EXHIBIT 10.19
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE
SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT
FOR CONSIDERATION, (A) WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS THEREUNDER, (B) WITHOUT AN AGREEMENT TO ASSUME THE
OBLIGATIONS OF THE FORMER HOLDER HEREOF UNDER THE TERMS OF THE INTERCREDITOR
AGREEMENT (AS DEFINED BELOW) AND (C) EXCEPT AS OTHERWISE PERMITTED BY THE
TERMS OF THIS NOTE.
SECURED PROMISSORY NOTE
[REVOLVING CREDIT NOTE]
$1,000,000.00 December 14, 2004
1. Principal Amount.
a. For value received, Trinity Springs, Inc., a Delaware corporation
("Maker"), unconditionally promises to pay to the order of Allen D. Petersen
("Secured Party"), the principal sum of ONE MILLION AND 00/100 DOLLARS
($1,000,000.00) or such lesser amount which shall be from time to time owing
hereunder on account of Advances (as defined in Section 1b. below) made by
Secured Party to or for the benefit of Maker, together with interest on such
unpaid principal balances from time to time outstanding hereunder at the rate
set forth in Section 2 of this Note.
b. This Note is a revolving credit facility. Secured Party agrees, on
the terms and subject to the satisfaction of the conditions hereinafter set
forth, to make advances to Maker from time to time (each, an "Advance")
during the period (the "Commitment Period") commencing on the date hereof and
continuing to the Maturity Date, at such times and in such amounts, as Maker
shall request; provided, however, in no event shall the aggregate outstanding
principal amount under this Note at any one time exceed ONE MILLION AND
NO/100 DOLLARS ($1,000,000.00) (the "Commitment"). During the Commitment
Period, Maker may borrow, repay and re-borrow principal under this Note
subject to the terms and conditions hereunder. Whenever Maker desires to
receive an Advance hereunder, Maker shall give Secured Party adequate notice
of no less than two (2) business days for such request for an Advance (an
"Advance Request"). Such Advance Request shall specify the aggregate
principal amount of the Advance to be made pursuant to such borrowing and the
date of borrowing (which shall be a business day). The date and amount of
each Advance and all receipts of principal and interest with respect to this
Note will be recorded by Secured Party in the records it maintains with
respect thereto. The failure to record, or any error in recording, any of
the foregoing shall not, however, affect the obligations of Maker under this
Note to repay the entire outstanding principal amount advanced and all
interest accrued thereon. Secured Party's records shall constitute prima
facie evidence of the amount outstanding under this Note. Secured Party and
Maker agree that the initial Advance under this note is FIVE HUNDRED THOUSAND
DOLLARS AND NO/100 ($500,000.00) (the "Initial Advance"). The Initial
Advance shall be transmitted from Secured Party to Maker on the date of this
Note.
2. Interest. Maker agrees to pay interest on each Advance hereunder until
the Maturity Date at an annual rate equal to eight percent (8%). Interest on
the Initial Advance shall begin to accrue from the date hereof and interest
on all subsequent Advances shall begin to accrue from the date of each such
Advance. Interest shall be computed on the basis of a year of 365 days and
the actual number of days elapsed.
3. Post Maturity Interest; Computation of Interest. Any amount of
principal and/or interest hereof which is not paid when due, whether at
stated maturity, by acceleration or otherwise, shall bear interest from the
date when due until said principal and/or interest amount is paid in full,
payable on demand, at an interest rate which is equal to twelve percent (12%)
per annum. No provision of this Note shall require the payment or permit the
collection of interest in excess of the maximum permitted by law. If any
excess of interest in such respect is herein or in such other instrument
provided for, or shall be adjudicated to be so provided for herein or in such
other instrument, Maker shall not be obligated to pay such interest in excess
of the maximum amount permitted by law and the right to demand the payment of
any such excess shall be and hereby is waived. This provision shall control
any other provision of this Note or such other instrument. If any such
excess interest shall have been paid by Maker it shall automatically be
treated as a permitted additional prepayment of principal.
4. Payments. The principal sum and interest thereon shall be payable as
follows:
a. The remaining principal balance together with interest thereon shall
be due and payable on December 14, 2005 (the "Maturity Date").
b. All payments to Secured Party shall be delivered to the following
address:
Draupnir, LLC
515 N. State St., #2650
Chicago, Illinois 60610
Attention: Allen Petersen
c. Payments shall be deemed to have been made on the date received by
Secured Party.
d. All or any portion of the indebtedness evidenced hereby may be
prepaid at any time without premium or penalty.
e. Each payment shall be made in lawful money of the United States which
shall be legal tender in payment of all debts and dues, public and private,
at the time of payment, and shall be credited first to interest then due and
the remainder shall be applied to principal.
