LINE OF CREDIT AGREEMENT
------------------------
THIS LINE OF CREDIT AGREEMENT (this "Agreement") made and entered into
effective as of April 1, 1999, by and among All Power Corp., a New York
corporation (the "Borrower") and Full Power Corporation, an Ohio corporation
(the "Lender").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower has requested the Lender to make available to the
Borrower a line of credit facility in the aggregate principal sum of $250,000;
WHEREAS, the Lender has agreed to make such line of credit facility
available to the Borrower, subject to the terms and on the conditions set
forth in this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, and for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agrees as follows:
SECTION 1. DEFINITIONS.
------------
In addition to the capitalized terms defined elsewhere in this
Agreement, the following capitalized terms shall have the meanings set forth
below:
"ADVANCE" shall mean an advance to Borrower under Section 2.1 of this
Agreement.
"APPLICABLE MARGIN" shall mean two percent (2.0%) per annum.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday, or a
legal holiday on which banks are authorized or required to be closed in
Cleveland, Ohio.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 5.
"INTEREST PERIOD" shall mean one calendar month.
"LINE OF CREDIT" shall have the meaning provided in Section 2.1
"LINE OF CREDIT NOTE" shall mean the Promissory Note in the form of
Exhibit A attached hereto as completed, executed and delivered by the
Borrower to the Lender pursuant to the terms of this Agreement.
"LOAN DOCUMENTS" shall mean this Agreement, the Line of Credit Note, and
any other instrument or agreement now or hereafter executed by the Borrower
in connection with the Line of Credit.
"NOTICE OF BORROWING" shall have the meaning provided in Section 2.3.
"PRIME RATE" shall mean the rate which Bank of America publicly
announces from time to time to be its prime lending rate, as in effect from
time to time.
"SECURITY DOCUMENTS" means the Pledge Agreement between Xxxx X'Xxxxx,
the principal shareholder of the Borrower, and the Lender, and any other
documents which may be reasonably requested from time to time by the Lender
as necessary to perfect its security interest.
"TERMINATION DATE" shall mean April___, 2001, or any subsequent date to
which the Lender has agreed in writing, in its sole discretion, to extend the
Line of Credit hereunder, or such earlier date on which the Line of Credit is
terminated pursuant to Section 5.
SECTION 2. CREDIT FACILITY.
----------------
2.1 LINE OF CREDIT. From time to time, from the date hereof through
and until the Termination Date, the Lender agrees to make Advances to the
Borrower which shall not exceed the aggregate principal amount of $250,000 at
any one time outstanding to the Borrower. Prior to the Termination Date, the
Borrower may borrow, repay, and borrow again in its discretion pursuant to
the terms hereof within the limits of this Agreement. All Advances shall be
evidenced by a single Line of Credit Note substantially in the form of
Exhibit A made by the Borrower, payable to the Lender in the original
principal amount of $250,000, dated the date hereof and maturing on the
Termination Date.
2.2 INTEREST. Interest shall accrue on the unpaid principal amount of
each Advance outstanding hereunder at a rate equal to the Prime Rate plus the
Applicable Margin; provided, however, that if the Borrower fails to pay (i)
any principal amount at maturity, or (ii) any interest on outstanding
Advances within five (5) days after the same has become due and payable, then
in either such case to the fullest extent permitted by law, interest shall
accrue on such unpaid principal amount or unpaid interest at a rate equal to
the Prime Rate plus an additional four percent (4%) per annum. Interest shall
be payable monthly in arrears on the last calendar day of each month, and on
the Termination Date. Interest shall be computed on the basis of the actual
number of days elapsed in a year of 365 days or 366 days, as the case may be.
