Exhibit 10.8
AGREEMENT FOR CONVERTIBLE, SECURED
LINE OF CREDIT
PHOENIX, ARIZONA
APRIL 30, 2001
THIS AGREEMENT, (the "AGREEMENT") effective April 30, 2001, is by, between
and among Dyna-Cam Engine Corporation, f/k/a TSI Handling, Inc., a corporation
organized under the laws of the State of Nevada ("MAKER") and Aztore Holdings,
Inc., of Phoenix, Arizona, a corporation organized under the laws of the State
of Arizona ("LENDER").
RECITALS
A. Maker is in the business of manufacturing and selling a unique,
cam-drive, free piston engines initially intended for use in airplanes;
B. Maker has authorized the issuance of up to six million shares of Series
A convertible preferred stock bearing a cumulative dividend of 10% per annum
(the "Series A Preferred stock");
C. Make has sold more than 1,000,000 shares of Series A Preferred stock;
D. Maker has entered into an agreement with Sunset Financial Services, Inc.
("SUNSET") to sell additional shares of Series A Preferred stock;
E. Lender is willing to provide the additional financing needed by Maker up
to $400,000 through a line of credit on a secured basis pursuant to the terms
and conditions of this Agreement (the "LINE OF CREDIT") awaiting the sale of
additional Series A Preferred stock;
F. Lender may, at its option, join with other companies, institutions or
individuals (the "PARTICIPATING LENDERS") to participate with Lender in order to
provide the Line of Credit;
G. A necessary precondition to the Lender entering into this Agreement is
for the Maker to execute this Agreement, a Security Agreement granting a
security interest in favor of the Lender in all personal property owned by Maker
(the "SECURITY AGREEMENT"), a UCC-1 Financing Statement, an amendment to the
Sunset Selling Agreement and a "RIGHTS AGREEMENT" concerning the naming of
members of the Makers' Board of Directors (collectively referred to hereinafter
as the "LOAN DOCUMENTS").
In consideration of the above recitals, the following representations,
warranties, covenants and conditions, and other good and valuable consideration,
the receipt of which is acknowledged, the parties agree as follows:
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 2 of 17
SECTION ONE
REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
Maker represents, warrants, and covenants that:
(1) Maker has been duly incorporated and organized and is existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
and is duly qualified and in good standing as a foreign corporation in those
jurisdictions where the conduct of its business or the ownership of its
properties requires qualification; Maker has the power and authority to own the
property that shall serve as collateral for all of the advances and loans made
by Lender to Maker (the "COLLATERAL"), pursuant to this Agreement and any
Secured Promissory Note, to enter into and perform this Agreement, and any other
document or instrument delivered in connection herewith.
(2) Except for liens specified in the Maker's Financial Statements,
attached hereto, Maker has good title to the Collateral and is the legal and
beneficial owner thereof and Maker warrants and will, at its own expense, defend
Lender's security interest in and to the Collateral against the claims of any
other person; Maker has not otherwise assigned, transferred or granted a
security interest in the Collateral or any right or interest therein which
remains in force except to Lender or an affiliate of Lender; and has not
executed any other instrument, and is not subject to any restriction, which
might prevent or limit Lender from enjoying the benefits of this Agreement;
(3) Maker will not further assign, transfer or grant or suffer to exist a
security interest in the Collateral or any other right, encumbrance, charge or
other interest therein, except to Lender or an affiliate thereof or in
connection with a transaction as a result of which the Line of Credit and any
other amounts due and owing to Lender or its nominee are repaid in full and the
Line of Credit Terminated;
(4) This Agreement has been duly authorized, executed and delivered,
constitutes the valid and binding obligation of Maker and is enforceable in
accordance with its terms;
(5) Maker will promptly (but not later than three days after receipt
thereof) deliver to Lender copies of all written notices received with respect
to the Collateral;
(6) Maker shall execute, acknowledge, deliver, record and file such further
instruments and do such further acts (including delivery of financing
statements) as Lender in its sole and absolute judgment deems necessary,
desirable or proper to carry out the purposes of this Agreement and to subject
to the security interest created hereby any property intended to be covered
hereby;
(7) No event has occurred (including, specifically, Maker's execution,
delivery of and performance under this Agreement) which will violate, constitute
(with notice and/or lapse of time) a default under, or result in the imposition
of any lien or other encumbrance upon, the Collateral pursuant to the terms of
(i) any judgment, decree, order, statute, ordinance, or regulation applicable to
Maker or any of the Collateral or (ii) any other contract or agreement to which
Maker is a party or by which its assets are bound;
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 3 of 17
(8) Maker is fully familiar with all the terms and conditions of this
Agreement;
(9) Maker utilizes the trade name "Dyna-Cam" in the conduct of its
business, and except as disclosed in the financial statements and the Private
Placement Memorandum dated December 7, 2000 (the "PPM") and in the Form 10-SB
