has full
ownership rights in all Collateral.
2.8 Collateral. The security interests granted to
the Lender herein and pursuant to any other Security Agreement
(a) constitute and, as to subsequently acquired property
included in the Collateral covered by the Security Agreement,
will constitute, security interests under the Code entitled to
all of the rights, benefits and priorities provided by the Code
and (b) are, and as to such subsequently acquired Collateral
will be fully perfected, superior and prior to the rights of
all third persons, now existing or hereafter arising, subject
only to Permitted Liens. All of the Collateral is intended for
use solely in the Borrower's business.
2.9 Location. The chief executive office of the
Borrower where the Borrower's business records are located is
the address designated for notices in Section 8.4 ("Notices")
and the Borrower has no other places of business except as
shown on Exhibit 2.9 (if any).
2.10 Taxes. The Borrower has filed all federal and
state income and other tax returns which, to the best knowledge
of the Borrower, are required to be filed, and have paid all
taxes as shown on said returns and all taxes, including ad
valorem taxes, shown on all assessments received by it to the
extent that such taxes have become due. The Borrower is not
subject to any federal, state or local tax Liens, nor has the
Borrower received any notice of deficiency or other official
notice to pay any taxes. The Borrower has paid all sales and
excise taxes payable by it.
2.11 Withholding Taxes. The Borrower has paid all
withholding, FICA and other payments required by federal, state
or local governments with respect to any wages paid to
employees.
2.12 Labor Law Matters. No goods or services have
been or will be produced by the Borrower in violation of any
applicable labor laws or regulations or any collective
bargaining agreement or other labor agreements or in violation
of any minimum wage, wage-and-hour or other similar laws or
regulations.
2.13 Accounts. Each Account, instrument, Chattel
Paper and other writing constituting any portion of the
Collateral is (a) genuine and enforceable in accordance with
its terms except for such limits thereon arising from
bankruptcy and similar laws relating to creditors' rights; (b)
not subject to any defense, setoff, claim or counterclaim of a
material nature against the Borrower except as to which the
Borrower has notified the Lender in writing; and (c) not
subject to any other circumstances that would impair the
validity, enforceability or amount of such Collateral except as
to which the Borrower has notified the Lender in writing.
2.14 Use and Location of Collateral. The Collateral
is located only, and shall at all times be kept and maintained
only, at the Borrower's location or locations as described
herein. No such Collateral is attached or affixed to any real
property so as to be classified as a fixture unless the Lender
has otherwise agreed in writing.
2.15 Judgment Liens. The Borrower, nor any of its
assets, are subject to any unpaid judgments (whether or not
stayed) or any judgment liens in any jurisdiction.
2.16 Intent and Effect of Transactions. This
Agreement and the transactions contemplated herein (a) are not
made or incurred with intent to hinder, delay or defraud any
person to whom the Borrower has been, is now, or may hereafter
become indebted; (b) do not render the Borrower insolvent nor
is the Borrower insolvent on the date of this Agreement; (c) do
not leave the Borrower with an unreasonably small capital with
which to engage in its business or in any business or
transaction in which it intends to engage; and (d) are not
entered into with the intent to incur, or with the belief that
the Borrower would incur, debts that would be beyond its
ability to pay as such debts mature.
2.17 Subsidiaries. The Borrower has no Subsidiaries.
2.18 Hazardous Materials. The Borrower's property
and improvements thereon have not in the past been used, are
not presently being used, and will not in the future be used
for, nor does the Borrower engage in, the handling, storage,
manufacture, disposition, processing, transportation, use or
disposal of hazardous or toxic materials.
2.19 ERISA. The Borrower does not have any pension,
profit-sharing or other benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
3. The Loan
3.1 Line of Credit I. The Lender may in its discre-
tion lend to the Borrower a total principal amount not to
exceed the Maximum Loan Amount for working capital to be used
in the operation of the Borrower's business. Line of Credit I
shall be evidenced by and payable in accordance with the terms
of a promissory note ("Note I") in the face amount of the
Maximum Loan Amount for Line of Credit I. Note I shall
evidence the outstanding principal balance of Line of Credit I,
as it may change from time to time. ADVANCES UNDER LINE OF
CREDIT I ARE DISCRETIONARY WITH THE LENDER AND THE PRINCIPAL
BALANCE OF THE REVOLVING LOAN, OR SO MUCH THEREOF AS MAY BE
ADVANCED, SHALL BE PAYABLE IN FULL ON DEMAND. Advances under
Line of Credit I shall be subject to the following terms:
(a) Advances of proceeds of Line of Credit I
shall be limited to the Maximum Loan Amount at any time
outstanding;
(b) All Advances by the Lender to or for the
account of the Borrower, whether or not in excess of the
Maximum Loan Amount, shall be considered part of the
indebtedness under Note I, shall bear interest as provided
in Note I, and shall be entitled to all rights and
benefits hereunder and under all other Loan Documents; and
(c) The Borrower shall not request and the
Lender will not be required to consider requests for
Advances under Line of Credit I after the Conversion Date;
provided that the Lender may in its discretion extend such
date in writing and further provided that the repayment
obligations of the Borrower for Advances made by the
Lender after such date (as it may be extended) shall be
binding on the Borrower to the same extent as obligations
with respect to Advances made prior to such date.
(d) As of the Conversion Date, the Lender shall
pay from an Advance under Line of Credit II (which hereby
is authorized without any notice to or action by the
Borrower) any amount due under Note I that exceeds the
Maximum Loan Amount for Line of Credit I, and
simultaneously with such payment the interest rate and
payment terms of Note I shall be converted without any
notice to or action by any Person to Ten percent (10%) and
payments based on a term loan for ten (10) years with
equal monthly payments, and otherwise as set forth in Note
I.
3.2 Line of Credit II. From and after the
Conversion Date, the Lender may in its discretion lend to the
Borrower a total principal amount not to exceed the Maximum
Loan Amount for working capital to be used in the operation of
the Borrower's business. Line of Credit II shall be evidenced
by and payable in accordance with the terms of a promissory
note ("Note II") in the face amount of the Maximum Loan Amount
for Line of Credit II. Note II shall evidence the outstanding
principal balance of Line of Credit II, as it may change from
time to time. ADVANCES UNDER LINE OF CREDIT II ARE DISCRE-
TIONARY WITH THE LENDER AND THE PRINCIPAL BALANCE OF THE
REVOLVING LOAN, OR SO MUCH THEREOF AS MAY BE ADVANCED, SHALL BE
PAYABLE IN FULL ON DEMAND. Advances under Line of Credit II
shall be subject to the following terms:
(a) Advances of proceeds of Line of Credit II
shall be limited to the Maximum Loan Amount at any time
outstanding;
(b) All Advances by the Lender to or for the
account of the Borrower, whether or not in excess of the
Maximum Loan Amount, shall be considered part of the
indebtedness under Note II, shall bear interest as
provided in Note II, and shall be entitled to all rights
and benefits hereunder and under all other Loan Documents;
and
3.3 Limitations on Advances. The outstanding
balance of the Loan may increase and decrease from time to
time, and Advances thereunder may be repaid and reborrowed, but
the total of Advances outstanding at any one time under the
Loan shall never exceed the applicable Maximum Loan Amount.
3.4 Notice and Manner of Borrowing. Unless another
satisfactory procedure for disbursements is agreed upon in
writing by the parties, the following procedure will be used
for disbursement of proceeds of the Loan. The Borrower shall
deliver a written and signed Advance Request to the Lender not
later than 12:00 noon, Jacksonville time, on the second
Business Day prior to the proposed Advance Date, in the form
attached hereto as Exhibit 3.3, setting forth the amount of the
requested Advance, and a reconciliation from the previous
Advance Request (or monthly report), specifying the date (which
shall be a Business Day), and the amount of the proposed
Advance of proceeds, and providing such other information as
the Lender may require.
3.5 Calculation of Interest. All interest under the
Notes or hereunder shall be calculated on the basis of a
360-day year for the actual number of days elapsed in an
interest period (actual/360 method), unless the Lender shall
otherwise elect.
3.6 Overdue Payments. Any payments not made as and
when due shall bear interest from the date due until paid at
the Default Rate.
3.7 Sales Tax. The Borrower shall notify the Lender
if any Account includes any sales or other similar tax and the
Lender may, but shall not be obligated to, remit any such taxes
directly to the taxing authority and make Advances. In no
event shall the Lender be liable for any such taxes.
4. Conditions Precedent to Borrowing. Prior to any
Advance of the proceeds of any Loan, the following conditions
shall have been satisfied, in the sole opinion of the Lender
and its counsel:
4.1 Conditions Precedent to Initial Advance. In
addition to any other requirement set forth in this Agreement,
the Lender will not make the initial Advance under Line of
Credit I unless and until the following conditions shall have
been satisfied:
(a) Loan Documents. The Borrower and each
other party to any Loan Documents, as applicable, shall
have executed and delivered this Agreement, the Notes, and
other required Loan Documents, all in form and substance
satisfactory to the Lender.
(b) Supporting Documents. The Borrower shall
cause to be delivered to the Lender the following
documents:
(i) A copy of the governing instruments of
the Borrower and a good standing certificate of the
Borrower, certified by the appropriate official of
its state of incorporation and the State of Florida,
if different;
(ii) Incumbency certificate and certified
resolutions of the board of directors (or other
appropriate Persons) of the Borrower and each other
Person executing any Loan Documents authorizing the
execution, delivery and performance of the Loan
Documents; and
(iii) UCC-11 searches and other Lien
searches showing no existing security interests in or
Liens on the Collateral other than the security
interests of the Lender and Permitted Encumbrances.