2.3 METHOD OF BORROWING. The Borrowers shall give the Lender written
or telephonic notice (promptly confirmed in writing) of any requested
Advance under the Line of Credit (a "Notice of Borrowing") specifying (i)
the amount of the Advance, and (ii) the date the proposed Advance is to be
made which shall be a Business Day shall be no sooner than five (5) business
days from the day the Notice of Borrowing is received by the Lender. The
Lender shall be entitled to rely on any telephonic Notice of Borrowing that
it believes in good faith to have been given by a duly authorized officer or
agent of the Borrower. Subject to the terms of this
2
Agreement, the Lender shall make the amount of such Advance to the Borrower
on the requested date or as soon thereafter as practicable.
2.4 PREPAYMENT OF ADVANCES. The Borrower shall have the right to
prepay Advances in whole at any time, or in part from time to time, without
premium or penalty, but with accrued interest on the principal amount prepaid
to the date of such prepayment.
2.5 SECURITY. The Line of Credit Note shall be entitled to the
benefits of shares of stock of the Borrower granted as collateral pursuant to
a Pledge Agreement to be entered into by Xxxx X'Xxxxx, the principal
shareholder of the Borrower in favor of the Lender substantially in the form
of Exhibit B.
SECTION 3. CONDITIONS OF LENDING.
The obligations of the Lender to make to Borrower an Advance hereunder
shall be subject to the prior satisfaction the following conditions:
3.1 DELIVERY OF NOTE AND SECURITY DOCUMENTS. The Borrower shall have
executed and delivered to the Lender the Loan Documents and Xxxx X'Xxxxx
shall have executed and delivered to the Lender the Security Documents in
form and substance satisfactory to Lender.
3.2 REPRESENTATIONS AND WARRANTIES. At the time of each Advance
hereunder, the representations and warranties set forth herein shall be true
and correct in all material respects with the same effect as though such
representations and warranties have been made on and as of the date hereof.
3.3 NO DEFAULT. At the time of each Advance hereunder, the Borrower
and Xxxx X'Xxxxx as applicable shall have performed and complied with all
agreements and conditions contained herein and in the Security Documents
required to be performed and complied with by the Borrower and Xxxx X'Xxxxx
and no Event of Default shall have occurred in this Agreement or the Security
Documents nor any event which with the lapse of time, giving of Notice or
both would constitute a default hereunder or under the Security Documents. At
the time of each Advance hereunder, Borrower shall be in compliance with all
terms and conditions or any agreements and documents evidencing any
indebtedness or debt obligation of the Borrower and no Event of Default shall
have occurred nor any event which with the lapse of time, giving of notice
or both would constitute an Event of Default under the agreement or documents
evidencing any other indebtedness or debt obligation of the Borrower.
3
SECTION 4. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lender as follows:
4.1 ORGANIZATION, POWERS, ETC. The Borrower is duly organized,
validly existing and in good standing under the laws of the State of New
York, with full power and authority to own its properties and to carry on its
business as presently conducted. The Borrower is qualified to do business and
is in good standing in every jurisdiction where failure to so qualify and be
in good standing would have a material adverse effect on the financial
condition or operations of the Borrower.
4.2 ORGANIZATIONAL AUTHORITY. The execution, delivery and performance
of this Agreement and the Line of Credit Note have each been duly authorized
by all requisite corporate action.
4.3 NO BREACH OF AGREEMENTS. The execution, delivery and performance
of this Agreement and the Line of Credit Note and the borrowing hereunder,
will not violate or constitute a material breach under the organizational
documents of the Borrower, nor any indenture, agreement, or other instrument
to which the Borrower is a party or by which the Borrower or its properties
are bound.
4.4 EXECUTION AND DELIVERY. This Agreement and the Line of Credit
Note have been duly executed and delivered by the Borrower, constitute legal,
valid and binding obligations of the Borrower enforceable in accordance with
their respective express terms.
4.5 NO DEFAULT. No Event of Default or default has occurred and
Borrower is not in breach of or in default under any Agreement to which it is
a party or by which it is bound.
4.6 NO ENCUMBRANCES. To the knowledge of the Borrower, there is no
mortgage, charge, pledge, lien or other encumbrance over all or any of the
property granted as collateral pursuant to the Pledge Agreement, except as
disclosed in the Pledge Agreement and there is no subsisting agreement to
create any such mortgage, charge, pledge, lien or encumbrance.