filed with the SEC on December 6, 2000 (the "FORM 10") has not changed its name,
been the surviving entity in a merger, acquired any business, or changed the
location of its chief place of business or chief executive office disclosed
herein as Maker's Address or the location of its records with respect to
Receivables, as that term is defined in the Security Agreement, the location of
any returns of Inventory, as that term is defined in the Security Agreement, the
location of any of the Inventory, the location of the Equipment, as that term is
defined in the Security Agreement, and the location of any records and documents
regarding the General Intangibles, as that term is defined in the Security
Agreement;
(10) Maker currently maintains casualty insurance coverage on the
Collateral in such amounts and of such types as may be requested by Lender, and
in any event, as are ordinarily carried by similar businesses; and, in the case
of all policies insuring property in which Maker shall have a security interest
of any kind whatsoever, all such insurance policies shall provide that the
proceeds thereof shall be payable to Lender as the loss payee. All said policies
or certificates thereof, including all endorsements thereof and those required
hereunder, shall be deposited with Lender; and such policies shall contain
provisions that no such insurance may be canceled or decreased without thirty
(30) days prior written notice to Lender; and in the event of acquisition of
additional insurable Collateral, Maker shall cause such insurance coverage to be
increased or amended in such manner and to such extent as prudent business
judgment would dictate. If Maker shall at any time or times hereafter fail to
obtain and/or maintain any of the policies of insurance required herein, or fail
to pay any premium in whole or in part relating to any such policies, Lender
may, but shall not be obligated to obtain and/or cause to maintained insurance
coverage with respect to the Collateral, including, at Lender's option, the
coverage provided by all or any of the policies of Maker and pay all or any part
of the premium, therefor, without waiving any Event of Default by Maker, and any
sums so disbursed by Lender shall be additional amounts due and payable by Maker
to Secured Party under the terms of this Agreement. Lender shall have the right
to settle and compromise any and all claims under any of the policies required
to be maintained by Maker hereunder and Maker hereby appoints Lender as its
attorney-in-fact, with power to demand, receive and receipt for all monies
payable thereunder, to execute in the name of Maker or Lender or both any proof
of loss, notice, draft or other instruments in connection with such policies or
any loss thereunder and generally to do and perform any and all acts as Maker,
but for this appointment, might or could perform;
(11) Maker will permit Lender, through its authorized attorneys,
accountants and representatives, access to all of its business premises and
offices to inspect and examine the Collateral and the books, accounts, records,
ledgers and assets of every kind and description of Maker with respect thereto
at all reasonable times;
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 4 of 17
(12) The capital structure of Maker and the owners of any class of capital
stock of Maker are as set forth in the PPM and the Form 10;
(13) The Maker has not filed and has not had filed against it a petition
for relief under Title 11 of the United States Code;
(14) Maker has paid and is current on all payroll taxes and all taxes or
assessments levied and assessed or imposed upon its property or income as well
as all claims which, if unpaid, might by law become a lien or charge upon its
property or income;
(15) Maker will furnish to Lender a consolidated profit and loss statement
and statement of surplus of the Maker and any subsidiaries, all in conformance
with GAAP, for each year of Maker's operations and for each month that this
Agreement is in force and a consolidated balance sheet for the Maker and any
subsidiaries, all in conformance with GAAP, as of the last day of each fiscal
year of its operations and for each month that this Agreement is in force. All
such financial statements and balance sheets shall be properly footnoted to the
satisfaction of Lender and each such financial statement shall be certified as
correct by the Chief Executive Officer of Maker;
(16) Maker will furnish to Lender such additional financial statements and
such data and information concerning the financial condition of Maker as may
reasonably be requested by Lender, including but not limited to a detailed
monthly listing of inventory, accounts payable, accounts receivable and an eight
week cash forecast by week; and
(17) Maker will not, without the prior written permission of Lender, pay
any amounts to Xxxxxxxx X. Xxxxx and Xxxxxx X. Xxxxxx other than those amounts
due as compensation under those persons employment contracts.
SECTION TWO
AMOUNT OF LOAN
Until further notice, and on the condition that Maker not be in default
with respect to any of the terms of this Agreement, or with respect to any
outstanding note evidencing any advance made under this Agreement, Lender will
make available to Maker the Line of Credit not to exceed Four Hundred Thousand
Dollars ($400,000.00) and, if Lender, at its option and in its sole discretion,
decides to loan amounts to Maker in excess of the amount of the Line of Credit.
In the event that Lender does obtain Participation Loan Agreements with
Participating Lenders, Lender shall serve as the agent (the "AGENT") for those
Participating Creditors.