(c) Insurance. The Borrower shall have
delivered to the Lender satisfactory evidence of insurance
meeting the requirements of Section 5.3 ("Insurance").
(d) Perfection of Liens. UCC-l financing
statements and, if applicable, certificates of title
covering the Collateral executed by the Borrower shall
duly have been recorded or filed in the manner and places
required by law to establish, preserve, protect and
perfect the interests and rights created or intended to be
created by this Agreement and any other Security
Agreement; and all taxes, fees and other charges in
connection with the execution, delivery and filing of this
Agreement, the Security Agreement and the financing
statements shall duly have been paid.
(e) Subordinations. The Lender shall have
received subordinations satisfactory to it from all
lessors that might have landlord's Liens on any
Collateral.
(f) Additional Documents. The Borrower shall
have delivered to the Lender all additional opinions,
documents, certificates and other assurances that the
Lender or its counsel may require.
4.2 Conditions Precedent to Each Advance. The
following conditions, in addition to any other requirements set
forth in this Agreement, shall have been met or performed by
the Advance Date with respect to any Advance Request:
(a) Advance Request. The Borrower shall have
delivered to the Lender an Advance Request and other
information, as required under in Section 3.3 ("Notice and
Manner of Borrowing").
(b) No Default. No default under this
Agreement and the Purchase Agreement shall have occurred
and be continuing or will occur upon the making of the
Advance in question and the Borrower shall have delivered
to the Lender an officer's certificate to such effect,
which may be incorporated in the Advance Request.
(c) Correctness of Representations. All
representations and warranties made by the Borrower herein
or otherwise in writing in connection herewith (including
the Purchase Agreement) shall be true and correct with the
same effect as though the representations and warranties
had been made on and as of the proposed Advance Date, and
the Borrower shall have delivered to the Lender an
officer's certificate to such effect, which may be
incorporated in the Advance Request.
(d) No Adverse Change. There shall have been
no material adverse change in the condition, financial or
otherwise, of the Borrower from such condition as it
existed on the date of the most recent financial
statements of the Borrower delivered prior to date
thereof.
(e) The litigation between Borrower and Xxxxxx
X. Xxxxxxx shall have been concluded to the satisfaction of
Lender and the settlement proceeds from the litigation
between Tokai Bank and Borrower shall have been disbursed
in a manner satisfactory to Lender, in both cases in
Lender's sole discretion.
(f) Further Assurances. The Borrower shall
have delivered such further documentation or assurances as
the Lender may reasonably require.
4.3 Waiver and Application of Conditions. The
conditions to Lender's obligation contained in Sections 4.1 and
4.2 of this Agreement are for the sole benefit of Lender and
may be waived by Lender in whole or in part at any time in
Lender's sole discretion. No waiver of any such condition
shall be valid unless in writing. No waiver of any condition
shall operate as a waiver of any condition other than as stated
in the written waiver or as a waiver of the same condition of
any Advance other than as stated in the written waiver. The
conditions to Lender's obligation contained in Sections 4.1 and
4.2 of this Agreement, nevertheless, shall not apply to any
Advance if the failure of the condition is caused by any
affirmative action of Vector taken after the date of this
Agreement.
5. Covenants of the Borrower. The Borrower covenants
and agrees that from the date hereof and until payment in full
of the Notes and the formal termination of this Agreement,
unless the Lender shall otherwise consent in writing, the
Borrower:
5.1 Use of Loan Proceeds. Shall use the proceeds of
the Loan only for working capital in the operation of the
business of the Borrower and shall furnish the Lender all
evidence that it may reasonably require with respect to such
use.
5.2 Maintenance of Business and Properties. Shall
at all times maintain, preserve and protect all Collateral and
all the remainder of its material property used or useful in
the conduct of its business, and keep the same in good repair,
working order and condition, and from time to time make, or
cause to be made, all material needful and proper repairs,
renewals, replacements, betterments and improvements thereto so
that the business carried on in connection therewith may be
conducted properly and in accordance with standards generally
accepted in businesses of a similar type and size at all times,
and maintain and keep in full force and effect all licenses and
permits necessary to the proper conduct of its business.
5.3 Insurance. Shall maintain such liability
insurance, workers' compensation insurance, business
interruption insurance and casualty (loss by fire and other
hazards included in the term "extended coverage") insurance as
may be required by law, customary and usual for prudent
businesses in its industry or as may be reasonably required by
the Lender and shall insure and keep insured all Collateral and
other properties in good and responsible insurance companies
satisfactory to the Lender. All hazard insurance covering
Collateral shall be in amounts and shall contain co-insurance
and deductible provisions approved by the Lender, shall name
and directly insure the Lender as secured party and loss payee
under a long-form New York standard loss payee clause, or its
equivalent, and shall not be terminable except upon 30 days'
written notice to the Lender. The Lender is authorized, but
not obligated, to purchase any or all of such insurance or
"single interest insurance" protecting only its security
interests, if available, all at the Borrower's expense. In
such event, the Borrower agrees to reimburse the Lender for the
cost of such insurance to the extent that the same is not
included in the principal amount of the Notes. In the event of
any Default under this Agreement, Lender is authorized in its
sole discretion to cancel any insurance and credit any premium
refund against the unpaid balance due on the Notes.
5.4 Notice of Default. Shall provide to the Lender
immediate notice of (a) the occurrence of a Default, (b) any
material litigation or material changes in existing litigation
or any judgment against it or its assets, (c) any material
damage or loss to property, (d) any notice from taxing
authorities as to claimed deficiencies or any tax lien or any
notice relating to alleged ERISA violations, (e) any Reportable
Event, as defined in ERISA, (f) any rejection, return, offset,
dispute, loss or other circumstance having a material adverse
effect on any Collateral, and (g) any loss or threatened loss
of material licenses, permits or patents.
5.5 Inspections. Shall permit inspections of the
Collateral and the records of such Person pertaining thereto,
at such times and in such manner as may be reasonably required
by the Lender and shall further permit such inspection, review
and audits of its other records and its properties (with such
reasonable frequency and at such reasonable times as the Lender
may desire) by the Lender as the Lender may deem necessary or
desirable from time to time. The cost of such audits, reviews
and inspections shall be borne by the Borrower.
5.6 Financial Information. Shall maintain books and
records in accordance with generally accepted accounting
principles and shall furnish to the Lender the following
periodic financial information:
(a) Annual Reports. Within 90 days after the
end of each fiscal year of the Borrower, a copy of a Form
10-K as filed with the Securities and Exchange Commission
and in compliance with the rules and regulations relating
to such a filing, or a consolidated and consolidating
balance sheet and a consolidated and consolidating state-
ment of income (loss), surplus (deficit) and cash flow,
together with supporting Schedules; all in reasonable
detail and prepared in conformity with generally accepted
accounting principles, applied on a basis consistent with
that of the preceding year; all examined by an independent
certified public accountant acceptable to the Lender,
showing the financial condition of the Borrower and any
Subsidiaries at the close of such year and the results of
operations of the Borrower and any Subsidiaries during the
year. The opinion of such independent certified public
accountant shall not be acceptable to the Lender if
qualified due to any limitations in scope imposed by the
Borrower or any Subsidiaries. Any other qualification of
the opinion by the accountant shall render the
acceptability of the financial statements subject to
Lender approval.
(b) Monthly Reports. Within 30 days after the
end of each calendar month similar financial statements to
those referred to in subparagraph (a) above, unaudited but
certified as to their correctness by the chief operating
officer or the principal financial officer of the
Borrower, all in reasonable detail, prepared in accordance
with generally accepted accounting principals applied on a
consistent basis throughout the period involved and prior
periods, such balance sheets to be as of the end of such
period and such statements of income and surplus to be for
the period from beginning of the fiscal year to the end of
such period, and in each case subject to audit and year-end adjustments.
(c) No Default Certificates. Together with
each report required by Subsection (a) and (b), shall
submit a certificate of its president or chief financial
officer that no Default or Event of Default then exists or
if a Default or Event of Default exists, the nature and
duration thereof and the Borrower's intention with respect
thereto, and in addition, shall cause the Borrower's
independent auditors (if applicable) to submit to the
Lender, together with its audit report, a statement that,
in the course of such audit, it discovered no
circumstances which it believes would result in a Default
or Event of Default or if it discovered any such circum-
stances, the nature and duration thereof.
(d) Additional Securities Filings. Within the
time period required for such filings, a copy of any Form
10-Q, Form 8-K and any other document required to be filed
by Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange
Commission, as filed with the Securities and Exchange
Commission and in compliance with the rules and
regulations relating to such a filing.
(e) Additional Information. In addition to the
financial statements required in this Agreement, the
Lender reserves the right to require other or additional
financial or other information concerning the Borrower and
the Collateral.
5.7 Debt. Shall not create or permit to exist any
Debt, including any guaranties or other contingent obligations,
except Permitted Debt.
5.8 Liens. Shall not create, assume or permit to
exist any Liens on any of its property except Permitted
Exceptions.
5.9 Merger, Sale, Etc. Shall maintain its corporate
existence, good standing and necessary qualifications to do
business and shall not merge or consolidate with any Person or
acquire all or substantially all of the assets of, or 50% or
more of any class of equity interest of, any Person or sell,
lease, assign or otherwise dispose of any Collateral or
substantial portion of its other assets (other than sales of
obsolete or worn-out equipment and sales of Inventory in the
ordinary course of business).
