PROMISSORY NOTE
Principle Loan Date Maturity Loan No. Account Officer Initials
$100,000.00 11-30-00 11-30-05 1024579987
- ------------------------------------------------------------------------------
References in the shaded area are for Lenders use only and do not
limit the applicability of this document to any particular loan or
item. Any item above containing has been omitted due to text length
limitations.
Borrower : U.S. Patriot, Inc. (TIN: 57-1107699) Lender: SouthTrust Bank
P.O. Box 6125 Forest Acres Office
Columbia, SC 29206 5490 Forest Drive
Columbia, SC 29206
(803) 787-0698
______________________________________________________________________________
Principle Amount: $100,000.00 Initial Rate: 10.500% Date of Note: 30 NOV 00
PROMISE TO PAY. U.S. Patriot , Inc. (Borrower) promises to pay to
SouthTrust Bank (Lender) , or order, In lawful money of the United
States of America, the principal amount of One Hundred Thousand &
00/100 Dollars ($100,000.00), together with interest on the unpaid
principal balance from October 11,2001, until paid in full.
PAYMENT-Subject to any payment changes resulting form changes in the
index. Borrower will pay this loan in 59 payments of $2,156.77 each
payment and an irregular last payment estimated at $1,091.96.
Borrower's first payment will be due on December 30, 2000, and all
subsequent payments are due on the same day of each month after that.
Borrower's final payment will be due on November 30, 2005, and will be
for all principal and all accrued interest not yet paid. Payments
include principal and interest. Unless otherwise agreed or required by
applicable law, payments will be applied first to any unpaid
collection costs and any late charges, then to any unpaid interest,
and any remaining amount to principal. The annual interest rate for
this Note is computed on a 365/360 basis: that is, by applying the
ratio of the annual interest rate over a year of 360 days, multiplied
by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay lender
at Lenders address shown above or at such other place as Lender may
designate in writing.
VARIABLE INTEREST RATE. The Interest rate on this Note is subject to
change from time to time based on changes in an index which is the
"base rate". The term "base rate" means the rate o Interest designated
by the Lender periodically as it's Base rate( the Index). The Index is
not necessarily the lowest rate charged by Lender on it's loans and is
set by Lender in it's sole discretion. If the Index becomes
unavailable during the term of this loan, Lender may designate a
substitute index after notifying Borrower. Lender will tell Borrower
the current index rate upon Borrower's request. The interest rate
change will not occur more often than each day the Index Rate charges.
Borrower understands that Lender may make loans based on other rates
as well. The Index currently is 9.500% per annum. The Interest rate to
be applied to the unpaid principal balance of this Note will be at a
rate of 1.000 percentage point over the Index, resulting in the
initial rate of 10.500% per annum. NOTICE: Under no circumstances will
the interest rate on this Note be more than the maximum rate allowed
by applicable law. Whenever increases occur in the interest rate,
Lender, at it's option may do one or more of the following: A Increase
Borrower's payments to ensure Borrower's loan will pay off by it's
original final maturity date. B) Increase Borrower's payments to cover
accruing interest. (C) Increase the number of Borrower's payments, and
(D) continue Borrower 's payments at the same amount and increase
Borrower's final payments.
PREPAYMENT. Borrower may pay without penalty all or a portion of the
amount owed earliest than it is due. Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower's
obligation to continue to make payments under the payment schedule.
Rather, early payments will reduce the principal balance due and may
result in Borrower's making fewer payments. Borrower agrees not to
send Lender payments marked "paid in full", "without recourse", or
similar language. If Borrower sends such a payment, Lender may accept
it without losing any of Lender's rights under this Note, and Borrower
will remain obligated to pay any further amount owed to Lender. All
written communications concerning disputed amounts, including any
1
check or other payment Instrument that indicates that the payment
constitutes "payment in full" of the amount owed or that is tendered
with other conditions or limitations or as full satisfaction of a
disputed amount must be mailed or delivered to: SouthTrust Bank,
Forest Acres Office, 5490 Forest Acre Drive, Columbia, SC 29205.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be
charged 5.000% of the unpaid portion of the regularly scheduled
payment or $0.50, whichever is greater.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon
final maturity, at Lender's option, and if permitted by applicable
law, Lender may add any unpaid accrued Interest to principal and such
sum will bear interest therefrom until paid at the rate provided in
the Note. Upon default the total sum due under this Note will bear
Interest from the date of acceleration or maturity. At the variable
interest rate on this Note. The Interest rate will not exceed the
maximum rate permitted by applicable law.
