EXHIBIT 10.7
REVOLVING LINE OF CREDIT AGREEMENT
This Revolving Line of Credit Agreement (the "AGREEMENT") is made and
entered into in this 15th day of December 15, 2006, by and between DLR Funding,
Inc., a Nevada corporation "LENDER"), and DLR Funding, LLC, a Texas limited
liability company ("BORROWER").
In consideration of the mutual covenants and agreements contained herein,
the parties agree as follows:
1. LINE OF CREDIT. Lender hereby establishes for a period extending to
January 1, 2010 (the "MATURITY DATE") a revolving line of credit (the "CREDIT
LINE") for Borrower in the principal amount of Five Hundred Thousand Dollars
($500,000.00) (the "CREDIT LIMIT"). In connection herewith, Borrower shall
execute and deliver to Lender a Promissory Note in the amount of the Credit
Limit and in form and content satisfactory to Lender. All sums advanced on the
Credit Line or pursuant to the terms of this Agreement (each an "ADVANCE") shall
become part of the principal of said Promissory Note.
2. ADVANCES. Any request for an Advance may be made from time to time and
in such amounts as Borrower may choose; provided, however, any requested Advance
will not, when added to the outstanding principal balance of all previous
Advances, exceed the Credit Limit. Requests for Advances may be made orally or
in writing by such officer of Borrower authorized by it to request such
Advances. Until such time as Lender may be notified otherwise, Borrower hereby
authorizes its Managing Member, Xxxxxxxx Xxxxxxxx, to request Advances. Lender
may deposit or credit the amount of any requested Advance to Borrower's checking
account. Lender may refuse to make any requested Advance if an Event of Default
has occurred and is continuing hereunder either at the time the request is given
or the date the Advance is to be made, or if an event has occurred or condition
exists which, with the giving of notice or passing of time or both, would
constitute an Event of Default hereunder as of such dates.
The funds from the Advances will be used by the Borrower for investment
purposes in connection with the operations of the Borrower.
3. INTEREST. All sums advanced pursuant to this Agreement shall bear
interest from the date each Advance is made until paid in full at the rate of
twelve percent (12%) per annum, simple interest (the "EFFECTIVE RATE").
4. REPAYMENT. Borrower shall pay installments of principal and interest on
the outstanding principal balance as follows. Commencing on April 1, 2007 and
then quarterly thereafter, until paid, or due, in full, with the quarterly
payment amounts being three (3) times the monthly payment that would be due
based on a forty-eight (48) month amortization ("Quarterly Payment") of the
outstanding principal balance due on the Agreement on each prior quarter's last
business day. The entire unpaid principal balance, together with any accrued
interest and other unpaid charges or fees hereunder, shall be due and payable on
the Maturity Date. All payments shall be made to Lender at such place as Lender
may, from time to time, designate. All payments received hereunder shall be
applied, first, to any costs or expenses incurred by Lender in collecting such
payment or to any other unpaid charges or expenses due hereunder; second, to
accrued interest; and third, to principal. Borrower may prepay principal at any
time without penalty.
5. REPRESENTATIONS AND WARRANTIES. In order to induce Lender to enter into
this Agreement and to make the advances provided for herein, Borrower represents
and warrants to Lender as follows:
a. Borrower is a duly organized, validly existing, and in good
standing under the laws of the State of Texas with the power to own its assets
and to transact business in Texas. b. Borrower has the authority and power to
execute and deliver any document required hereunder and to perform any condition
or obligation imposed under the terms of such documents.
c. The execution, delivery and performance of this Agreement and each
document incident hereto will not violate any provision of any applicable law,
regulation, order, judgment, decree, article of incorporation, by-law,
indenture, contract, agreement, or other undertaking to which Borrower is a
party, or which purports to be binding on Borrower or its assets and will not
result in the creation or imposition of a lien on any of its assets.
d. There is no action, suit, investigation, or proceeding pending or,
to the knowledge of Borrower, threatened, against or affecting Borrower or any
of its assets which, if adversely determined, would have a material adverse
affect on the financial condition of Borrower or the operation of its business.
6. EVENTS OF DEFAULT. An event of default ("Event of Default") will occur
if any of the following events occurs:
a. Failure to pay any principal or interest hereunder within ten (10)
days after the same becomes due.
b. Any representation or warranty made by Borrower in this Agreement
or in connection with any borrowing or request for an Advance hereunder, or in
any certificate, financial statement, or other statement furnished by Borrower
to Lender is untrue in any material respect at the time when made.
c. Default by Borrower in the observance or performance of any other
covenant or agreement contained in this Agreement, other than a default
constituting a separate and distinct Event of Default under this Paragraph 6.
d. Filing by Borrower of a voluntary petition in bankruptcy seeking
reorganization, arrangement or readjustment of debts, or any other relief under
the Bankruptcy Code as amended or under any other insolvency act or law, state
or federal, now or hereafter existing.
e. Filing of an involuntary petition against Borrower in bankruptcy
seeking reorganization, arrangement or readjustment of debts, or any other
relief under the Bankruptcy Code as amended, or under any other insolvency act
or law, state or federal, now or hereafter existing, and the continuance thereof
for sixty (60) days and not dismissed, bonded, or discharged.
