BUSINESS LOAN AGREEMENT
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Principal Loan Date Maturity Loan No. Initials
$400,000.00 9/8/99 3-8-00 106
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References in the shaded areas are for Lender's use only and do not limit
applicability or tills document to any particular loan or item.
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Borrower: ACE Motor Company Lender: AutoPrime, Inc.
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THIS BUSINESS LOAN AGREEMENT between ACE Motor Company ("Borrower") and
AutoPrime, Inc. ("Lender") is made and executed on the following terms and
conditions. All such loans and financial accommodations, together with all
future loans and financial accommodations from Lender to Borrower, are referred
to in this Agreement individually as the "Loan" and collectively as the "Loans."
Borrower understands and agrees that (a) in granting, renewing, or extending any
Loan, Lender is relying upon Borrower's representations, warranties, and
agreements, as set forth in this Agreement; (b) the granting, renewing, or
extending of any Loan by Lender at all times shall be subject to Lender's sole
judgment and discretion; and (c) all such Loans shall be and shall remain
subject to the following terms and conditions of this Agreement.
TERM: This Agreement shall be effective as of September 8, 1999, and shall
continue thereafter until all indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory
to Lender the following documents for the Loan: (a) the Note, (b) the
Security Agreements granting to Lender security interests in the
Collateral, (c) Financing Statements perfecting Lender's Security
Interests, (d) evidence of insurance as required below; and (e) any
other documents required under this Agreement or by Lender or its
counsel, including without limitation any assignments of life
insurance described below and any guaranties described below.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and
the Related Documents, and such other authorizations and other
documents and instruments as Lender or its counsel, in their sole
discretion, may require.
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Payment of Fees and Expenses. Borrower shall have paid to Lender all
fees, charges, and other expenses which are then due and payable as
specified in this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document
or certificate delivered to Lender under this Agreement are true and
correct.
No Event of Default. There shall not exist at the time of any advance
a condition which would constitute an Event of Default under this
Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any indebtedness exists:
Organization. Borrower is a corporation which is duly organized,
validly existing, and in good standing under the laws of the State of
Texas and validly existing and in good standing in all states in which
Borrower is doing business. Borrower has the full power and authority
to own its properties and to transact the businesses in which it is
presently engaged or presently proposes to engage. Borrower also is
duly qualified as a foreign partnership and is in good standing in all
states in which the failure to so qualify would have a material
adverse effect on its businesses or financial condition.
Authorization. The execution, delivery, and performance of this
Agreement by Borrower, to the extent to be executed, delivered or
performed by Borrower, have been duly authorized by all necessary
action by Borrower; do not require the consent or approval of any
other person, regulatory authority or governmental body; and do not
conflict with, result in a violation of, or constitute a default under
(a) any provision of the partnership agreement, or any agreement or
other instrument binding upon Borrower or (b) any law, governmental
regulation, court decree', or order applicable to Borrower.
Financial Information. Each financial statement of Borrower supplied
to Lender truly and completely disclosed Borrower's financial
condition as of the date of the statement, and there has been no
material adverse change in Borrower's financial condition subsequent
to the date of the most recent financial statement supplied to Lender.
Borrower has no material contingent obligations except as disclosed in
such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or
agreement required hereunder to be given by Borrower when delivered
will constitute, legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective
terms.
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Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender
and as accepted by Lender, and except for property tax liens for taxes
not presently due and payable, Borrower owns and has good title to all
of Borrower's properties free and clear of all liens and security
interests, and has not executed any security documents or financing
statements relating to such properties. All of Borrower's properties
are titled in Borrower's legal name, and Borrower has not used, or
filed a financial statement under, any other name for at least the
last five (5) years.
Hazardous Substances. Except as disclosed to Lender in writing, no
property of Borrower ever has been, or ever will be so long as this
Agreement remains in effect, used for the generation, manufacture,
storage, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the
"CERCLA "▇▇▇▇," applicable state or Federal laws, or regulations
adopted pursuant to any of the foregoing. The representations and
warranties contained herein are based on Borrower's due diligence in
investigating the properties for hazardous waste and hazardous
substances. Borrower hereby (a) releases and waives any future claims
against Lender for indemnity of contribution in the event Borrower
becomes liable for cleanup or other costs under any such law, and (b)
agrees to indemnify and hold harmless Lender against any and all
claims and losses resulting from a breach of this provision of this
Agreement. This obligation to indemnify shall survive the payment of
the indebtedness and the satisfaction of this Agreement.
Commercial Purposes. Borrower intends to use the Loan proceeds solely
for business or commercial related purposes.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material
adverse changes in Borrower's financial condition, and (b) all
existing and threatened litigation, claims; investigations,
administrative proceedings or similar actions affecting Borrower or
any guarantor of the Loan which could materially affect the financial
condition of Borrower or the financial condition of the Loan.
Financial Records. Maintain its books and records in accordance with
accounting principles acceptable to Lender, applied on a consistent
basis and permit Lender to examine and audit Borrower's books and
records at all reasonable times.
Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and
other reports with respect to Borrower's financial condition and
business operations a Lender may request from time to time.
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Guaranties. Prior to disbursement of any Loan proceeds, furnish
executed guaranties of the Loans in favor of Lender, executed by the
guarantors named below, on Lender's forms, and in the amounts and under
the conditions spelled out in those guaranties.
Guarantors
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AutoCorp Equities, Inc.
Lenders Auto Resale Center of Texas, Inc.
Loan Proceeds. Use all Loan proceeds solely for the following solely
for the following specific purposes: Funds to be used for the purchase
of vehicles.