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 5 of 17
SECTION THREE
TERMS OF LOAN
(1) Maker may from time to time request Lender to loan or advance amounts
to Maker and Lender shall make such loan or advance up to the amount of the Line
of Credit, provided Section Five below has been complied with by Maker. Maker
shall use all proceeds from such loans or advances pursuant to the Use of
Proceeds Exhibit referenced in Section Five-B. Lender may waive any of the
conditions set forth in Section Five in its sole discretion. Lender is not
required, but may decide at its discretion, to make such loan or advance to
Maker if Maker has satisfied the conditions and met the benchmarks set forth
below. In the event that Lender elects to make such loan or advance, at the time
of each such borrowing Maker shall execute and deliver to Lender a new Secured
Promissory Note payable to Lender in order to evidence each such new loan or
advance (the "SECURED PROMISSORY NOTE(S)"). Each Secured Promissory Note shall
be in the form of Exhibit "A" hereto, with blanks suitably filled, shall be
dated the date of the borrowing and shall mature on or before October 31, 2001.
Such note may be extended as provided below. All amounts advanced or loaned by
Lender hereunder and under each Secured Promissory Note shall bear interest from
the date the funds are advanced (the "FUNDING DATE") until paid at the rate of
twelve percent (12%) per annum (the "STATED RATE"), however, in the event that
applicable law may limit the amount of interest that may be charged under this
Agreement and the Secured Promissory Notes, the Stated Rate shall be at the
highest rate allowed by applicable law. Interest shall be calculated on the
basis of a 360 day year consisting of twelve 30 day months. All amounts are
payable in lawful money of the United States. Interest under each Secured
Promissory Note shall accrue at the Stated Rate beginning on the Funding Date.
All unpaid principal, interest and other amounts payable in connection with the
Notes shall be due and payable on October 31, 2001 (the "LOAN MATURITY"),
however, either at its sole option and in the exercise of its discretion or if
Maker has met the "REQUIRED GOALS," as herein after defined, Lender may extend
the date for the Loan Maturity for one 180 day period.
(2) Required Goals. The Required Goals are attached hereto as Exhibit B.
(3) Required Repayment. The Maker will reduce the Loan by 50% of new equity
investment received.
(4) Additional Negative Covenants.
(i) No other loans or liens;
(ii) No change of management;
SECTION FOUR
TERMINATION OF AGREEMENT
This Agreement, each of the Loan Documents and each of the other related
agreements, documents and instruments executed or entered into in connection
herewith or therewith, and the rights and obligations of each of the parties
hereunder and thereunder shall terminate and be of no further force or effect,
with the exception of the rights granted to Lender pursuant to the terms of the
Rights Agreement, on the earlier of (a) the date that all amounts due and owing
under this Agreement and/or each of executed Secured Promissory Notes or any of
the other Loan Documents, including but limited to principal, interest, late
charges, fees, costs or penalties have been paid in full to Lender (the
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 6 of 17
"TERMINATION DATE"). Upon such termination, Lender shall (and Lender shall cause
its nominees, other loan participants and any affiliates that have any rights
under this Agreement or any of the Loan Documents to) execute, acknowledge,
deliver, record and/or file any and documents, releases, termination of security
interest statements and the like, execute, deliver, record and/or file such
documents of reassignment, reconveyance and the like, and take any and all
actions reasonably requested by Maker as may be necessary or advisable to
release all security interests, liens, charges and the like on the assets of
Maker, any securities of Maker or which otherwise arise under or with respect to
this Agreement, the Loan Documents or any such related agreements, documents or
instruments.
SECTION FIVE
CONDITIONS FOR LOANS AND ADVANCES
AND USE OF PROCEEDS
It is specifically understood and agreed that Lender will only make loans
and advance funds to Maker if Maker satisfies the following conditions and meets
the following benchmarks:
A. CONDITIONS.
(1) Maker is not in default under the terms and conditions of this
Agreement or any of the other Loan Documents as defined above;
(2) No condition exists which, but for the giving of notice or the lapse of
time or both, would constitute a default under the terms and conditions of this
Agreement or any of the other Loan Documents as defined above;
(3) The Maker has not filed and has not had filed against it a petition for
relief under Title 11 of the United States Bankruptcy Code;
(4) The Maker utilized all funds from prior advances or loans made by
Lender in the manner set forth below;
(5) The Maker will furnish to Lender a consolidated profit and loss
statement and statement of surplus, all in conformance with GAAP, of the Maker
and any subsidiaries for each year of Maker's operations within sixty (60) days
of the execution of this Agreement and for each month that this Agreement is in
force and a consolidated balance sheet, in conformance with GAAP, for the Maker
and any subsidiaries as of the last day of each fiscal year of its operations
and for each month that this Agreement is in force. All such financial
statements and balance sheets shall have been properly footnoted to the
satisfaction of Lender and each such financial statement shall have been
certified as correct by the Chief Executive Officer of Maker;
(6) The Maker has furnished to Lender such additional financial statements
and such data and information concerning the financial condition of the Maker as
may reasonably be requested by Lender, including but not limited to a detailed
monthly listing of inventory, accounts payable, accounts receivable and an eight
week cash forecast by week;
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 7 of 17
(7) All property belonging to or leased by Maker is insured against loss or
damage to the extent and against the risks that similar property is usually
insured by other companies engaged in the same business and will cause any
subsidiaries so to do and all insurance policies of Maker name Lender as the
"loss payee";
(8) Maker has paid and is current on all payroll taxes and is current on
all payroll taxes all taxes or assessments levied and assessed or imposed upon
its property or income as well as all claims which, if unpaid, might by law
become a lien or charge upon its property or income; and.