DEFAULT. Each of the following shall constitute an event of default
("Event of Default") under this Note. Payment Default. Borrower
fails to make any payment when due under this Note.
Other Defaults. Borrower fails to comply with or to perform any
other term, obligation, covenant or condition contained in this
Note or in any of the related documents or to comply with or to
perform any term, obligation, covenant or condition contained in
any other agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor
defaults under any loan, extension of credit, security agreement,
purchase or sales 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 this Note or
perform Borrower's obligations under this Note or any of the
related documents.
False Statements. Any warranty, representation or statement made
or furnished to Lender by Borrower or on Borrower's behalf under
this Note or the related documents is false or misleading in any
material respect either now or at the time made or furnished or
becomes false or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's
existence as a gin 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
creditor, any type of creditor workout, or the commencement of
any proceeding under any bankruptcy or Insolvency laws or against
Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosures
or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by
any governmental agency against any collateral securing the loan. This
includes a garnishment of any of Borrower's accounts, including deposit
accounts with Lender. However, this Event of Default shall not apply
if there is a good faith dispute by Borrower as to the validity or
reasonableness of the calm which is the basic of the creditor or
forfeiture proceeding and if Borrower gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding. In
the amount determined by Lender, in it's sole discretion, as
being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs
with respect to any Guarantor of any of the indebtedness or any
Guarantor dies or becomes incompetent, or revokes or disputes the
validity of, or liability under, any guaranty of the indebtedness
evidenced by this Note. In the event of death, Lender, at it's
option, may, but shall not be required to permit the Guarantor's
estate to assume unconditionally the obligations arising under
the guaranty in a manner satisfactory to Lender, and, in doing
so, cure any Event of Default.
Change in Ownership. Any change in ownership at twenty-five
percent (25%) or more of the common stock of Borrower.
Address Change. A material adverse change occurs in Borrowers
financial condition, or Lender believes the prospect of payment
performance of this Note is impaired.
2
2
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions, If any default, other than a default in payment
is curable and if Borrower has not been given a notice of a
breach of the same provision of this Note within the preceding
twelve (12) months, it may be cured and (no event of default will
have occurred) if Borrower , after receiving written notice from
Lender demanding cure of such default: 1) cures the default
within (15) days or 20 if the cure requires more than fifteen
(15) days, immediately initiates steps which Lender deems in
Lender's sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably
practical.
LENDER'S RIGHT'S. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower will pay Lender
that amount. This includes Lenders reasonable attorney's fees in an
amount not less than fifteen percent (15%) of the amount owing on this
Note and Lender's legal expenses whether or not there is a lawsuit,
including reasonable attorneys' fees and legal expenses for bankruptcy
proceedings including efforts to modify or vacate any automatic stay
or injunction and appeal. If not prohibited by applicable law,
Borrower also will pay any court costs. In addition to all other sums
provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either
Lender or Borrower against the other. Initial Here_______
GOVERNING LAW. This Note will be governed by construed and enforced in
accordance with federal law and the laws of the State of South
Carolina. This note has been accepted by Lender in the State of South
Carolina.
RIGHT OF SETOFF. To the extent permitted by applicable law. Lender
reserves a right of setoff in all Borrower's accounts with Lender
(whether checking, savings, or some other accounts). This includes all
accounts Borrower holds jointly with someone else and all accounts
Borrower any open in the future. However, this does not include any
IRA or Keogh accounts, or any trust accounts for which setoff would be
prohibited by law. Borrower authorizes Lender, to the extent permitted
by applicable la, to charge or setoff all sums owing on the
indebtedness against any and all accounts , and at Lender's option, to
administratively freeze all such accounts to allow Lender to protect
Lender's charge and setoff right's provided in this paragraph.