5. Security.
a. Maker's obligations under this Note shall be secured by the real and
personal property pursuant to that certain Commercial Mortgage, Assignment of
Leases and Rents, and Fixture Filing dated as of June 17, 2004 and as
modified and extended by that certain Modification and Extension of Second
Lien Commercial Mortgage, Assignment of Leases and Rents, and Fixture Filing,
dated as of December 14, 2004 (the "Mortgage") executed by Maker in favor of
Secured Party and AMCON Distributing Company ("AMCON").
b. Secured Party, AMCON, and Maker are all parties to that certain
Intercreditor Agreement, dated of even date herewith (the "Intercreditor
Agreement") in which, among other things (i) AMCON and Secured Party set
forth their respective rights and obligations with respect to the Mortgage
and (ii) Maker promises to elect certain members to its board of directors.
c. This Note is issued pursuant to and is subject to all of the terms
and conditions set forth in the Mortgage and the Intercreditor Agreement.
6. Events of Default. The occurrence of any one or more of the following
events shall constitute an event of default ("Event of Default") hereunder:
a. Maker shall fail to pay any amount under this Note when due, whether
at maturity, by acceleration or otherwise, and such failure continues for
five (5) business days after Secured Party provides written notice of such
failure to Maker;
b. Any representation, warranty, condition or covenant of Maker made in
this Note, the Intercreditor Agreement or the Mortgage is or shall become
incorrect or misleading in any material respect, and such breach and/or
failure continues for ten (10) days after Secured Party provides written
notice of such breach and/or failure to Maker;
c. A default shall occur in (i) the payment when due (subject to
applicable grace periods), whether by maturity, acceleration or otherwise, of
any indebtedness in excess of $100,000 of Maker or (ii) the performance or
observance of any obligation, covenant or condition with respect to such
indebtedness, if the effect of such default is to accelerate, or to permit
the acceleration of, the maturity of such indebtedness; provided, however,
that the occurrence of the events described in clause (i) and/or (ii) shall
not be an Event of Default if Maker is contesting such matter in good faith
(for a reasonable period of time given the applicable circumstances) and
thereafter makes payment of the amount determined to be due and/or refinances
such indebtedness within thirty (30) days of such determination; and
d. Maker shall: (i) file any proceeding in bankruptcy or reorganization;
(ii) make an assignment for the benefit of creditors; or (iii) fail to
vacate, discharge or dismiss within sixty (60) days of its initiation either:
(x) the filing of a proceeding in bankruptcy against it; or (y) the
appointment of a receiver or trustee for all or any part of Maker's assets or
property.
7. Remedies. Upon the occurrence of an Event of Default, Secured Party, at
his option, will have all rights and remedies of a secured party under the
Uniform Commercial Code of the State of Idaho ("UCC"), and other applicable
laws. In addition to the foregoing rights and remedies, upon the occurrence
of an Event of Default, Secured Party shall have the right to declare all
amounts due hereunder to be immediately due and payable, whereupon all such
amounts shall become immediately due and payable, without further notice,
demand or presentment of any kind (provided that in the event of a default
described in clause (d) of the foregoing paragraph, all amounts due hereunder
automatically shall become due and payable, without declaration, notice,
demand or presentment of any kind). Maker promises to pay all costs of
collection, including, but not limited to, reasonable attorneys' fees,
incurred by Secured Party on account of such collection, whether or not suit
is filed hereon.
8. Miscellaneous.
a. The time of payment of this Note, or any installment thereof may be
extended from time to time without notice to Maker, endorsers, guarantors,
sureties and all other parties liable for payment of any sum or sums due or
to become due under the terms of this Note. No extension of the time for the
payment of this Note or any installment hereof made by agreement with any
person now or hereafter liable for the payment of this Note shall operate to
release, discharge, modify, change or affect the original liability under
this Note, either in whole or in part, of Maker hereunder or any other person
now or hereafter liable for the payment of this Note who is not a party to
such agreement.
b. If any one or more of the covenants, agreements, terms or provisions
contained in this Note shall be invalid, illegal or unenforceable in any
respect, the validity of the remaining covenants, agreements, terms or
provisions contained herein shall be in no way affected, prejudiced, limited
or impaired thereby.
c. Maker agrees that this Note shall be deemed to have been made under
and shall be governed by, and construed in accordance with, the laws of the
state of Idaho (without regard to its conflicts of law rules) in all
respects, including, without limitation, matters of construction, validity
and performance, and that none of its terms or provisions may be waived,
altered, modified or amended except as Secured Party may consent thereto in a
writing duly signed by it.
d. The headings, titles and subtitles herein are inserted for convenience
of reference only and are to be ignored in any construction of the provisions
hereof. The term "Maker" as defined herein includes the heirs, personal
representatives, successors and assigns of Maker.
e. Secured Party, as the holder of this Note, and any subsequent holder
of this Note, shall not sell, pledge, hypothecate, donate or otherwise
transfer or convey, whether or not for consideration, to any person, any
interest in this Note representing less than the entire amount of this Note
and the entire amount of indebtedness evidenced by this Note, but rather, any
holder of this Note may only sell, pledge, hypothecate, donate or otherwise
transfer or convey such holder's entire interest in this Note representing
the entire amount of this Note and the entire amount of indebtedness
evidenced by this Note.
IN WITNESS WHEREOF, Maker has executed and delivered this Note on the day and
year first above written.
Maker:
TRINITY SPRINGS, INC.
/s/ William F. Wright
- ----------------------------------
Name: William F. Wright
Title: Chairman of the Board and
Chief Executive Officer