(9) Maker has permitted Lender, through its authorized attorneys,
accountants and representatives, reasonable access to all of its business
premises and offices to inspect and examine the Collateral and the books,
accounts, records, ledgers and assets of every kind and description of Maker.
B. USE OF PROCEEDS.
Maker shall use all funds and proceeds from all advances and loans by
Lender to Maker hereunder only in the manner set forth in Exhibit "C" hereto,
(the "BUDGET").
SECTION SIX
SECURITY FOR LOANS
All funds advanced or loaned to Maker by Lender including all amounts
evidenced by any and all Secured Promissory Notes as having been loaned or
advanced by Lender to Maker are secured by collateral pursuant to a security
agreement of even date herewith for the benefit of Lender (the "SECURITY
AGREEMENT"), and a limited guarantee. Such instruments and documents, together
with any other instruments and documents evidencing or securing the indebtedness
evidenced by this Agreement and any Secured Promissory Notes, are referred to
herein as the "SECURITY DOCUMENTS". In the event of any inconsistency between
the terms of this Agreement, any Secured Promissory Note and any of the Security
Documents, the terms of this Agreement shall control; however, this provision
shall not be deemed to limit, abrogate, restrict or impair any provision in any
one or more of the Security Documents which provides for more extensive or
expansive obligations, requirements or restrictions by or upon Maker or more
extensive or expansive rights or remedies of Lender, than are contained in this
Agreement.
SECTION SEVEN
CONVERSION OF DEBT INTO STOCK
A. CONVERSION RIGHTS.
The Lender shall have the option and may, in the sole exercise of its
discretion, elect to convert all or a portion of the outstanding balance of all
loans and advances made by Lender to Maker under this Agreement, the Secured
Promissory Notes and any other instrument or transaction between Lender and
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 8 of 17
Maker into such shares of Maker's Series A Preferred stock, at $1.00 per share
(the "CONVERSION PRICE"). In the event that Lender elects to exercise its option
to convert its debt into such securities, Lender shall deliver a notice of its
election to convert (the "CONVERSION NOTICE") to Maker at the address set forth
herein within ten business days from the receipt of the payoff of all Notes
hereunder and a Termination Notice. Within seven days following the date of the
Conversion Notice, Maker shall issue to Lender such Conversion Shares that shall
be equal to the aggregate dollar amount of principal and interest elected for
conversion divided by the Conversion Price as may be adjusted from time to time
as provided herein, and shall deliver to Lender a certificate evidencing the
ownership by Lender or its nominee of such securities of Maker. Lender or its
nominee, which shall be entitled to receive securities of Maker upon conversion
under this Section, shall be treated for all purposes as having become the
record holder or holders of such securities such time; provided, however, that
no such surrender on any date when the stock transfer books of Maker shall be
closed shall be effective to constitute such conversion as the record holder or
holders of such securities on such date, but such surrender shall be effective
to constitute the person or persons entitled to receive such securities as the
record holder or holders thereof for all purposes at the close of business on
the next succeeding day on which such stock transfer books are open. In
addition, in the event that Maker issues any warrants to purchase securities to
any agents for the seller of or finders of purchasers for its Conversion Shares
then Maker will issue to Lender, upon conversion, an equal percentage of
warrants related to the amount of debt converted by Maker.
B. TERM OF THE CONVERSION RIGHTS.
1. Partial Payment/Partial Conversion. If Maker, at any time, tenders
payment of an amount which is less than the full amount due to Lender (a
"PARTIAL PAYMENT"), then Lender may exercise its right to convert the amount of
debt represented by such Partial Payment for a period of ten business days after
any such Partial Payment has been received by Lender by serving Maker with a
Conversion Notice stating the portion of the debt for which Maker has tendered
Partial Payment plus any additional amounts due and owing from Maker to Lender
which Lender is electing to convert. In the event that Lender does not timely
serve Maker with such a Conversion Notice, the Partial Payment shall be deemed
accepted, the aggregate amount of the debt due and owing to Lender by Maker
shall be reduced by the amount of such Partial Payment and the portion of
Lender's conversion rights as would relate to the amount of debt reduced by such
partial Payment shall terminate. All remaining conversions rights of Lender (the
right to convert the remaining balance of the debt due to Lender) shall be
unaffected by such Partial Payment.