COLLATERAL. Borrower acknowledges this Note is secured by Any and All
Commercial Security Agreements describing One (1) Embroidery Machine
EMT1/ EDSIV with Embroidery Software.: Guaranty of Payment executed by
Phil Dee.
FINANCIAL STATEMENTS. Until this loan is paid in full. Borrower will
furnish to Lender, as soon as available but in any event within 120
days after the end of each fiscal year. Borrower's balance sheet and
statements of income, cash flows and changes in capital for the fiscal
year just ended. Setting forth in comparative form the corresponding
figures for the prior year, together with accompanying schedule and
footnotes. If the financial statements were complied or certified by
a public accountant, Borrower will also furnish Lender the accountants
letter accompanying the financial statements. Borrower will furnish
to Lender, as soon as available, but in any event within 30 days after
the end of the first three quarters of Borrower's fiscal year.
Borrower's balance sheet and profit and loss statement for the quarter
just ended,. All financial reports provided to Lender will be
certified in writing by the chief executive officer, managing partner
or comparable financial officer of Borrower to be true and complete to
the heat of his or her knowledge and belief and to have been prepared
in accordance with generally accepted accounting principles applied on
a basic consistent with the financial statements previously furnished
to Lender or, if not so prepared, setting forth the manner in which
the financial statements depart therefrom. Borrower will cause each
guarantor or endorser of this loan to furnish to Lender, within 90
3
days after Lender's request therefor, a current financial statement of
such guarantor or endorser in form acceptable to Lender and a copy of
the federal income tax return most recently filed by such guarantor or
endorser.
CHANGE IN OWNERSHIP. Any aggregate change of twenty -five (25%) or
more in the ownership of the common stock or other ownership interest
in Borrower in any period of 12 consecutive months shall constitute a
default under this loan.
OBLIGATION TO DEVELOP BUSINESS PLAN. Before approving this loan,
Lender required Borrower to furnish Lender with financial statements
and other information concerning the financial history and future
prospects of Borrower's business. Lender requested and reviewed that
information solely to enable it to make a decision whether to extend
credit. Borrower understands that Lender has not necessarily approved
Borrower's business plan and has not undertaken any duty or obligation
to advise Borrower on business matters now or in the future. Lender is
not a financial or business advisor, and borrower will not look to
Lender for business advise. Lender's role is solely hat of a Lender
and Borrower's relationship with Lender is that of debtor and
creditor. Lender expressly disclaims any fiduciary or other duties
or obligations to Borrower except those expressly provided in the
written loan documents signed by Lender.
NO ORAL AGREEMENTS. Lender's agreements to lend, Borrower's obligation
to repay the loan, and all other agreements between Lender and
Borrower have been reduced to writing. This instrument and the other
documents signed concurrently with it contain the entire agreement
between Lender and Borrower. Any prior conversations and discussions
that Lender or Borrower may have had concerning the transaction are
not binding unless reflected in the written loan documents. Borrower
acknowledges that the loan documents reflects everything the Lender
has agreed to do or not to do in connection with the transaction.
SUCCESSOR INTERETS. The terms of this Note shall be binding upon
Borrower , and upon Borrower's heirs, personal representatives,
successors and assigns, and shall inure to the benefit to Lender and
it's successors and assigns.
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING
AGENCIES. Please notify us if we report any inaccurate information
about your account(s) to a consumer reporting agency. Your written
notice describing the specific inaccuracy(ies) should be sent to us at
the following address: SouthTrust Bank P.O. Box 2554 Birmingham,
AL35290
GENERAL PROVISIONS. Lender may delay or forge enforcing any of it's
rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, t the
extent allowed by law, waive presentment, demand for payment, and
notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing , no party who sighs this
Note, whether as maker, guarantor, accommodation make or endorser,
shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan
or release any party or guarantor or collateral, or impair, fail to
realize upon or perfect Lender's security interest in the collateral:
and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that
lender may modify this loan without the consent or notice to anyone
other than the party with whom the modification is made. The
obligations under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE
PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEGES RECEIPT OF A COMPLETEDD COPY OF THIS PROMISSARY
NOTE.
BORROWER:
U.S. PATRIOT, INC.
By:___________________________
Phil Dee, President/ Secretary of U.S. Patriot, Inc.
4
4