7. REMEDIES. Upon the occurrence of an Event of Default as defined above,
Lender may declare the entire unpaid principal balance, together with accrued
interest thereon, to be immediately due and payable without presentment, demand,
protest, or other notice of any kind. Lender may suspend or terminate any
obligation it may have hereunder to make additional Advances. To the extent
permitted by law, Borrower waives any rights to presentment, demand, protest, or
notice of any kind in connection with this Agreement. No failure or delay on the
part of Lender in exercising any right, power, or privilege hereunder will
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege. The rights and remedies provided herein are
cumulative and not exclusive of any other rights or remedies provided at law or
in equity. Borrower agrees to pay all costs of collection incurred by reason of
the default, including court costs and reasonable attorney's fees.
8. NOTICE. Any written notice will be deemed effective on the date such
notice is placed, first class, postage prepaid, in the United States mail,
addressed to the party to which notice is being given as follows:
Lender: DLR Funding, Inc.
x/x XXXXXX X. XXXX, Xxxxxxx
00000 Xxxxx Xxxxxxxxx Road Suite A
Santa Fe Springs, CA 90670
Borrower: DLR Funding, LLC
Attn.: Xxxxxxxx Xxxxxxxx
0000 Xxxx Xxxxxx Xxxx 00
Xxxxxxx, XX 00000
9. AFFIRMATIVE COVENANTS. During the term of this Agreement, the Borrower
covenants and agrees:
a) CORPORATE EXISTENCE AND AUTHORIZATIONS. The Borrower shall maintain
in good standing its corporate existence and its right to transact business in
those jurisdictions in which it is now or hereafter doing a material amount of
business, and the Borrower shall maintain all material licenses, permits and
registrations necessary for the conduct of its operations.
b) COMPLIANCE WITH LAWS. The Borrower shall comply with all material
Laws applicable to its business operations.
c) PAYMENT OF OBLIGATIONS. The Borrower shall promptly pay and
discharge or cause to be paid and discharged, as and when due (or as amended or
extended by the lender or creditor), any and all of its lawful debts and other
obligations, including all lawful taxes, rates, levies and assessments and all
claims for labor, materials or supplies; provided, however, that nothing herein
contained shall be construed as prohibiting the Borrower from diligently
contesting in good faith by appropriate proceedings the validity of any such
debt or other obligation, provided Borrower has established adequate reserves
for such debt or obligation on its books and records.
d) FINANCIAL INFORMATION. The Borrower will provide the Lender with
copies of its unaudited quarterly financial statements within 45 days of the end
of each calendar quarter ending during prior to the Maturity Date.
10. NEGATIVE COVENANTS. During the term of this Agreement, the Borrower
covenants and agrees that without the prior written consent of the Lender that:
a) DIVIDENDS. The Borrower shall not declare or pay dividends or other
distributions to its now existing, or new member(s), or other equity owners.
b) USE OF PROCEEDS. The Borrower will not use the proceeds of the Loan
to be used for any purpose other than that stated herein.
c) CONFLICTING AGREEMENTS. The Borrower will not enter into any
agreement, any term or condition of which would, if complied with by Borrower,
result in an Event of Default.
10. REMEDIES NOT EXCLUSIVE. The Lender shall be entitled to enforce payment
and performance of all obligations of the Borrower hereunder or under the Note
and to exercise all rights and powers hereunder or under the Note, or under any
Law and the pursuit of any remedy available to the Lender against the Borrower
shall not prejudice or in any manner affect the Lender's right to realize upon
or enforce any other remedy or security now or hereafter available to it in such
order and in such manner as the Lender may determine in its sole discretion. No
such right or remedy shall be exclusive, but each shall be cumulative and shall
be in addition to every other remedy provided herein or in any other agreement
or by Law and each such remedy may be exercised concurrently or independently.
Nothing in this Agreement shall be construed as prohibiting the Lender from
seeking a deficiency judgment against the Borrower.
11. GENERAL PROVISIONS. All representations and warranties made in this
Agreement and the Promissory Note and in any certificate delivered pursuant
thereto shall survive the execution and delivery of this Agreement and the
making of any loans hereunder. This Agreement will be binding upon and inure to
the benefit of Borrower and Lender, their respective successors and assigns,
except that Borrower may not assign or transfer its rights or delegate its
duties hereunder without the prior written consent of Lender. This Agreement,
the Promissory Note, and all documents and instruments associated herewith will
be governed by and construed and interpreted in accordance with the laws of the
State of Nevada. Time is of the essence hereof. This Agreement will be deemed to
express, embody, and supersede any previous understanding, agreements, or
commitments, whether written or oral, between the parties with respect to the
general subject matter hereof. This Agreement may not be amended or modified
except in writing signed by the parties.
EXECUTED on the day and year first written above.
Borrower: DLR Funding, LLC,
By its Managing Member,
/s/ Xxxxxxxx Xxxxxxxx
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Xxxxxxxx Xxxxxxxx, Managing Member
Lender: DLR Funding, Inc.,
By its Chief Executive Officer,
/s/ Xxxxxx X. Sock
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XXXXXX X. SOCK, CEO