2. After Termination Date. The conversion rights granted herein to Lender
shall continue and be in full force and effect and Lender may exercise all or a
portion thereof until 10 business days after the occurrence of the Termination
Date. In the event that Maker tenders payment to Lender of all amounts due and
owing under this Agreement and/or each of executed Secured Promissory Notes or
any of the other Loan Documents ("FULL PAYMENT"), Lender may elect to convert
all or a portion of the amount of the debt for which Maker has tendered payment
by serving Maker with a Conversion Notice as set forth above. In the event that
Lender does not timely serve Maker with such a Conversion Notice, the Full
Payment shall be deemed accepted, the aggregate amount of the debt due and owing
to Lender by Maker shall be reduced by the amount of such Full Payment and the
all of Lender's conversion rights shall terminate.
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 9 of 17
SECTION EIGHT
LENDER'S AND AGENT'S FEES
As further consideration and inducement for Lender to provide and hold the
Line of Credit available to Maker, Maker will issue to Lender within ten (10)
days of the first Note advance Sixty Thousand (60,000) shares of Series A
Preferred Stock.
SECTION NINE
ADDITIONAL INTEREST
As further consideration for Lender's Loans under this Agreement, the
Series A Preferred shares in Section Eight shall also be additional interest. In
the event the Line of Credit is extended past October 31, 2001, there shall be
no additional interest or commitment fee payable in stock or otherwise.
SECTION TEN
EVENTS OF DEFAULT AND LENDER'S RIGHTS AND REMEDIES
The occurrence of any one or more of the following events shall constitute
an "EVENT OF DEFAULT" hereunder:
(A) Nonpayment of principal, interest or any other amount when due under
this Agreement or any of the Secured Promissory Notes;
(B) Failure to perform any duty or obligation of Maker under this Agreement
or to pay any sum due or otherwise advanced under this Agreement, any of the
Secured Promissory Notes, any Security Document or any other default by Maker
thereunder;
(C) The adjudication of the Maker or any Guarantor as a bankrupt or
insolvent, or entry of any order appointing a receiver or trustee for the Maker
or any Guarantor or for all or any of their property, or the vote or the
decision by the Maker's Board of Directors, shareholders or officers or the
entry of an order approving a petition seeking relief for Maker or any Guarantor
or other similar relief under Title 11 of the United States Bankruptcy Code or
other similar laws of the United States of America or any other competent
jurisdiction, or the filing by or against Maker or any Guarantor of a petition
seeking any of the foregoing or consenting to any of the foregoing, or the
filing of a petition to take advantage of any Maker's act, or making a general
assignment for the benefit of creditors, or the admission in writing by Maker or
any Guarantor of its inability to pay its debts as they become due;
(D) The failure of Maker to use any portion of the funds advanced or loaned
by Lender in the manner set forth above in Section Three;
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 10 of 17
(E) Any material representation or warranty made by Maker to Lender in
connection with or pursuant to this Agreement is false in any material respect
on the date as of which it was made or becomes false in any material respect;
(F) Maker or the Guarantors default in the performance or observance of any
of the other Loan Documents or Security Documents;
(G) The failure of Maker to pay any taxes, including payroll taxes, when
due to any governmental entity;
(H) If Maker pays, other than as required under contract, any amounts to
Xxxxxxxx X. Xxxxx or Xxxxxx X. Xxxxxx, without the prior written permission of
Lender, on account of (i) any loans made to Maker; or (ii) any unpaid or
deferred compensation owed by Maker.
(I) The occurrence of any of the Events of Default as defined and set forth
in the Security Agreement, any of the Secured Promissory Notes or any of the
other Loan Documents.
Upon the occurrence of an Event of Default or Maker otherwise fails to
perform any of its duties, covenants, undertakings and responsibilities
contained herein or in any of the other Loan Documents, Lender shall provide to
Maker a written Notice of Default at the address set forth herein and provide to
Maker a period of seven (7) business days from the date of the Notice of Default
in order to cure all defaults under this Agreement and/or any of the other Loan
Documents. If any such defaults remain uncured as of the close of business on
the seventh business day following the date of the Notice of Default: (i) the
unpaid principal balance, and accrued unpaid interest and all other amounts due
or otherwise advanced under this Agreement, all of the Secured Promissory Notes
and/or the Security Documents shall automatically without notice bear interest
at a rate equal to eight (8) percentage points above the "prime rate" of
interest charged by Xxxxx Fargo Bank to large business borrowers in Arizona, as
announced by that bank from time to time, per annum (the "DEFAULT RATE"),
however, in the event that applicable law may limit the amount of interest that
may be charged under this Agreement and the Secured Promissory Notes, such
Default Rate shall be at the highest rate allowed by applicable law, until the
default has been cured, at which time interest shall again accrue at the Stated
Rate; (ii) the whole sum of principal, accrued interest and all other amounts
due under this Agreement, the Secured Promissory Notes and/or the Security
Documents may, at the option of the Lender, its nominee and any holder of any of
the Secured Promissory Notes, be declared due and payable, with interest thereon
to accrue at the Default Rate from the date of the Event of Default until the
Event of Default has been cured at which time interest shall again accrue at the
Stated Rate; and (iii) the Lender may exercise any of the rights and remedies
contained herein, in any of the Secured Promissory Notes, in the Security
Agreement or in any of the other Loan Documents.
