DISBURSEMENT AGREEMENT
----------------------
By and Between
THE MAJESTIC COMPANIES, LTD.,
A DELAWARE CORPORATION
AND
MAJESTIC TRANSPORTATION PRODUCTS, LTD.,
A DELAWARE CORPORATION
AND
/s/ Xxxxxxxx X. Xxxxxx
----------------------
XXXXXXXX X. XXXXXX, AN INDIVIDUAL
AUGUST 26, 1999
DISBURSEMENT AGREEMENT
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THIS DISBURSEMENT AGREEMENT (the "Disbursement Agreement") is made by
and among THE MAJESTIC COMPANIES, LTD., a Nevada corporation, MAJESTIC
TRANSPORTATION PRODUCTS, LTD., a Maryland corporation, jointly and severally
(collectively the "Borrower"), and XXXXXXXX X. XXXXXX, an Individual (the
"Lender").
RECITALS
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A. The Borrower has requested financing in the principal amount of One
Hundred Thousand Dollars ($100,000.00) (the "Loan") and the Lender has agreed to
provide the financing requested by the Borrower. The proceeds of the Loan shall
be disbursed by the Lender to the Borrower as a line of credit as hereafter set
forth.
B. This Agreement is made for the purpose of setting forth the terms
and conditions pursuant to which the Lender will disburse the Loan to the
Borrower and to set forth the Borrower's obligations and duties with respect to
the application of Loan proceeds.
NOW, THEREFORE, in consideration of the premises, the terms and
conditions set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Lender and the
Borrower agree as follows:
ARTICLE I
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TERMS AND PURPOSES OF THE LOAN
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The general terms and the purposes of the Loan shall be as follows:
Section 1.1. General Terms of the Loan. Subject to the limitations set
forth herein, the Lender shall lend to the Borrower as the Loan an amount of up
to One Hundred Thousand Dollars ($100,000.00) upon the terms and conditions
contained herein and in the other loan documents of even date herewith relating
to the Loan (the "Loan Documents"). The Loan shall be disbursed in accordance
with the provisions of this Agreement and shall be repaid with interest thereon
by the Borrower to the Lender in accordance with the terms and provisions of a
certain Promissory Note of even date herewith evidencing the Loan (the
"Promissory Note"), the terms and provisions of which are incorporated by
reference herein to the same extent as if set forth in full in this Agreement.
Section 1.2. Security for the Loan. All advances made under this
Agreement and all obligations of the Borrower under this Agreement, the
Promissory Note and the other Loan Documents shall be secured by: (a) the grant
by the Borrower to the Lender under a Security Agreement of even date herewith
(the "Security Agreement") of a lien and security interest in all Personalty,
now existing or hereafter acquired by the Borrower, and the proceeds and
products thereof; (b) the additional security and assurance of performance and
repayment to be furnished to the Lender by the Borrower under the Loan Documents
in accordance with the terms and conditions thereof.
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ARTICLE II
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DISBURSEMENT OF LOAN PROCEEDS
-----------------------------
Subject to the terms and conditions of this Agreement, the Lender shall
disburse the Loan Proceeds in the following manner:
Section 2.1. Purpose. The purpose of the Loan is to provide working
capital as needed by the Borrower for the Borrower's business operations.
Section 2.2. Term. The term of the Loan shall be for the period
extending to the Maturity Date of the Promissory Note, as defined and set forth
therein.
Section 2.3. Loan Documents. This Agreement, the Note, and all other
documents, agreements, certifications, instruments executed or to be executed
and delivered or to be delivered in connection with the Loan and the Note
evidencing the Loan, are collectively referred to herein as the "Loan
Documents".