5.10 Loans and Other Investments. Shall not make or
permit to exist any advances or loans to, or guarantee or
become contingently liable, directly or indirectly, in
connection with the obligations, leases, stock or dividends of,
or own, purchase or make any commitment to purchase any stock,
bonds, notes, debentures or other securities of, or any
interest in, or make any capital contributions to (all of which
are sometimes collectively referred to herein as "Investments")
any Person except for (a) purchases of direct obligations of
the United States government, (b) deposits in commercial banks
insured by the Federal Deposit Insurance Corporation,
(c) commercial paper of any U.S. corporation having the highest
ratings then given by Xxxxx'x Investors Service, Inc. or
Standard & Poor's Corporation, and (d) endorsement of
negotiable instruments for collection in the ordinary course of
business.
5.11 Change in Business. Shall not enter into any
business which is substantially different from the business or
businesses in which it is presently engaged.
5.12 Accounts. (a) shall not sell, assign or
discount any of its Accounts, Chattel Paper or any promissory
notes held by it other than the discount of such notes in the
ordinary course of business for collection; and (b) shall
notify the Lender promptly in writing with any discount, offset
or other deductions not shown on the face of an Account invoice
and any dispute over an Account, and any information relating
to an adverse change in any Account Debtor's financial
condition or ability to pay its obligations.
5.13 No Change in Name, Offices; Removal of
Collateral. Shall not, unless it shall have given 60 days'
advance written notice thereof to the Lender, (a) change its
name or the location of its chief executive office or other
office where books or records are kept or (b) permit any
Inventory or other tangible Collateral to be located at any
location other than as specified in Section 2.9. ("Location").
5.14 No Sale, Leaseback. Shall not enter into any
sale-and-leaseback or similar transaction.
5.15 Payment of Taxes, Etc. Shall pay before
delinquent all of its debts and taxes except that the Lender
shall not unreasonably withhold its consent to nonpayment of
taxes being actively contested in accordance with law (provided
that the Lender may require bonding or other assurances).
5.16 Compliance; Hazardous Materials. Shall strictly
comply with all laws, regulations, ordinances and other legal
requirements, specifically including, without limitation,
ERISA, all securities laws and all laws relating to hazardous
materials and the environment; and unless approved in writing
by the Lender, the Borrower shall not engage in the storage,
manufacture, disposition, processing, handling, use or
transportation of any hazardous or toxic materials, whether or
not in compliance with applicable laws and regulations.
5.17 Subsidiaries. Shall not acquire, form or
dispose of any Subsidiaries or permit any Subsidiary to issue
capital stock except to its parent.
5.18 Withholding Taxes. Pay as and when due all
employee withholding, FICA and other payments required by
federal, state and local governments with respect to wages paid
to employees.
5.19 Further Assurances. Shall take such further
action and provide to the Lender such further assurances as may
be reasonably requested to ensure compliance with the intent of
this Agreement and the other Loan Documents.
6. Default.
6.1 Events of Default. Each of the following shall
constitute an Event of Default under this Agreement and be a
default under both Note I and Note II:
(a) Any representation or warranty made by the
Borrower or any other party to any Loan Document (other
than the Lender) herein or therein or in any certificate
or report furnished in connection herewith or therewith
shall prove to have been untrue or incorrect in any
material respect when made and at each Advance; or
(b) There shall occur any default by the
Borrower in the payment, when due, of any principal of or
interest on the Notes, any amounts due hereunder or any
other Loan Document or any other Indebtedness (not cured
within any grace period provided in such Note or in the
document or instrument evidencing such Indebtedness); or
(c) There shall occur any default by the
Borrower or any other party to any Loan Document (other
than the Lender) in the performance of any agreement,
covenant or obligation contained in this Agreement or such
Loan Document not provided for elsewhere in this Article 6
and such default is not cured within any grace period
provided in this Agreement or such other Loan Document; or
(d) Any other obligation now or hereafter owed
by the Borrower to the Lender shall be in default and not
cured within any period of grace provided therein or the
Borrower shall be in default under any obligation in
excess of $10,000 owed to any other obligee, which default
entitles the obligee to accelerate any such obligations or
exercise other remedies with respect thereto; or
(e) The Borrower shall (i) voluntarily
liquidate or terminate operations or apply for or consent
to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of the Borrower
or of all or of a substantial part of its assets,
(ii) admit in writing its inability, or be generally
unable, to pay its debts as the debts become due,
(iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the
federal Bankruptcy Code (as now or hereafter in effect),
(v) file a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts,
(vi) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy
Code, or (vii) take any corporate action for the purpose
of effecting any of the foregoing; or
(f) Without its application, approval or
consent, a proceeding shall be commenced, in any court of
competent jurisdiction, seeking in respect of Borrower any
remedy under the federal Bankruptcy Code, the liquidation,
reorganization, dissolution, winding-up, or composition or
readjustment of debt, the appointment of a trustee,
receiver, liquidator or the like of the Borrower, or of
all or any substantial part of the assets of the Borrower,
or other like relief under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or
adjustment of debts; or
(g) Any security interest or Lien of the Lender
hereunder or under any other Security Agreement shall not
constitute a perfected security interest of first priority
in the Collateral thereby encumbered, subject only to
Permitted Liens; or
(h) There shall occur any material loss, theft,
damage or destruction of any of the Collateral, which loss
is not fully insured; or
(i) A judgment in excess of $10,000 shall be
rendered against the Borrower and shall remain
undischarged, undismissed and unstayed for more than ten
days (except judgments validly covered by insurance with a
deductible of not more than $10,000) or there shall occur
any levy upon, or attachment, garnishment or other seizure
of, any material portion of the assets of the Borrower by
reason of the issuance of any tax levy, judicial attach-
ment or garnishment or levy of execution or upon entry of
a tax lien involving Borrower; and
(j) If at any time all of the members of the
Board of Directors of the Borrower shall not be persons
acceptable to the Lender, which acceptance has been
evidenced in writing.
THE FOREGOING ENUMERATION OF EVENTS OF DEFAULT NOTWITHSTANDING,
NOTHING HEREIN SHALL BE DEEMED TO LIMIT, RESTRICT, IMPAIR OR
DIMINISH THE ABSOLUTE RIGHT OF THE LENDER TO DEMAND PAYMENT OF
THE LOAN IN FULL, AT ANY TIME, WITHOUT CAUSE.
6.2 Remedies. If any Default shall occur, the
Lender may, without notice to the Borrower, at its option,
withhold further Advances to the Borrower of proceeds of the
Loan. Should (a) any Event of Default under Section 6.1(g)
occur and not be cured within thirty (30) days following
delivery of written notice thereof by the Lender to the
Borrower (which notice shall be complete upon hand or overnight
delivery or upon facsimile delivery or mailing by certified
mail, return receipt requested) or (b) any other Event of
Default occur, the Lender may declare any or all Indebtedness
to be immediately due and payable (if not earlier demanded),
bring suit against the Borrower to collect the Indebtedness,
exercise any remedy available to the Lender hereunder and take
any action or exercise any remedy provided herein or in any
other Loan Document or under applicable law, without demand or
any notice or other action by Lender, all of which hereby are
expressly waived. No remedy shall be exclusive of other
remedies or impair the right of the Lender to exercise any
other remedies.
7. Security Agreement.
7.1 Security Interest.
(a) As security for the payment and performance
of any and all of the Indebtedness and the performance of
all other obligations and covenants of the Borrower
hereunder and under the other Loan Documents, certain or
contingent, now existing or hereafter arising, which are
now, or may at any time or times hereafter be owing by the
Borrower to the Lender, the Borrower hereby pledges to the
Lender and gives the Lender a continuing security interest
in and general Lien upon and right of set-off against, all
right, title and interest of the Borrower in and to the
Collateral, whether now owned or hereafter acquired by the
Borrower, wherever located. As further assurance for the
payment and performance of the Indebtedness, Borrower
hereby assigns to Lender all sums, including returned or
unearned premiums, which may become payable under any
policy of insurance on the Collateral, and Borrower hereby
directs each insurance company issuing any such policy to
make payment of such sums directly to Lender, subject to
prior interests noted in this Agreement.
(b) Except as herein or by applicable law
otherwise expressly provided, the Lender shall not be
obligated to exercise any degree of care in connection
with any Collateral in its possession, to take any steps
necessary to preserve any rights in any of the Collateral
or to preserve any rights therein against prior parties,
and the Borrower agrees to take such steps. In any case
the Lender shall be deemed to have exercised reasonable
care if it shall have taken such steps for the care and
preservation of the Collateral or rights therein as the
Borrower may have reasonably requested the Lender to take
and the Lender's omission to take any action not requested
by the Borrower shall not be deemed a failure to exercise
reasonable care. No segregation or specific allocation by
the Lender of specified items of Collateral against any
liability of the Borrower shall waive or affect any
security interest in or Lien against other items of
Collateral or any of the Lender's options, powers or
rights under this Agreement or otherwise arising.
(c) The Lender may at any time and from time to
time, with or without notice to the Borrower, (i) transfer
into the name of the Lender or the name of the Lender's
nominee any of the Collateral, (ii) notify any Account
Debtor or other obligor of any Collateral to make payment
thereon direct to the Lender of any amounts due or to
become due thereon and (iii) receive and after a default
direct the disposition of any proceeds of any Collateral.