The rights or remedies of Lender as provided in this Agreement, the Secured
Promissory Notes and the Security Documents shall be cumulative and concurrent,
and may be pursued singly, successively, or together against Maker, any
guarantor hereof and any other funds, property or security held by Lender for
payment hereof or otherwise at the sole, absolute and uncontrolled discretion of
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 11 of 17
Lender. No single or partial exercise of any power hereunder or under any
Security Document securing this Agreement and the Secured Promissory Notes or
any guaranty shall preclude other or further exercise of such power or the
exercise of any other right, remedy or power. The Lender, its nominee and/or the
holder of any of the Secured Promissory Notes shall at all times have the right
to proceed against any portion of the security in such order and in such manner
as the holder may elect, without waiving any rights with respect to any other
security. Neither (i) the acceptance by Lender, its nominee or the holder of any
of the Secured Promissory Notes of any payment in an amount less than payment in
full of the amount due and payable at the time of such payment, nor (ii) any
delay or omission on the part of the holder hereof in exercising any right,
remedy or power hereunder, shall operate as a waiver by the holder of the right
to exercise any right, remedy or power at the time or at any subsequent time, or
nullify any prior exercise of a right, remedy or power.
Maker acknowledges and agrees that it is impractical and extremely
difficult to fix in advance the actual damages incurred by Lender, its nominee
and/or the holder of any of the Secured Promissory Notes if the required
payments are not made at Loan Maturity, due to the fact that (i) interest rates
and administrative costs fluctuate, (ii) it is impossible to predict how long a
default will continue, and (iii) the economic cost of ascertaining actual
damages in each instance of default would be excessive in relation to the actual
damages sustained. Therefore, Maker agrees to pay to Lender, its nominee and/or
the holder of any of the Secured Promissory Notes a late charge equal to eight
percent (8%) of the aggregate amount of principal plus interest due and owing at
Loan Maturity on the date that is thirty days after Loan Maturity if all amounts
due and owing to Lender, its nominee and/or any holder of any Secured Promissory
Note under this Agreement and all of the Secured Promissory Notes are not paid
in full at Loan Maturity. Maker further agrees to pay to Lender, its nominee
and/or the holder of any of the Secured Promissory Notes an additional late
charge equal to five percent (5%) of the aggregate amount of principal plus
interest due and owing at Loan Maturity on each successive thirtieth day
following Loan Maturity if all amounts due and owing to Lender under this
Agreement and all of the Secured Promissory Notes are not paid in full prior to
that date. Said late charges are intended as liquidated damages in lieu of
actual damages and not as a penalty. Maker agrees that said late charge
represents a fair and reasonable estimate of the average compensation for the
actual economic loss sustained because of a default in payment. All late charges
shall be due and payable, without further notice, on each successive thirty day
anniversary of the Loan Maturity. Late charges are in addition to any interest
charged at the Default Rate. However, in the event that applicable law may limit
the amount of late charges or the aggregate amount of late charges plus interest
that may be charged under this Agreement and the Secured Promissory Notes, such
late charges shall be at the highest rate allowed by applicable law.
Notwithstanding the foregoing, the Lender, its nominee and/or any holder of
any Secured Promissory Note shall not be obligated to accept any delinquent
payment, nor shall acceptance of any delinquent payment or any late charges
prejudice Lender's, its nominee's or any holder's right to collect any other
amounts under this Agreement or any Secured Promissory Note, to declare a
default under or to accelerate this Agreement or any of the Secured Promissory
Note in the event of any subsequent Event of Default or to exercise any other
rights or remedies provided herein or by law. Acceptance of any delinquent
payment without the applicable late charge shall not be deemed a waiver of the
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 12 of 17
right to collect that or any subsequent late charge. Acceptance of late charge
and/or default interest payments will be made "without prejudice" and with
explicit reservation of all rights - this notification to that effect being
intended in lieu of specific notification being set out on a check or other
instrument by which a payment may be tendered and regardless of what notations
on Maker's part may accompany any tendered payment. Specifically this means that
partial payment of amounts due and payable does not, and will not, accomplish a
reinstatement of this Agreement or any Secured Promissory Note, unless Maker and
Lender have a specific written understanding to allow reinstatement on that
basis. Such payments will simply reduce the accelerated balance owing. Any such
payment, if accepted, will be retained without prejudice to Maker's right to
proceed.
All payments on this Agreement and any of the Secured Promissory Notes
shall be applied first to late charges and any costs, added charges or advances
made by Lender, its nominee or any holder of any of the Secured Promissory Notes
under the terms of any of the Security Documents, then to discharge all interest
including Default Interest due on the unpaid principal balance hereof, and the
remainder shall be applied to the reduction of the principal balance.