Performance. Perform and comply with all terms, conditions, and
provisions set forth in this Agreement and in the Related Documents in
a timely manner, and promptly notify Lender if Borrower learns of the
occurrence of any event which constitutes an Event of Default under
this Agreement or under any of the Related Documents.
Operations. Maintain executive and management personnel with
substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender
of any change in executive and management personnel; conduct its
business affairs in a reasonable and prudent manner and in compliance
with all applicable federal, state and municipal laws, ordinances,
rules and regulations respecting its properties, charters, businesses
and operations, including without limitation, compliance with the
Americans With Disabilities Act and with all minimum funding standards
and other requirements of ERISA and other laws applicable to
Borrower's employee benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable
time to inspect any and all Collateral for the Loan or Loans and
Borrower's other properties and to examine or audit Borrower's books,
accounts, and records and to make copies and memoranda of Borrower's
books, accounts, and records. If Borrower now or at any time hereafter
maintains any records (including without limitation computer generated
records and computer software programs for the generation of such
records) in the possession of a third party, Borrower, upon request of
Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of
any records it may request, all at Borrower's expense.
RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including any
request or policy not having the force of law) shall impose, modify or make
applicable any taxes (except U.S. federal, state, or local income or franchise
taxes- imposed on Lender), reserve requirements, capital adequacy requirements
or other obligations which would (a)
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increase the cost to Lender for extending or maintaining the credit facilities
to which this Agreement relates, (b) reduce the amounts payable to Lender under
this Agreement or any related documents, or (c) reduce the rate of return on
Lender's capital as a consequence of Lender's obligations with respect to the
credit facilities to which this. Agreement relates, then Borrower agrees to pay
Lender such additional amounts as will compensate Lender therefor, within five
(5) days after Lender's written demand for such payment, which demand shall be
accompanied by an explanation of such imposition or charge and a calculation in
reasonable detail of the additional amounts payable by Borrower which
explanation and calculations shall be conclusive in the absence of manifest
error.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in the
normal course of business and indebtedness to Lender contemplated by
this Agreement, create, incur or assume indebtedness for borrowed
money, including capital leases, (b) except as allowed as a Permitted
Lien, self transfer, mortgage, assign, pledge, lease, grant a security
interest in, or encumber any of Borrower's assets, or (c) sell with
recourse any of Borrower's accounts, except to Lender.
Continuity of Operations. (a) Engage in any business activities
substantially different than those in whic h Borrower is presently
engaged, (b) cease operations, liquidate, merge, -transfer, acquire or
consolidate with any other entity, change ownership, change its name,
dissolve or transfer or sell Collateral out of the ordinary course of
business, or (c) make any distribution with respect to any capital
account, whether by reduction of capital or otherwise.
Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance
money or assets, (b) purchase, create or acquire any interest in any
other enterprise or entity, or (c) incur any obligation as surety or
guarantor other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan advances or to disburse Loan proceeds if.
(a) Borrower or any Guarantor is in default under the terms of the Agreement or
any other agreement that Borrower or any guarantor has with Lender; (b)
Borrower or any Guarantor becomes insolvent, files a petition in bankruptcy or
similar proceedings, or is adjudged a bankrupt; (c) there occurs a material
adverse change in Borrower's financial condition, in the financial condition of
any guarantor, or in the value of any collateral securing any Loan; (d) any
guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
guarantor's guaranty of the Loan or any other loan with Lender; or (e) Lender
in good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure, even though no Event of Default shall have
occurred.
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Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the indebtedness against any and all funds held by
Lender or owed to Borrower for any reason.
EVENTS OF DEFAULT. Each of the following shall constitute an event of default
("Event of Default") under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when
due on the Loans.
Other Defaults. Failure of Borrower to comply with or to perform when
due on any other term, obligation, covenant or condition contained in
the Agreement.
Default in Favor of Third Parties. Should Borrower default under any
loan, extension of credit, security agreement, purchase or sale
agreement, or any other agreement, in favor of any other creditor or
person that may materially affect any of Borrower's property or
Borrower's ability to repay the Loans or perform Borrower's
obligations under this Agreement or any related documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower is false or misleading
in any material respect at the time made or furnished, or becomes
false or misleading at any time thereafter.
Death or Insolvency. The dissolution or termination of Borrower's
existence as a going business, the insolvency of Borrower, the
appointment of a receiver for any part of Borrower's property, any
assignment for the benefit of creditors, any type of credit workout,
or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help
repossession or any other method, by any creditor of Borrower, any
creditor of any grantor of collateral for the loan. This includes a
garnishment attachment.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the indebtedness; or any Guarantor
revokes or disputes the validity of, or liability under, any Guaranty
of the indebtedness.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment
performance of the indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
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EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement immediately will terminate
(including any obligation to make Loan Advances or disbursements), and, at
Lender's option,. all indebtedness immediately will become due and payable, all
without notice of any kind to Borrower, except that in the case of an Event of
Default of the type described in the "Insolvency" subsection above, such
acceleration shall be automatic and not optional. In addition, Lender shall have
all the rights and remedies provided in the Related Documents or available at
law, in equity or otherwise. Except as may be prohibited by applicable law, all
of Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or
take action to perform an obligation of Borrower or of any Grantor shall not
affect Lender's right to declare a default and to exercise its rights and
remedies.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS.
BORROWER:
ACE Motor Company
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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LENDER: AutoPrime, Inc.
By: /s/ Illegible
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Title
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