Section 2.4. Disbursements under the Loan. Advances under the Loan
shall be made by the Lender in its sole discretion from time to time upon the
request of the Borrower, which may be written or telephoned and shall be made by
the President of the Borrower or by any other authorized officer of the
Borrower. The Lender shall advance such sums to the Borrower which the Lender,
in its sole discretion, deems reasonable and proper and the Lender may reject
any request for an advance which the Lender deems not reasonable or proper in
its sole discretion. The Lender shall credit such advances to a commercial
account established or to be established by the Borrower. Any obligation of the
Lender to advance under the Loan is subject to the continued determination by
the Lender, in good faith, that the Borrower remains in acceptable financial
condition and continues to be creditworthy. The Borrower agrees that no request
for an advance under the Loan shall be made which, if honored or paid, would
cause the aggregate amount of advances made and outstanding to exceed the
limitations as to the maximum amount of advances set forth herein. In no event
shall the Lender be obligated to make any advance if a default under the Note or
an Event of Default under the Security Agreement shall have occurred, unless and
until such default or Event of Default shall be cured (if the Borrower is given
the right to cure the applicable Event of Default hereunder), or if such advance
would cause the total advances made to or for the Borrower and outstanding under
this Agreement to exceed the limitations as to the maximum amount of advances
set forth herein.
Section 2.5. Safeguards as to Application of Disbursements. The Lender
shall have the right to require the Borrower to submit a breakdown of each
disbursement which is to be made by the Lender hereunder. The Lender shall have
the right to require at any time, or from time to time, the presentation of
receipts evidencing the payment of bills for which advances have been made
hereunder. The Lender may, in the Lender's reasonable judgment, make
disbursement checks payable jointly to the Borrower and those creditors of the
Borrower due or who will be due sums which are advanced hereunder. This
Agreement shall constitute an irrevocable and automatic authorization and
direction on the part of the Borrower to the direction on the part of the
Borrower to the Lender to so disburse the Loan proceeds and the Lender shall
need no further
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authorization from the Borrower to make disbursements in this manner. Any such
disbursements shall satisfy the Lender's obligations hereunder, and shall be
fully secured in accordance with and by way of the Loan Documents securing the
Loan. The Lender shall at all reasonable times have access to the books and
records of the Borrower so as to enable the Lender to verify that funds
disbursed by the Lender for the Real Property are being used properly.
ARTICLE III
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GENERAL CONDITIONS AND TERMS
----------------------------
Section 3.1. Waivers. The Lender may at any time or from time to time
waive all or any rights under this Agreement or any other Loan Document, but any
waiver or indulgence by the Lender at any time and from time to time shall not
constitute, unless specifically so expressed by the Lender in writing, a future
waiver of performance or exact performance by the Borrower or the Guarantor.
Section 3.2. No Third Party Beneficiary Rights. No person not a party
to this Agreement shall have any benefit hereunder nor have third party
beneficiary rights as a result of this Agreement or any other Loan Documents,
nor shall any party be entitled to rely on any actions or inactions of the
parties hereto or their agents, all of which are done for the sole benefit of
the parties hereto.
Section 3.3. Continuing Obligation of Borrower. The terms, conditions,
and covenants set forth herein and in the Loan Documents shall survive closing
and shall constitute a continuing obligation of the Borrower during the course
of the Loan.
Section 3.4. Binding Obligation. This Agreement shall be binding upon
the parties, their successors, personal representatives, and assigns.
Section 3.5. Final Agreement. This Agreement and the Loan Documents
contain the final and entire agreement and understanding of the parties, and any
terms and conditions not set forth in this Agreement or the Loan Documents are
not a part of this Agreement and understanding of the parties hereof. This
Agreement may be amended or altered only in writing signed by the party to be
bound by the change or alteration.
Section 3.6. Photocopies Sufficient. A xerox, photographic, or other
reproduction of a security agreement or financing statement shall be sufficient
as a financing statement.
Section 3.7. Time. Time as of the essence of this Agreement.
Section 3.8. Choice of Law. This Agreement shall be governed,
construed, and enforced in accordance with the laws of the State of Maryland.
Section 3.9. Assignability. This Agreement may be assigned by the
Lender or its successors and assigns at any time or from time to time; this
Agreement may not be assigned by the Borrower.
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Section 3.10. Invalidity of Any Part. If any provision or part of any
provision of this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement and this Agreement shall
be construed as if such invalid, illegal, or unenforceable provision or part
thereof had never been contained herein, but only to the extent of its
invalidity, illegality or unenforceability.