7.2 Remedies.
(a) If an Event of Default shall have occurred
and be continuing, without waiving any of its other rights
hereunder or under any other Loan Documents, the Lender
shall have all rights and remedies of a secured party
under the Code (and the Uniform Commercial Code of any
other applicable jurisdiction) and such other rights and
remedies as may be available hereunder, under other
applicable law or pursuant to contract. If requested by
the Lender, the Borrower will promptly assemble the
Collateral and make it available to the Lender at a place
to be designated by the Lender. The Borrower agrees that
any notice by the Lender of the sale or disposition of the
Collateral or any other intended action hereunder, whether
required by the Code or otherwise, shall constitute
reasonable notice to the Borrower if the notice is mailed
to the Borrower by regular or certified mail, postage
prepaid, at least five days before the action to be taken.
The Borrower shall be liable for any deficiencies in the
event the proceeds of the disposition of the Collateral do
not satisfy the Indebtedness in full.
(b) If an Event of Default shall have occurred
and be continuing, the Lender may demand, collect and xxx
for all amounts owed pursuant to Accounts, General
Intangibles, Chattel paper or for proceeds of any
Collateral (either in the Borrower's name or the Lender's
name at the latter's option), with the right to enforce,
compromise, settle or discharge any such amounts. The
Borrower appoints the Lender as the Borrower's
attorney-in-fact to endorse the Borrower's name on all
checks, commercial paper and other instruments pertaining
to Collateral or proceeds.
(c) The Borrower specifically authorizes the
Lender, without limiting any other rights of the Lender,
to apply the proceeds realized from disposition of the
Collateral to satisfy the following items, in the order
here listed:
(1) The cost of reimbursing any person whose
interest in the premises is physically damaged by the
entry and removal of the Collateral, upon Borrower'S
failure to do so; next to
(2) The expenses of taking, removing, holding for
sale, repairing or otherwise preparing for sale and
selling of said Collateral, specifically including the
Lender'S reasonable attorney's fees (including appellate
costs, if any) and both legal and collection expenses;
next to
(3) The expense of liquidating any liens, security
interests, attachments or encumbrances superior to the
security interests herein created; and, finally to
(4) The unpaid principal and all accumulated
interest hereunder and to any other debt owed to Lender
by any signer hereof.
Any surplus, after the satisfaction of the
foregoing items (1) through (4) shall be paid to
Borrower or to any other party lawfully entitled
thereto and known to the Lender. Further, if proceeds
realized from disposition of the Collateral shall fail
to satisfy any of the foregoing items (1) through (4),
Borrower shall forthwith pay deficiency balance to
Lender.
7.3 Power of Attorney. The Borrower authorizes the
Lender at the Borrower's expense to file any financing
statements relating to the Collateral (without the Borrower's
signature thereon) which the Lender deems appropriate and the
Borrower irrevocably appoints the Lender as its
attorney-in-fact to execute any such financing statements in
the Borrower's name and to perform all other acts which the
Lender deems appropriate to perfect and to continue perfection
of the security interest of the Lender. The Borrower hereby
appoints the Lender as the Borrower's attorney-in-fact to
endorse, present and collect on behalf of the Borrower and in
the Borrower's name any draft, checks or other documents
necessary or desirable to collect any amounts which the
Borrower may be owed. Borrower further hereby irrevocably
appoints the Lender as its attorney-in-fact, which power of
attorney shall be irrevocable for so long as any amount is
unpaid under either Note, to give Lender the sole right to file
Proof of Loss and/or any other forms required to collect from
any insurer any amount due from any loss, damage or destruction
of the Collateral; to agree to and bind Borrower as to the
amount of said recovery; to designate payee(s) of such
recovery; to grant releases to payor-insurers for their
liability; to grant subrogation rights to any such payor-insurer,
to endorse any settlement check or draft. Borrower
further agrees not to exercise any of the foregoing powers
granted to Lender without the Lender's prior written consent.
7.4 Entry. The Borrower hereby irrevocably consents to
any act by the Lender or its agents in entering upon any
premises for the purposes of either (i) inspecting the
Collateral or (ii) taking possession of the Collateral; and the
Borrower hereby waives its right to assert against the Lender
or its agents any claim based upon trespass or any similar
cause of action for entering upon any premises where the
Collateral may be located.
7.5. Deposits; Insurance. Upon the occurrence and
continuance of an Event of Default, the Borrower authorizes the
Lender to collect and apply against the Indebtedness when due
any cash or deposit accounts in its possession, and any refund
of insurance premiums or any insurance proceeds payable on
account of the loss or damage to any of the Collateral and
irrevocably appoints the Lender as its attorney-in-fact to
endorse any check or draft or take other action necessary to
obtain such funds.
7.6. Other Rights. The Borrower authorizes the Lender
without affecting the Borrower's obligations hereunder or under
any other Loan Document from time to time (i) to take from any
party and hold additional Collateral or guaranties for the
payment of the Indebtedness or any part thereof, and to
exchange, enforce or release such collateral or guaranty of
payment of the Indebtedness or any part thereof and to release
or substitute any endorser or guarantor or any party who has
given any security interest in any collateral as security for
the payment of the Indebtedness or any part thereof or any
party in any way obligated to pay the Indebtedness or any part
thereof; (ii) upon the occurrence of any Event of Default to
direct the manner of the disposition of the Collateral and the
enforcement of any endorsements, guaranties, letters of credit
or other security relating to the Indebtedness or any part
thereof as the Lender in its sole discretion may determine;
(iii) upon the occurrence of any Event of Default to take
immediate possession of the Collateral without notice or resort
to legal process, and for such purpose, to enter upon any
premises on which the Collateral or any part thereof may be
situated and remove the same therefrom, or, at its option, to
render the Collateral unusable;(iv) upon the occurrence of any
Event of Default, at Lender's option, to dispose of said
Collateral on Borrower's premises; and (v) to make or have made
any repairs deemed necessary or desirable at time of
repossession, possession or sale, the cost of which is to be
charged against the Borrower.
7.7. Accounts. Before or after any Event of Default, the
Lender may notify any Account Debtor of the Lender's security
interest and may direct such Account Debtor to make payment
directly to the Lender for application against the
Indebtedness. Any such payments received by or on behalf of
the Borrower at any time, whether before or after default,
shall be the property of the Lender, shall be held in trust for
the Lender and not commingled with any other assets of any
Person (except to the extent they may be commingled with other
assets of the Borrower in an account with the Lender) and shall
be immediately delivered to the Lender in the form received.
The Lender shall have the right to apply any proceeds of
Collateral to such of the Indebtedness as it may determine.
7.8. Tangible Collateral. Except as otherwise provided
herein or agreed to in writing by the Lender, no Inventory or
other tangible collateral shall be commingled with, or become
an accession to or part of, any property of any other Person so
long as such property is Collateral. Upon the occurrence of
any Event of Default, the Borrower shall, upon the request of
the Lender, promptly assemble all tangible Collateral for
delivery to the Lender or its agents. No tangible Collateral
shall be allowed to become a fixture unless the Lender shall
have given its prior written authorization.
7.9. Waiver of Marshalling. The Borrower hereby waives
any right it may have to require marshaling of its assets.
7.10. Waiver of Automatic Stay. The Borrower hereby waives
the application of the automatic stay of enforcement provided
in Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code and agrees
that the Lender may proceed with enforcement and collection
notwithstanding the filing of a petition in bankruptcy.
8. Miscellaneous.
8.1. No Waiver, Remedies Cumulative. No failure on the
part of the Lender to exercise, and no delay in exercising, any
right hereunder or under any other Loan Document shall operate
as a waiver thereof, nor shall any single or partial exercise
of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies
herein provided are cumulative and are in addition to any other
remedies provided by law, any Loan Document or otherwise, and
may be pursued singly, successively or together, in the sole
discretion of Lender, and may be exercised as often as occasion
therefor shall arise.
8.2. Survival of Representations. All representations and
warranties made herein shall survive the making of the Loans
hereunder and the delivery of the Notes, and shall continue in
full force and effect so long as any balance of either Note is
outstanding, there exists any commitment by the Lender to the
Borrower, and until this Agreement is formally terminated in
writing.
8.3. Expenses. Whether or not the Loan herein provided
for shall be made, the Borrower shall pay all reasonable costs
and expenses in connection with the preparation, execution,
delivery, amendment and enforcement of this Agreement and any
Loan Document, including the reasonable fees and disbursements
of counsel for the Lender in connection therewith, whether suit
be brought or not and whether incurred at trial or on appeal,
and all costs of repossession, storage, disposition, protection
and collection of Collateral. If the Borrower should fail to
pay any tax or other amount required by this Agreement to be
paid or which may be reasonably necessary to protect or
preserve any Collateral or the Borrower's or Lender's interests
therein, the Lender may make such payment and the amount
thereof shall be payable on demand, shall bear interest at the
Default Rate from the date of demand until paid and shall be
deemed to be Indebtedness entitled to the benefit and security
of the Loan Documents.
In addition, the Borrower agrees to pay and save the Lender
harmless against any liability for payment of any state
documentary stamp taxes, intangible taxes or similar taxes
(including interest or penalties, if any) which may now or
hereafter be determined to be payable in respect to the
execution, delivery or recording of any Loan Document or the
making of any Advance, whether originally thought to be due or
not, and regardless of any mistake of fact or law on the part
of the Lender or the Borrower with respect to the applicability
of such tax. The provisions of this Section shall survive
payment in full of the Loan and termination of this Agreement.