4.7 TAXES. The Borrower is not in default in the payment of any due
and payable taxes.
4.8 NO LITIGATION. The Borrower is not engaged in any significant
litigation or arbitration proceedings and is not aware of any facts likely to
give rise to any significant litigation or arbitration proceedings.
4.9 STOCK MATTERS. The Borrower has issued all outstanding 1,000,000
shares of $.0001 par value common stock, all of which is issued in the name
of Xxxx X'Xxxxx. Borrower has no agreement, arrangement or understanding
calling for the issuance of additional shares
4
of its capital stock. Without the express written consent of the Lender,
Borrower shall not issue or enter into any agreement, arrangement or
understanding for the issuance of any of its capital stock.
SECTION 5. EVENTS OF DEFAULT.
5.1 Any one or more of the following shall constitute an Event of
Default hereunder:
(a) The Borrower shall fail to pay when due any principal portion of
the Line of Credit Note, or shall fail to pay any interest due under the Line
of Credit Note within five (5) days after receipt of notice from the Lender
of the amount of interest accrued and payable under the terms of the Line of
Credit Note;
(b) Any representation or warranty given or deemed to be given or
repeated by the Borrower or in accordance with this Agreement, is found to be
incorrect on the particular date that it was so given or deemed to be given
or repeated;
(c) The Borrower shall (i) file a petition under any applicable
insolvency, debtor relief, or reorganization statute, including without
limitation, the Federal Bankruptcy Code; (ii) be subject to an involuntary
petition under any applicable insolvency, debtor relief or reorganization
statute, including without limitation, the Federal Bankruptcy Code, which is
not dismissed within sixty (60) days of its filing; (iii) appoint or consent
to the appointment of any receiver, conservator, liquidating agent or
committee in any insolvency, readjustment of debts, marshaling of assets or
liabilities, or similar proceedings of or relating to the Borrower or any
substantial portion of the Borrower's assets; or (iv) take any corporate
action for the purpose of effecting any of he foregoing;
(d) The amount or balance of any debt of other indebtedness of the
Borrower not being paid when due, becoming payable prior to its date of
maturity date by reason of default or by reason of any demand for immediate
payment by any person or persons entitled to the benefit thereof or any
creditor of the Borrower becoming entitled to declare any such debt or
indebtedness due and payable prior to its date of maturity for any reason; and
(e) The Borrower ceasing or threatening to cease to carry on all or a
substantial part of its operations without the prior written approval of the
Lender.
5.2 Upon the occurrence of any Event of Default as provided herein,
the Lender may, without further notice or demand, terminate all obligations
of the Lender to the Borrower hereunder, declare the Line of Credit Note
(including principal, interest, reasonable attorneys fees and other costs of
collection if collected by legal action or through an attorney-at-law) to be
immediately due and payable. In such event, the Lender shall be entitled to
exercise its rights and remedies under this Agreement, the Line of Credit
Note and the Security
5
Documents or otherwise available by agreement or under law, all of which
remedies shall be cumulative and may be exercised concurrently.
SECTION 6. MISCELLANEOUS.
6.1 NOTICES. All notices provided for hereunder shall be in writing
and unless otherwise directed, if to the Lender, delivered by hand or mailed
by first class mail, postage prepaid, addressed to the Lender at its offices
at 00000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxx 00000, Attention: Xxxxxx
Xxxxxxx, and if to the Borrower, delivered by hand or sent by first class
mail, postage prepaid, addressed to the Borrower at _____________________,
Attention: Xxxx X'Xxxxx. The foregoing addresses shall be subject to change,
provided that the party wishing to change such address notifies the other
party of such address change in a notice duly delivered or sent pursuant to
this Section 6.1 at least ten (10) days prior to the effective date of such
address change.