Section 3.11. Number, Gender, and Captions. As used herein, the
singular shall include the plural and the plural shall include the singular. The
use of any gender shall be applicable to all genders. The captions contained
herein are for purposes of convenience only and are not a part of this
Agreement.
IN WITNESS WHEREOF, the Lender and the Borrower have executed this
Agreement under seal as of the 26th day of August, 1999, with the specific
intention that this Agreement constitutes an instrument under seal.
WITNESS:
LENDER:
/s/ Xxxxxxxx X. Xxxxxx,
-----------------------
An Individual
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Xxxx X. Xxxxxx By : Xxxxxxxx X. Xxxxxx(SEAL)
-------------- ---------------------------------------
An Individual
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WITNESS:
BORROWER:
THE MAJESTIC COMPANIES, LTD., a
Nevada corporation
/s/ Xxxx Xxxxx By: Xxxxxxx X. Xxxxxxxxx (SEAL)
-------------- ---------------------------------------
Xxxxxxx X. Xxxxxxxxx, Chairman and
Chief Executive Officer
MAJESTIC TRANSPORTATION
PRODUCTS, LTD., a Maryland corporation
/s/ Xxxx Xxxxx By: Xxxxxx Xxxxxxx (SEAL)
-------------- ---------------------------------------
Xxxxxx Xxxxxxx, President
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TO FILING OFFICER: AFTER RECORDATION RETURN TO:
/s/ Xxxxxxxx X. Xxxxxx
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0000 X. Xxxxxx Xx.
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Xxxxxxxxx, XX 00000-0000
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______ To Be Recorded in the Financing Statement Records of the Secretary
of State of California
_______ To Be Recorded in the Financing Statement Records of ______ County,
California
FINANCING STATEMENT
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($200,000.00 LINE OF CREDIT)
1. Debtor: THE MAJESTIC COMPANIES, LTD.
0000 Xxx Xxx Xxxxx Xxxxx
0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
MAJESTIC TRANSPORTATION PRODUCTS, LTD.
0000 Xxx Xxx Xxxxx Xxxxx
0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
2. Secured Party: /s/ Xxxxxxxx X. Xxxxxx
----------------------
----------------------
0000 X. Xxxxxx Xx.
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Xxxxxxxxx, XX 0000-0000
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3. Each of the above referred corporations comprising the Debtor as set forth
above hereby grants to the Secured Party a security interest in and to, and
this Financing Statement covers, all of the Debtor's right, title and
interest in and to all of the tangible and intangible assets owned by the
Debtor, wherever located, whether now owned or hereafter acquired by the
Debtor, together with all substitutions therefor, and replacements and
renewals thereof, including but not limited to the following: (a) Accounts;
(b) Cash on hand and in any deposit, passbook, savings or checking account;
(c) Chattel Paper; (d) Documents; (e) Contracts and Contract rights; (f)
General Intangibles; (g) Goods; (h) Instruments; (i) Inventory; and (j) All
Records relating to or pertaining to any of the above listed Collateral.
The terms "Accounts," "Chattel Paper," "Documents," "General Intangible,"
"Goods," "Instruments," and "Inventory" as used above shall have the same
respective meanings as
are given to those terms in the Maryland Uniform Commercial Code - Secured
Transactions, Title 9, Commercial Law Article, Annotated Code of Maryland, as
amended.
4. The proceeds (including insurance proceeds) and products of the collateral
are secured, as are future advances and after acquired property, and any
substitutions, renewals, replacements, additions and accretions of or to any
of the above-described collateral.
DEBTOR:
THE MAJESTIC COMPANIES, LTD.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx (SEAL)
---------------------------------------
Xxxxxxx X. Xxxxxxxxx, President
and Chief Executive Officer
August 27, 1999
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MAJESTIC TRANSPORTATION PRODUCTS, LTD.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx (SEAL)
---------------------------------------
Xxxxxxx X. Xxxxxxxxx, President
and Chief Executive Officer
August 27, 1999
---
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