8.4. Notices. Any notice or other communication hereunder
to any party hereto shall be by hand delivery, overnight
delivery, facsimile, telegram, telex or registered or certified
mail and unless otherwise provided herein shall be deemed to
have been given or made when delivered, telegraphed, telexed,
faxed or deposited in the mails, postage prepaid, addressed to
the party at its address specified below (or at any other
address that the party may hereafter specify to the other
parties in writing):
The Lender: Tradelink International Limited
0000 Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxx Xxxxxxx
With copy to: Xxxxxxxx & Xxxxx
One Independent Drive, Suite 3131
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
The Borrower: Vector Aeromotive Corporation
000 Xxxxxx Xxxxxx
Xxxxx Xxxx Xxxxxxx, Xxxxxxx
Attention: Treasurer
8.5. Governing Law. This Agreement and the Loan Documents
shall be deemed contracts made under the laws of the State of
Florida and shall be governed by and construed in accordance
with the laws of Florida except insofar as the laws of another
jurisdiction may govern the perfection, priority and
enforcement of security interests in Collateral located in
another jurisdiction.
8.6. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the Borrower and
the Lender, and their respective successors and assigns;
provided, that the Borrower may not assign any of its rights
hereunder without the prior written consent of the Lender, and
any such assignment made without such consent will be void.
8.7. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed an original and all of which when
taken together shall constitute but one and the same
instrument.
8.8. No Usury. Notwithstanding anything contained in this
Agreement, the Notes, or in any other Loan Document to the
contrary, in no event will interest or other charges deemed to
be interest be chargeable against the Borrower if such amount
(combined with any other amounts considered to be in the nature
of interest) would exceed the maximum amount permitted by law
from time to time while any of the Notes is outstanding, and in
the event any amount in excess of the lawful maximum is charged
or collected by the Lender or paid by the Borrower, the
Borrower shall be entitled to the reimbursement of such excess
together with interest thereon at the highest lawful rate at
the time of such overcharge.
8.9. Powers. All powers of attorney granted to the Lender
are coupled with an interest and are irrevocable.
8.10. Approvals. If this Agreement calls for the approval
or consent of the Lender, such approval or consent may be given
or withheld in the sole discretion of the Lender unless
otherwise specified herein.
8.11. Jurisdiction, Service of Process.
(a) Any suit, action or proceeding against the
Borrower with respect to this Agreement, the Collateral or
any Loan Document or any judgment entered by any court in
respect thereof may be brought in the courts of Clay County,
Florida or in the U.S. District court for the Middle
District of Florida as the Lender (in its sole discretion)
may elect, and the Borrower hereby accepts the nonexclusive
jurisdiction of those courts for the purpose of any suit,
action or proceeding. Service of process in any such case
may be had against the Borrower by delivery in accordance
with the notice provisions herein or as otherwise permitted
by law, and the Borrower agrees that such service shall be
valid in all respects for establishing personal jurisdiction
over it.
(b) In addition, the Borrower hereby irrevocably
waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or
relating to this Agreement, the Loan Documents, the
Collateral or any judgment entered by any court in respect
thereof brought in Clay County, Florida or the U.S. District
Court for the Middle District of Florida, as selected by the
Lender, and hereby further irrevocably waives any claim that
any suit, action or proceedings brought in Clay County,
Florida or in such District Court has been brought in an
inconvenient forum.
8.12. Multiple Borrowers. If more than one Person is named
herein as the Borrower, all obligations, representations and
covenants herein and in other Loan Documents to which the
Borrower is a party shall be joint and several.
8.13. Waiver of Jury Trial. THE BORROWER AND THE LENDER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT
EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED UPON THIS AGREEMENT OR ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT AND ANY OTHER LOAN
DOCUMENT AND ANY OTHER AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTIES ENTERING INTO THIS AGREEMENT.
(EXECUTION ON FOLLOWING PAGE)
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first
above written.
TRADELINK INTERNATIONAL LIMITED
By: /s/ X. X. Xxxxxxx
Its President
VECTOR AEROMOTIVE CORPORATION
By: /s/ Xxxxx Xxxxx Xxxx
Its President
SCHEDULE OF EXHIBITS
(If any exhibit is omitted, the information called for therein
shall be considered "None" or "Not Applicable")
Exhibit Section Reference Title
1.1C 1.1 ("Permitted Debt") Permitted Debt
1.1D 1.1 ("Permitted Liens") Permitted Liens
2.3 2.3 ("Financial Condition") Contingent Liabilities
2.4 2.4 ("Litigation") Litigation
2.9 2.9 ("Location") Offices of Borrower
3.3 3.3 ("Notice & Manner of Borrowing") Form of Advance
Request
EXHIBIT 1.1C
Permitted Debt
The following shall be additional Permitted Debt:
1. Any Debt approved by the Board of Directors of Vector
after the date of this Agreement.
EXHIBIT 1.1D
Permitted Liens
The following shall be additional Permitted Liens:
1. Deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance,
social security and similar laws.
2. Attachment, judgment and other similar non-tax Liens
arising in connection with court proceedings but only if and
for so long as (a) the execution or enforcement of such Liens
is and continues to be effectively stayed and bonded on appeal,
(b) the validity and/or amount of the claims secured thereby
are being actively contested in good faith by appropriate legal
proceedings and (c) such Liens do not, in the aggregate,
materially detract from the value of the assets of the Person
whose assets are subject to such Lien or materially impair the
use thereof in the operation of such Person's business.
3. Liens securing Permitted Debt incurred solely for the
purpose of financing the acquisition of equipment, provided
that such Lien does not secure more than the purchase price of
such equipment and does not encumber property other than the
purchased property.
EXHIBIT 2.3
CONTINGENT LIABILITIES
The following are contingent liabilities of the Borrower:
[Describe listing liable party, maximum potential liability,
nature of liability and its current status]
EXHIBIT 2.4
LITIGATION
Describe any suit or proceeding pending or threatened :
[Describe any suit or proceeding pending or threatened before
any court, governmental or regulatory authority, commission,
Bureau or agency or public regulatory body.]
EXHIBIT 2.9
OFFICES OF BORROWER
List any offices of Borrower not listed in Section 8.4.
NAME LOCATION TYPE OF FACILITY
N/A 000 Xxxxxx Xxxxxx production plant
Green Cove Springs
Florida
EXHIBIT 3.3
FORM OF ADVANCE REQUEST
Borrower Name: VECTOR AEROMOTIVE CORPORATION
Maximum Loan Amount: ___ $1,250,000 or ___ $2,500,000
Previous Advances (aggregate): $______________
Repayments (aggregate): $________________
Amount of Loan remaining: $_______________
Amount requested: $________________
Advance Date: ________________, 199__
All representations and warranties made by Borrower in the
Agreement or otherwise in writing in connection with the
Agreement are true and correct as of the date hereof.
There has not been a material adverse change in the condition,
financial or otherwise, of the Borrower from the condition as
it existed on the date of the most recent financial statements
of Borrower delivered to the Lender.
The undersigned hereby certifies, represents and warrants that
there has not occurred an event of Default under the Agreement
or any other Loan Document and no event has occurred that with
the passage of time or the giving of notice will constitute an
Event of Default and the making of the Advance requested hereby
will not cause an Event or Default or such an event.
___________________________(SEAL)
PROMISSORY NOTE
$1,250,000 July 22, 1997
(Date of Execution and Delivery)
LENDER: TRADELINK INTERNATIONAL LIMITED (hereinafter termed
"LENDER"), 0000 Xxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx 00000-0000
BORROWER(S): VECTOR AEROMOTIVE CORPORATION, a Nevada
corporation, 000 Xxxxxx Xxxxxx, Xxxxx Xxxx Xxxxxxx, Xxxxxxx
00000
BORROWER(S) REPRESENT HEREWITH THAT THE LOAN EVIDENCED IS BEING
OBTAINED PRIMARILY FOR BUSINESS PURPOSES.
FOR VALUE RECEIVED: to wit, money loaned, the above-named;
undersigned BORROWER(s) (hereinafter collectively termed
"BORROWER"), jointly and severally (if more than one BORROWER),
promise(s) to pay to the order of LENDER at its office in the
above city, or wherever else LENDER may specify, the sum of ONE
MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($1,250,000), with
interest paid as follows. From the date of the first advance
under this Note until the date that is the day immediately after
the fifth consecutive day that the principal balance outstanding
under this Note is $1,250,000 (the "Conversion Date"), interest
shall accrue and be paid at the annual rate of LENDER'S PRIME
RATE plus 2.0% as that rate may change from time to time with
changes to occur on the date the LENDER'S PRIME RATE changes.
From and after the Conversion Date, interest shall accrue and be
paid at the annual rate of ten percent (10.0%) .
The Borrower shall pay interest and principal under this
Note as follows. Until the Conversion Date, interest shall
be payable monthly in arrears commencing on the day that
is thirty (30) days after the date of this Note and
continuing on the same day of each consecutive month
thereafter, and all principal outstanding and accrued and
unpaid interest shall be payable in full ON DEMAND. From
and after the Conversion Date, this Note shall be payable
in consecutive monthly payments of $16,518.84, commencing
on the day that is thirty (30) days after the Conversion
Date and continuing on the same day of each consecutive
month thereafter until the date that is one hundred twenty
(120) months after the Conversion Date, at which time (the
"Maturity Date") all principal outstanding and accrued and
unpaid interest shall be payable in full.