6.2 NON-WAIVER. No delay or failure on the part of the lender in the
exercise of any power or right shall operate as a waiver thereof, or as an
acquiescence in any default, nor shall any single or partial exercise of any
power or right preclude any other or future exercise thereof or the exercise
of any other power or right. No acceptance of payments past the maturity date
thereof shall constitute a novation or waiver of the terms hereof.
6.3 GOVERNING LAW, ETC. THIS AGREEMENT, THE LINE OF CREDIT NOTE AND
THE SECURITY DOCUMENTS SHALL BE GOVERNED IN ALL RESPECT BY THE LAWS OF THE
STATE OF OHIO.
6.4 TIME. Time is of the essence hereunder.
6.5 DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
6.6 EXECUTION. This Agreement may be executed in any number of
counterparts, and all such counterparts taken together shall be deemed to
constitute an original.
6.7 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof, and
any prior agreement, whether written or oral, between the parties hereto is
superseded hereby.
6.8 ASSIGNMENT. Borrower may not assign its right or obligations
under this Agreement without the prior written consent of the Lender, which
consent may be withheld in the sole discretion of the Lender. Lender may
assign its right hereunder to any affiliated party of the Lender.
6
6.9 SEVERABILITY. In case any one provision contained in this
agreement, in the Line of Credit Note or the Security Documents shall be
invalid, illegal or unenforceable in any respect, the legality, validity, or
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered under seal the day and year first above written.
BORROWER:
ALL POWER CORP.
a New York corporation
By: Xxxx X'Xxxxx
------------------------------
Name: Xxxx X'Xxxxx
Title: President
Attest: /s/ Xxxxx Xxxxxxx
--------------------------
Name: Xxxxx Xxxxxxx
Title: Secretary
LENDER:
FULL POWER CORPORATION
an Ohio corporation
/s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
By: Xxxxxxx X. X'Xxxxxx
------------------------------
Name: Xxxxxxx X. X'Xxxxxx
Title: Secretary
7
EXHIBIT A
LINE OF CREDIT NOTE
April __, 1999 $250,000.00
All Power Corp., a New York corporation (the "Borrower") promises to pay
to Full Power Corporation, an Ohio corporation (the "Lender") the principal
amount of $250,000.00, or such lesser amount as may be advanced by the Lender to
the Borrower in accordance with the terms of the Line of Credit Agreement
between the Borrower and Lender on April ___, 2001 or such earlier date as is
permitted or provided for in the Line of Credit Agreement, with interest
(computed on the basis of the actual number of days elapsed in a year of 365
days or 366 days, as the case may be) on the unpaid balance of such principal
amount at a rate equal to the Prime Rate at which the Bank of America publicly
announces from time to time to be its Prime Lending Rate, plus two (2)
percentage points. Interest shall be payable monthly in arrears on the last
calendar day of each month. All payments shall first be applied to interest and
any other costs which may be due and payable from Borrower to Lender and lastly,
to principal. Payments of principal and interest shall be made in lawful money
of the United States of America at the principal office of Full Power
Corporation at 00000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxx 00000, or such
other office as Lender shall have designated by written notice to the Borrower
as provided in the Line of Credit Agreement.
The Lender is entitled to the benefits of the Line of Credit Agreement
and may enforce agreements of the Borrower contained therein and exercise the
remedies provided for thereby or otherwise made available with respect thereto.
Capitalized terms are not otherwise defined herein shall have the respective
meanings attributed to such terms in the Line of Credit Agreement.
This Line of Credit Note is entitled to the benefits of certain shares of
stock of Borrower owned by Xxxx X'Xxxxx held by the Lender under the Pledge
Agreement.
The Borrower shall have the right to prepay, in whole or in part, from
time to time, without premium or penalty, any accrued interest or outstanding
principal.
This Note is assignable by the Lender to an affiliate of the Lender.
This Note is made and delivered in Ohio and shall be governed by and
construed and enforced in accordance with the laws of the State of Ohio.
ALL POWER CORP.
a New York corporation
By: Xxxx X' Xxxxx
-------------------------
Xxxx X'Xxxxx
Its President