Maker (i) waives all applicable exemption rights, whether under the state
constitution, homestead laws or otherwise, (ii) waives diligence, presentment,
protest and demand and also notice of protest of demand, of nonpayment, of
dishonor and of maturity and also recourse to suretyship defenses generally,
marshaling of assets, laches, estoppel and equitable defenses generally, and
(iii) waives offset rights against the debt evidenced by this Note.
Maker agrees to pay all costs of collection, including reasonable
attorney's fees and all costs of suit, in the Event of Default hereunder.
SECTION ELEVEN
AMENDMENT AND MODIFICATION
This Agreement and the Secured Promissory Notes may not be amended,
modified or changed, nor shall any waiver of any provision hereof be effective,
except only by an instrument in writing and signed by the party against whom
enforcement of any waiver, amendment, change, modification or discharge is
sought; provided, however, that this paragraph shall in no way be a limitation
on the provisions of the consents and waivers set forth above.
SECTION TWELVE
SEVERABILITY, ENFORCEABILITY AND CONSTRUCTION
Each provision of this Agreement is intended to be severable. Maker and
Lender further intend and believe that each provision in this Agreement and each
of the Secured Promissory Notes complies with all applicable local, state and
federal laws and court decisions. However, if any provision or provisions in
this Agreement or any of the Secured Promissory Notes is or are found by a court
of law to be in violation of an applicable local, state or federal ordinance,
statute, law, administrative or judicial decision, or public policy, and if such
court should declare such portion or provision(s) of this Agreement or any
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 13 of 17
Secured Promissory Note to be illegal, invalid, unlawful, void or unenforceable
as written, then it is the intent of Maker that such portion, provision(s) shall
be given full force and effect to the fullest possible extent that they are
legal, valid and enforceable, that the remainder of this Agreement and such
Notes shall be construed as if such illegal, invalid, unlawful, void or
unenforceable portion, provision(s) are not contained herein, and that the
rights, obligations and interests of the Maker and the holder hereof under the
remainder of this Agreement and such Notes shall continue in full force and
effect.
SECTION THIRTEEN
ADDITIONAL SUMS
All fees, additional interest, charges, points, loan origination fees,
goods, things in action or any other sums or things of value, including any
compensating balance requirements or other contractual obligations
(collectively, the "ADDITIONAL SUMS") paid by Maker to Lender, whether pursuant
to this Agreement or any Secured Promissory Note or otherwise with respect to
the indebtedness evidenced hereby, or with respect to the Security Agreement
securing this Agreement and the Secured Promissory Notes, or any other Security
Document, which, under the law of the State of Arizona may be deemed to be
interest with respect to such indebtedness, shall, for the purpose of any laws
of the State of Arizona which may limit the maximum rate of interest to be
charged with respect to such indebtedness, be payable by Maker as, and shall be
deemed to be, additional interest, and for such purposes only, the agreed upon
and contracted for rate of interest shall be the sum of the Stated Rate or the
Default Rate, as applicable, plus the rate of interest resulting from the
Additional Sums being considered as interest. Maker understands and believes
that this transaction complies with the usury laws of Arizona; however, if any
interest or other charges are ever deemed to exceed the maximum amount permitted
by law, then: (i) the amount of interest or charges payable hereunder by Maker
shall be reduced to the maximum amount permitted by law; and (ii) any excess
amount previously collected from Maker which exceeded the maximum amount
permitted by law will be credited against the outstanding principal
indebtedness. If the principal indebtedness has already been paid, the excess
amount paid will be refunded to Maker. If this paragraph becomes operative, the
total unpaid balance shall, at the option of Payee, become immediately due and
payable and shall bear interest at a maximum rate then permitted by the
applicable usury laws until all the then obligations of this Note, as modified
by this paragraph, are paid and performed in full. The acceleration provided in
this paragraph may not be avoided by Maker and all parties liable to Payee on
the Note, waiving any and all usury claims and defenses they then have.
SECTION FOURTEEN
TIME OF THE ESSENCE
Time is of the essence of this Agreement.
SECTION FIFTEEN
GOVERNING LAW, JURISDICTION AND VENUE
The enforcement, performance, discharge, lack of performance and formation
of this Agreement shall be governed by, and construed and enforced in accordance
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 14 of 17
with, the law of the State of Arizona, regardless of any applicable
conflict-of-law rules to the contrary.
The Maker and Lender also hereby:
(A) irrevocably submit to the jurisdiction of the Superior Court of
Maricopa County, State of Arizona, or any successor to said court, and to the
jurisdiction of the United States District Court for the District of Arizona, or
any successor to said court (hereinafter referred to as the "ARIZONA COURTS")
for purposes of any suit, action or other proceeding which relates to the
transactions contemplated in this Agreement;
(B) to the extent permitted by applicable law, waive and agree not to
assert by way of motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that they are not personally subject to the jurisdiction
of the Arizona Courts; that the suit, action or proceeding is brought in an
inconvenient forum; that the venue of the suit, action or proceeding is
improper; or that this Agreement or any transaction provided for herein may not
be enforced in or by the Arizona Courts; and
(C) agree not to seek, and hereby waive, any collateral review by any other
court, which may be called upon to enforce the judgment or any of the Arizona
Courts, of the merits of any such suit, action or proceeding or the jurisdiction
of said Arizona Court.