The undersigned agrees to pay a late charge equal to 5%
of each payment of principal and/or interest which is not
paid within 10 days of the date on which it is due. At
LENDER'S option, the rate of interest charged shall become
a rate equal to the lesser of (a) five (5) percentage
points above the rate on the Note otherwise in effect, or
(b) the highest rate allowed by the law of the State of
Florida, commencing with and continuing for so long as this
Note is in Default (as hereinafter defined). Further, upon
BORROWER'S Default and where LENDER deems it necessary or
proper to employ an attorney to enforce collection of any
unpaid balance or to otherwise protect its interests
hereunder, then BORROWER agrees to pay to the LENDER
reasonable attorney's and legal fees for the services and
expenses of counsel, paralegals and others employed after
maturity or default to collect this Note, whether or not
suit be brought, and whether incurred in connection with
collection, trial, appeal, bankruptcy proceedings or
otherwise, and to indemnify and to hold the LENDER
harmless against liability for the payment of state
documentary stamp taxes, intangible taxes and other taxes
(including interest and penalties, if any) which may be
determined to be payable with respect to this transaction.
If the interest provision contained herein refers to
"LENDER'S PRIME RATE," the LENDER'S PRIME RATE shall be the
prime rate as published in the Wall Street Journal ("WSJ")
as of the date of this Note ("WSJ Prime Rate"). The
interest rate will change from time to time as the WSJ
Prime Rate changes in an amount equal to the change in the
WSJ Prime Rate, but will not change more often than once a
month which will occur on the first day of each calendar
month and will be based on the prime rate published in the
WSJ on the 25th of the prior calendar month. If more than
one rate is published, the highest rate published shall
apply; and if the 25th or the date of closing falls on a
day when the WSJ Prime Rate is not published, the WSJ Prime
Rate shall be the rate published on the last day prior to
the 25th or the date of closing. The BORROWER understands
and agrees that the WSJ Prime Rate is not represented or
intended to be the lowest or most favorable rate offered by
LENDER to any of its borrowers.
If the scheduled payment amount is insufficient to pay
accrued interest, BORROWER shall make an additional payment
of the amount of the accrued interest in excess of the
scheduled payment.
PAYMENT of this Note, all obligations of the undersigned
BORROWER hereunder and under the Security Agreement defined
below ("OBLIGATIONS") to LENDER, its successors and
assigns, is secured, inter alia (and includes the terms and
obligations set forth therein), by a valid, subsisting Loan
and Security Agreement made by and between BORROWER and
LENDER (the "Loan Agreement") describing certain personal
property (the "COLLATERAL"), and by this reference is
incorporated herein.
If an Event of Default under this Note occurs or if the
BORROWER violates any of the terms or breaches any of the
conditions of the Loan Agreement, the entire principal sum
and accrued interest shall become due and payable without
notice unless otherwise provided in the Loan Agreement at
the option of the LENDER. TIME BEING OF THE ESSENCE OF
THIS NOTE. Failure to exercise this option shall not
constitute a waiver of the right to exercise the same at
any other time. Upon such Default, the principal of the
Note and any part thereof, and accrued unpaid interest, if
any, shall bear interest at the rate of the then highest
legal rate permissible by law. All parties liable for the
payment of this Note agree to pay the LENDER hereof
reasonable attorneys' fees for the services and expenses of
counsel employed after maturity or Default to collect this
Note (including any appeals relating to such enforcement
proceedings), or to protect or enforce the security hereto,
whether or not suit be brought. Notwithstanding any other
provisions of this Note, LENDER may, in the sole discretion
of LENDER, accept payments under this Note made by BORROWER
after any Default has occurred, without waiving any of
LENDER'S rights or remedies under this Note.
The remedies of LENDER as provided herein and in the
Loan Agreement shall be cumulative and concurrent, and may
be pursued singly, successively or together, at the sole
discretion of LENDER, and may be exercised as often as
occasion therefor shall arise. No act of omission or
commission of LENDER, including specifically any failure to
exercise any right, remedy or recourse, shall be effective
as a waiver thereof unless it is set forth in a written
document executed by LENDER and then only to the extent
specifically recited therein. A waiver or release with
reference to one event shall not be construed as
continuing, as a bar to, or as a waiver or release of, any
subsequent right, remedy or recourse as to any subsequent
event.
BORROWER and all sureties, endorsers and guarantors of
this Note, jointly and severally, hereby (a) waive demand,
presentment for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, notice of
acceleration after Default and all other notices, filing of
suit and diligence in collecting this Note, in enforcing
any of the security rights or in proceeding against the
COLLATERAL; (b) agree to any substitution, exchange,
addition or release of any of the COLLATERAL or the
addition or release of any party or person primarily or
secondarily liable hereon; (c) agree that LENDER shall not
be required first to institute any suit, or to exhaust his,
their or its remedies against BORROWER or any other person
or party to become liable hereunder or against the
COLLATERAL in order to enforce payment of this Note; (d)
consent to any extension, rearrangement, renewal or
postponement of time of payment of this Note and to any
other indulgence with respect hereto without notice,
consent or consideration to any of the foregoing (except
the express written release by LENDER of any such person),
they shall be and remain jointly and severally, directly
and primarily, liable for all sums due under this Note and
the Loan Agreement.
As used herein, the words "BORROWER" and "LENDER" shall
be deemed to include BORROWER and LENDER as defined herein
and their respective heirs, personal representatives,
successors and assigns.
This Note is executed and delivered at the Place of
Execution and shall be construed and enforced in accordance
with the laws of the State of Florida.
Anything contained herein to the contrary
notwithstanding, if for any reason the effective rate of
interest on this Note should exceed the maximum lawful
rate, the effective rate shall be deemed reduced to and
shall be such maximum lawful rate, and any sums of interest
which have been collected in excess of such maximum lawful
rate shall be applied as a credit against the unpaid
balance due hereunder and thereafter delivered to BORROWER.
Under no circumstances shall BORROWER, or any parties
liable for the payment of this Note, be required to pay
interest in excess of the maximum rate allowed by
applicable law.
Interest is computed on the basis of a 360-day year for
the actual number of days in the interest period
(Actual/360 Computation) unless indicated below. LENDER'S
Actual/360 or 365/360 computation determines the annual
effective interest yield by taking the stated (nominal)
interest rate for a year's period and then dividing said
rate by 360 to determine the daily periodic rate to be
applied for each day in the interest period. Application
of such computation produces an annualized effective
interest rate exceeding that of the nominal rate.
At LENDER'S option, any repayments of this Note, other
than by U.S. currency, will not be credited to the
outstanding loan balance until LENDER receives collected
funds.
In the event any provision(s) of this instrument shall
be left blank or incomplete, BORROWER hereby authorizes and
empowers LENDER to supply and complete the necessary
information as a ministerial task consistent with the
understanding between the parties.
Upon any transfer of this Note, the LENDER may deliver
the property held as security, or any part thereof, to the
transferee, as well as any subsequent holder hereof, who
shall thereupon become vested with all the powers and
rights herein given to the LENDER in respect to the
property so transferred and delivered; and the LENDER shall
thereafter be forever relieved and fully discharged from
any liability or responsibility with respect to such
property so transferred but with respect to any property
not so transferred, the LENDER shall retain all rights and
powers hereby given.
WAIVER OF JURY TRIAL. BY THE EXECUTION HEREOF, BORROWER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY AGREES,
THAT:
(A) NEITHER THE BORROWER NOR ANY ASSIGNEE, SUCCESSOR,
HEIR, OR LEGAL REPRESENTATION OF ANY OF THE SAME SHALL SEEK
A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR
ANY OTHER LITIGATION PROCEDURE ARISING FROM OR BASED UPON
THIS PROMISSORY NOTE, ANY OTHER LOAN AGREEMENT OR ANY LOAN
DOCUMENT EVIDENCING, SECURING OR RELATING TO THE
OBLIGATIONS OR TO THE DEALINGS OR RELATIONSHIP BETWEEN OR
AMONG THE PARTIES THERETO;
(B) NEITHER THE BORROWER NOR LENDER WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN
WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT
BEEN OR CANNOT BE WAIVED;
(C) THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
NEGOTIATED BY THE PARTIES HERETO, AND THESE PROVISIONS
SHALL BE SUBJECT TO NO EXCEPTIONS;
(D) NEITHER THE BORROWER NOR LENDER HAS IN ANY WAY
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE
PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES; AND
(E) THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER
TO ENTER INTO THIS TRANSACTION.
EVENTS OF DEFAULT. BORROWER shall be in Default
under this Note upon the happening of any of the following
events, circumstances or conditions, namely:
(1) Default in the payment or performance of any of the
OBLIGATIONS provided hereunder or in connection herewith or
any other OBLIGATIONS of BORROWER or any affiliate (as
defined in 11 U.S.C. 101(2), hereinafter affiliate) of
BORROWER or any endorser, guarantor or surety for BORROWER
to LENDER or any affiliate of LENDER, howsoever created,
primary or secondary, whether direct or indirect, absolute
or contingent, now or hereafter existing, due or to become
due, or of any other covenant, warranty or undertaking
expressed herein, therein, or in any other document
establishing said endorsement, guaranty, or surety; or any
other document executed by BORROWER in conjunction
herewith; or
(2) Any warranty, representation or statement made or
furnished to LENDER by or on behalf of BORROWER, or any
guarantor, endorser, or surety for BORROWER in connection
with this Note or to induce LENDER to make a loan to
BORROWER which was false in any material respect when made
or furnished or has become materially false, if such
warranty of BORROWER or guarantor, endorser or surety for
BORROWER was ongoing in nature; or
(3) Death, dissolution, liquidation, termination of
existence, insolvency, business failure, appointment of a
receiver, custodian, or trustee for any part of the
property of, assignment for the benefit of creditors by, or
the commencement of any proceeding under any bankruptcy or
insolvency laws by or against BORROWER or any endorser,
guarantor, or surety for BORROWER; or
(4) BORROWER or any guarantor, endorser, or surety for
BORROWER shall allow the acquisition of substantially all
of the business or assets of BORROWER or guarantor,
endorser, or surety for BORROWER or a material portion of
such business or assets if such a sale is outside
BORROWER'S or guarantor's, endorser's or surety's ordinary
course of business, or more than 50% of the outstanding
stock or voting power of any other entity, or enter into
any transaction of merger or consolidation without prior
written consent of LENDER; or
(5) Failure of a corporate BORROWER or endorser,
guarantor, or surety for said BORROWER to maintain its
corporate existence in good standing; or
(6) Upon the entry of any monetary judgment or the
assessment and/or filing of any tax lien against BORROWER
or any endorser, surety, or guarantor, or upon the issuance
of any writ of garnishment, judicial seizure of, or
attachment against any property of, debts due or rights of
BORROWER or any endorser, surety or guarantor, to
specifically include commencement of any action or
proceeding to seize monies of BORROWER or any endorser,
surety or guarantor on deposit in any bank account with
LENDER; or
(7) The BORROWER or any endorser, guarantor, or surety
for said BORROWER shall be a debtor, either voluntarily,
under (and as the term debtor is defined in) the United
States Bankruptcy Code or should the BORROWER be generally
not paying BORROWER'S debts as such debts become due; or
(8) Failure of BORROWER, endorsers, guarantors or
sureties to furnish financial statements or other financial
information reasonably requested by LENDER; or
(9) Loss, theft, substantial damage, destruction, sale
or encumbrance to or of any COLLATERAL, or the assertion or
making of any foreclosure, levy, seizure, mechanic's or
materialman's lien or attachment thereof or thereon; or
(10) If LENDER should otherwise deem itself or the
debt created hereunder unsafe or insecure; or should
LENDER, in good faith, believe that the prospect of payment
or other performance is impaired.
THE FOREGOING ENUMERATION OF EVENTS OF DEFAULT
NOTWITHSTANDING, NOTHING HEREIN SHALL BE DEEMED TO LIMIT,
RESTRICT, IMPAIR OR DIMINISH THE ABSOLUTE RIGHT OF THE
LENDER TO DEMAND PAYMENT OF THE NOTE IN FULL, AT ANY TIME,
WITHOUT CAUSE.
No waivers, amendments or modifications shall be valid
unless in writing. No waiver by LENDER of any Default(s)
shall operate as a waiver of any other default or the same
default on a future occasion. All rights of LENDER
hereunder shall inure to the benefit of its successors and
assigns; and all obligations of BORROWER shall bind his
heirs, executors, administrators, successors and/or
assigns.
If more than one person has signed this instrument, such
parties are jointly and severally obligated hereunder.
Further, use of the masculine pronoun herein shall include
the feminine and neuter and also the plural. If any
provision of this instrument shall be prohibited or invalid
under applicable law, such provision shall be ineffective
but only to the extent of such prohibition of invalidity,
without invalidation the remainder of such provision or the
remaining provisions of this Note. In the case of conflict
between the terms of this Note and any Loan Agreement
and/or Letter of Intent issued in connection herewith, the
priority of controlling terms shall be first this Note,
then the Loan Agreement, then the Letter of Intent.
IN WITNESS WHEREOF, the BORROWER, on the day and year
first written above, has caused this Note to be executed
under seal by (i) if a corporation, adoption of the
facsimile seal printed hereon for such special occasion and
purpose (or if an impression seal appears hereon by
affixing such impression seal) by its duly authorized
officer(s), or (ii) if by individuals, by hereunto setting
their hands and seals.
VECTOR AEROMOTIVE CORPORATION
By: /s/ Xxxxx Xxxxx Xxxx
Its President
Taxpayer Identification Number 00-0000000
PROMISSORY NOTE
$2,500,000 July 22, 1997
(Date of Execution and Delivery)
LENDER: TRADELINK INTERNATIONAL LIMITED (hereinafter
termed "LENDER"), 0000 Xxxx Xxxxxx, Xxxxx Xxxxxx,
Xxxxxxxxxx 00000-0000
BORROWER(S): VECTOR AEROMOTIVE CORPORATION, a Nevada
corporation, 000 Xxxxxx Xxxxxx, Xxxxx Xxxx Xxxxxxx, Xxxxxxx
00000
BORROWER(S) REPRESENT HEREWITH THAT THE LOAN EVIDENCED IS
BEING OBTAINED PRIMARY FOR BUSINESS PURPOSES.
FOR VALUE RECEIVED: to wit, money loaned, the above-named;
undersigned BORROWER(s) (hereinafter collectively
termed "BORROWER"), jointly and severally (if more than one
BORROWER), promise(s) to pay to the order of LENDER at its
office in the above city, or wherever else LENDER may
specify, the sum of TWO MILLION FIVE HUNDRED THOUSAND
DOLLARS ($2,500,000), with interest paid as follows. From
the date of the first advance under this Note, interest
shall accrue and be paid at the annual rate of LENDER'S
PRIME RATE plus 2.0% as that rate may change from time to
time with changes to occur on the date the LENDER'S PRIME
RATE changes.
The Borrower shall pay interest and principal under this
Note as follows. Interest shall be payable monthly in
arrears commencing on the day that is thirty (30) days
after the date of this Note and continuing on the same day
of each consecutive month thereafter, and all principal
outstanding and accrued and unpaid interest shall be
payable in full ON DEMAND.
The undersigned agrees to pay a late charge equal to 5%
of each payment of principal and/or interest which is not
paid within 10 days of the date on which it is due. At
LENDER'S option, the rate of interest charged shall become
a rate equal to the lesser of (a) five (5) percentage
points above the rate on the Note otherwise in effect, or
(b) the highest rate allowed by the law of the State of
Florida, commencing with and continuing for so long as this
Note is in Default (as hereinafter defined). Further, upon
BORROWER'S Default and where LENDER deems it necessary or
proper to employ an attorney to enforce collection of any
unpaid balance or to otherwise protect its interests
hereunder, then BORROWER agrees to pay to the LENDER
reasonable attorney's and legal fees for the services and
expenses of counsel, paralegals and others employed after
maturity or default to collect this Note, whether or not
suit be brought, and whether incurred in connection with
collection, trial, appeal, bankruptcy proceedings or
otherwise, and to indemnify and to hold the LENDER
harmless against liability for the payment of state
documentary stamp taxes, intangible taxes and other taxes
(including interest and penalties, if any) which may be
determined to be payable with respect to this transaction.
If the interest provision contained herein refers to
"LENDER'S PRIME RATE," the LENDER'S PRIME RATE shall be the
prime rate as published in the Wall Street Journal ("WSJ")
as of the date of this Note ("WSJ Prime Rate"). The
interest rate will change from time to time as the WSJ
Prime Rate changes in an amount equal to the change in the
WSJ Prime Rate, but will not change more often than once a
month which will occur on the first day of each calendar
month and will be based on the prime rate published in the
WSJ on the 25th of the prior calendar month. If more than
one rate is published, the highest rate published shall
apply; and if the 25th or the date of closing falls on a
day when the WSJ Prime Rate is not published, the WSJ Prime
Rate shall be the rate published on the last day prior to
the 25th or the date of closing. The BORROWER understands
and agrees that the WSJ Prime Rate is not represented or
intended to be the lowest or most favorable rate offered by
LENDER to any of its borrowers.
PAYMENT of this Note, all obligations of the undersigned
BORROWER hereunder and under the Security Agreement defined
below ("OBLIGATIONS") to LENDER, its successors and
assigns, is secured, inter alia (and includes the terms and
obligations set forth therein), by a valid, subsisting Loan
and Security Agreement made by and between BORROWER and
LENDER (the "Loan Agreement") describing certain personal
property (the "COLLATERAL"), and by this reference is
incorporated herein.
If an Event of Default under this Note occurs or if the
BORROWER violates any of the terms or breaches any of the
conditions of the Loan Agreement, the entire principal sum
and accrued interest shall become due and payable without
notice unless otherwise provided in the Loan Agreement at
the option of the LENDER. TIME BEING OF THE ESSENCE OF
THIS NOTE. Failure to exercise this option shall not
constitute a waiver of the right to exercise the same at
any other time. Upon such Default, the principal of the
Note and any part thereof, and accrued unpaid interest, if
any, shall bear interest at the rate of the then highest
legal rate permissible by law. All parties liable for the
payment of this Note agree to pay the LENDER hereof
reasonable attorneys' fees for the services and expenses of
counsel employed after maturity or Default to collect this
Note (including any appeals relating to such enforcement
proceedings), or to protect or enforce the security hereto,
whether or not suit be brought. Notwithstanding any other
provisions of this Note, LENDER may, in the sole discretion
of LENDER, accept payments under this Note made by BORROWER
after any Default has occurred, without waiving any of
LENDER'S rights or remedies under this Note.
The remedies of LENDER as provided herein and in the
Loan Agreement shall be cumulative and concurrent, and may
be pursued singly, successively or together, at the sole
discretion of LENDER, and may be exercised as often as
occasion therefor shall arise. No act of omission or
commission of LENDER, including specifically any failure to
exercise any right, remedy or recourse, shall be effective
as a waiver thereof unless it is set forth in a written
document executed by LENDER and then only to the extent
specifically recited therein. A waiver or release with
reference to one event shall not be construed as
continuing, as a bar to, or as a waiver or release of, any
subsequent right, remedy or recourse as to any subsequent
event.