SECTION SIXTEEN
ADDITIONAL ACTIONS
Each party hereto agrees to do all acts and things and to make, execute,
and deliver such written instruments and documents as shall from time to time be
reasonably required to carry out the terms and provisions of this Agreement.
SECTION SEVENTEEN
ATTORNEYS' FEES
All attorneys' fees and costs of Lender related to the costs for the
preparation of this Agreement and any of the other Loan Documents shall be paid
by the Lender. However, in the event of any claim, controversy or dispute
arising out of or relating to this Agreement, or the breach thereof, the
prevailing party shall be entitled to recover reasonable attorneys' fees
incurred in connection with any court proceeding set by the court sitting
without a jury.
SECTION EIGHTEEN
REMEDIES CUMULATIVE
The remedies of the parties hereto under this Agreement are cumulative and
shall not exclude any other remedies to which any party may be lawfully
entitled.
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 15 of 17
SECTION NINETEEN
COMPUTATION OF TIME
Whenever the last day for the exercise of any privilege or discharge of any
duty hereunder shall fall upon Saturday, Sunday or any public or legal holiday,
whether under federal or state law, the party having such privilege or duty
shall have until 5:00 p.m. (Pacific time) on the next succeeding regular
business day to exercise such right or to discharge such duty.
SECTION TWENTY
AUTHORITY
Any individual signing below on behalf of a corporation, partnership or
other entity hereby personally represents that he or she has full authority to
bind the party or parties on whose behalf he or she is signing.
SECTION TWENTY-ONE
ENTIRE AGREEMENT
This Agreement, including the exhibits and schedules hereto, and the Loan
Documents contain the entire understanding and agreement among the parties
hereto with respect to the subject matter hereof, and supersedes all prior
agreements and understandings, express or implied, oral or written, among the
parties with respect to such subject matter. The express terms of this Agreement
shall control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof. Each of the exhibits and schedules
hereto is incorporated herein by this reference and constitutes a part of this
Agreement.
SECTION TWENTY-TWO
TERMINOLOGY
All captions, headings or titles in the paragraphs or sections of this
Agreement are inserted for convenience of reference only and shall not
constitute a part of this Agreement or a limitation of the scope of the
particular paragraph or section to which they apply. All personal pronouns used
in this Agreement, whether used in the masculine, feminine, or neuter gender,
shall, where appropriate, include all other genders and the singular shall
include the plural and vice versa.
SECTION TWENTY-THREE
NOTICES
All communications or notices required or permitted to be given or served
under this Agreement shall be in writing and shall be deemed to have been duly
given or made if: (a) delivered in person or by courier (e.g., Federal Express),
(b) deposited in the United States mail, postage prepaid, for mailing by
certified or registered mail, return receipt requested, or (c) sent by facsimile
and addressed to the intended recipient at the address and/or the facsimile
number set forth below such party's signature at the end of this Agreement. All
communications and notices shall be effective upon delivery in person or by
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 16 of 17
courier, three (3) days after being deposited in the United States mail or two
(2) business hours after being sent by facsimile. Any party may change his or
her address and/or facsimile number by giving notice in writing, stating his or
her new address and/or facsimile number, to all of the other parties in the
foregoing manner. Copies of all notices to Secured Party shall also be sent to
Xxxxxxxxxxx X. Xxxx, Esq., Peskind Xxxxxx & Xxxxxxxxx P.C., 00000 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, facsimile: 480-443-8854.
SECTION TWENTY-FOUR
SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective assigns, legal representatives, executors,
heirs and successors, provided, however, that no party hereto shall have the
right to assign any right hereunder or delegate any obligation hereunder, in
whole or in part, without the prior written consent of the other parties hereto,
and any attempt to do so shall be void.
SECTION TWENTY-FIVE
COUNTERPARTS
This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which together shall constitute one and the same
agreement. This Agreement shall become binding when one or more counterparts
have been signed by each of the parties hereto and delivered to the other
parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above,
LENDER MAKER
Aztore Holdings, Inc. Dyna-Cam Engine Corporation
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxx X. Xxxx
----------------------------- -----------------------------------
By: Xxxxxxx X. Xxxxxxxx By: Xxxx X. Xxxx
Its: President Its: President
Line of Credit Agreement between Dyna-Cam and Aztore
Effective Date April 30, 2001; page 17 of 17
EXHIBIT LIST
Exhibit A: Form of Secured Promissory Note
Exhibit B: Required Goals
Exhibit C: The Maker's Budget