BORROWER and all sureties, endorsers and guarantors of
this Note, jointly and severally, hereby (a) waive demand,
presentment for payment, notice of nonpayment, protest,
notice of protest, notice of dishonor, notice of
acceleration after Default and all other notices, filing of
suit and diligence in collecting this Note, in enforcing
any of the security rights or in proceeding against the
COLLATERAL; (b) agree to any substitution, exchange,
addition or release of any of the COLLATERAL or the
addition or release of any party or person primarily or
secondarily liable hereon; (c) agree that LENDER shall not
be required first to institute any suit, or to exhaust his,
their or its remedies against BORROWER or any other person
or party to become liable hereunder or against the
COLLATERAL in order to enforce payment of this Note; (d)
consent to any extension, rearrangement, renewal or
postponement of time of payment of this Note and to any
other indulgence with respect hereto without notice,
consent or consideration to any of the foregoing (except
the express written release by LENDER of any such person),
they shall be and remain jointly and severally, directly
and primarily, liable for all sums due under this Note and
the Loan Agreement.
As used herein, the words "BORROWER" and "LENDER" shall
be deemed to include BORROWER and LENDER as defined herein
and their respective heirs, personal representatives,
successors and assigns.
This Note is executed and delivered at the Place of
Execution and shall be construed and enforced in accordance
with the laws of the State of Florida.
Anything contained herein to the contrary
notwithstanding, if for any reason the effective rate of
interest on this Note should exceed the maximum lawful
rate, the effective rate shall be deemed reduced to and
shall be such maximum lawful rate, and any sums of interest
which have been collected in excess of such maximum lawful
rate shall be applied as a credit against the unpaid
balance due hereunder and thereafter delivered to BORROWER.
Under no circumstances shall BORROWER, or any parties
liable for the payment of this Note, be required to pay
interest in excess of the maximum rate allowed by
applicable law.
Interest is computed on the basis of a 360-day year for
the actual number of days in the interest period
(Actual/360 Computation) unless indicated below. LENDER'S
Actual/360 or 365/360 computation determines the annual
effective interest yield by taking the stated (nominal)
interest rate for a year's period and then dividing said
rate by 360 to determine the daily periodic rate to be
applied for each day in the interest period. Application
of such computation produces an annualized effective
interest rate exceeding that of the nominal rate.
At LENDER'S option, any repayments of this Note, other
than by U.S. currency, will not be credited to the
outstanding loan balance until LENDER receives collected
funds.
In the event any provision(s) of this instrument shall
be left blank or incomplete, BORROWER hereby authorizes and
empowers LENDER to supply and complete the necessary
information as a ministerial task consistent with the
understanding between the parties.
Upon any transfer of this Note, the LENDER may deliver
the property held as security, or any part thereof, to the
transferee, as well as any subsequent holder hereof, who
shall thereupon become vested with all the powers and
rights herein given to the LENDER in respect to the
property so transferred and delivered; and the LENDER shall
thereafter be forever relieved and fully discharged from
any liability or responsibility with respect to such
property so transferred but with respect to any property
not so transferred, the LENDER shall retain all rights and
powers hereby given.
WAIVER OF JURY TRIAL. BY THE EXECUTION HEREOF, BORROWER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY AGREES,
THAT:
(A) NEITHER THE BORROWER NOR ANY ASSIGNEE, SUCCESSOR,
HEIR, OR LEGAL REPRESENTATION OF ANY OF THE SAME SHALL SEEK
A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR
ANY OTHER LITIGATION PROCEDURE ARISING FROM OR BASED UPON
THIS PROMISSORY NOTE, ANY OTHER LOAN AGREEMENT OR ANY LOAN
DOCUMENT EVIDENCING, SECURING OR RELATING TO THE
OBLIGATIONS OR TO THE DEALINGS OR RELATIONSHIP BETWEEN OR
AMONG THE PARTIES THERETO;
(B) NEITHER THE BORROWER NOR LENDER WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN
WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT
BEEN OR CANNOT BE WAIVED;
(C) THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
NEGOTIATED BY THE PARTIES HERETO, AND THESE PROVISIONS
SHALL BE SUBJECT TO NO EXCEPTIONS;
(D) NEITHER THE BORROWER NOR LENDER HAS IN ANY WAY
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE
PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES; AND
(E) THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER
TO ENTER INTO THIS TRANSACTION.
EVENTS OF DEFAULT. BORROWER shall be in Default
under this Note upon the happening of any of the following
events, circumstances or conditions, namely:
(11) Default in the payment or performance of any of
the OBLIGATIONS provided hereunder or in connection
herewith or any other OBLIGATIONS of BORROWER or any
affiliate (as defined in 11 U.S.C. 101(2), hereinafter
affiliate) of BORROWER or any endorser, guarantor or surety
for BORROWER to LENDER or any affiliate of LENDER,
howsoever created, primary or secondary, whether direct or
indirect, absolute or contingent, now or hereafter
existing, due or to become due, or of any other covenant,
warranty or undertaking expressed herein, therein, or in
any other document establishing said endorsement, guaranty,
or surety; or any other document executed by BORROWER in
conjunction herewith; or
(12) Any warranty, representation or statement made or
furnished to LENDER by or on behalf of BORROWER, or any
guarantor, endorser, or surety for BORROWER in connection
with this Note or to induce LENDER to make a loan to
BORROWER which was false in any material respect when made
or furnished or has become materially false, if such
warranty of BORROWER or guarantor, endorser or surety for
BORROWER was ongoing in nature; or
(13) Death, dissolution, liquidation, termination of
existence, insolvency, business failure, appointment of a
receiver, custodian, or trustee for any part of the
property of, assignment for the benefit of creditors by, or
the commencement of any proceeding under any bankruptcy or
insolvency laws by or against BORROWER or any endorser,
guarantor, or surety for BORROWER; or
(14) BORROWER or any guarantor, endorser, or surety
for BORROWER shall allow the acquisition of substantially
all of the business or assets of BORROWER or guarantor,
endorser, or surety for BORROWER or a material portion of
such business or assets if such a sale is outside
BORROWER'S or guarantor's, endorser's or surety's ordinary
course of business, or more than 50% of the outstanding
stock or voting power of any other entity, or enter into
any transaction of merger or consolidation without prior
written consent of LENDER; or
(15) Failure of a corporate BORROWER or endorser,
guarantor, or surety for said BORROWER to maintain its
corporate existence in good standing; or
(16) Upon the entry of any monetary judgment or the
assessment and/or filing of any tax lien against BORROWER
or any endorser, surety, or guarantor, or upon the issuance
of any writ of garnishment, judicial seizure of, or
attachment against any property of, debts due or rights of
BORROWER or any endorser, surety or guarantor, to
specifically include commencement of any action or
proceeding to seize monies of BORROWER or any endorser,
surety or guarantor on deposit in any bank account with
LENDER; or
(17) The BORROWER or any endorser, guarantor, or
surety for said BORROWER shall be a debtor, either
voluntarily, under (and as the term debtor is defined in)
the United States Bankruptcy Code or should the BORROWER be
generally not paying BORROWER'S debts as such debts become
due; or
(18) Failure of BORROWER, endorsers, guarantors or
sureties to furnish financial statements or other financial
information reasonably requested by LENDER; or
(19) Loss, theft, substantial damage, destruction,
sale or encumbrance to or of any COLLATERAL, or the
assertion or making of any foreclosure, levy, seizure,
mechanic's or materialman's lien or attachment thereof or
thereon; or
(20) If LENDER should otherwise deem itself or the
debt created hereunder unsafe or insecure; or should
LENDER, in good faith, believe that the prospect of payment
or other performance is impaired.
THE FOREGOING ENUMERATION OF EVENTS OF DEFAULT
NOTWITHSTANDING, NOTHING HEREIN SHALL BE DEEMED TO LIMIT,
RESTRICT, IMPAIR OR DIMINISH THE ABSOLUTE RIGHT OF THE
LENDER TO DEMAND PAYMENT OF THE NOTE IN FULL, AT ANY TIME,
WITHOUT CAUSE.
No waivers, amendments or modifications shall be valid
unless in writing. No waiver by LENDER of any Default(s)
shall operate as a waiver of any other default or the same
default on a future occasion. All rights of LENDER
hereunder shall inure to the benefit of its successors and
assigns; and all obligations of BORROWER shall bind his
heirs, executors, administrators, successors and/or
assigns.
If more than one person has signed this instrument, such
parties are jointly and severally obligated hereunder.
Further, use of the masculine pronoun herein shall include
the feminine and neuter and also the plural. If any
provision of this instrument shall be prohibited or invalid
under applicable law, such provision shall be ineffective
but only to the extent of such prohibition of invalidity,
without invalidation the remainder of such provision or the
remaining provisions of this Note. In the case of conflict
between the terms of this Note and any Loan Agreement
and/or Letter of Intent issued in connection herewith, the
priority of controlling terms shall be first this Note,
then the Loan Agreement, then the Letter of Intent.
IN WITNESS WHEREOF, the BORROWER, on the day and year
first written above, has caused this Note to be executed
under seal by (i) if a corporation, adoption of the
facsimile seal printed hereon for such special occasion and
purpose (or if an impression seal appears hereon by
affixing such impression seal) by its duly authorized
officer(s), or (ii) if by individuals, by hereunto setting
their hands and seals.
VECTOR AEROMOTIVE CORPORATION
By: /s/ Xxxxx Xxxxx Xxxx
Its President
Taxpayer Identification Number 00-0000000
