REVOLVINGLINE OF CREDIT AGREEMENT

 

 

This Revolving Line of Credit Agreement (the "Loan Agreement"), dated as of August 17, 2009 is by and between INTERNATIONAL BIODIESEL, INC., a Nevada corporation (the “Borrower”) and LAIRD Q. CAGAN ("Lender”).

 

in consideration of the mutual covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows:

 

 

a.   “Guarantee” means any guarantee of the payment or performance of any Indebtedness or other obligation and any other arrangement whereby credit is extended to one obligor on the basis of any promise of another Person, whether that promise is expressed in terms of an obligation to (i) pay the Indebtedness or other liabilities of such obligor, (ii) purchase an obligation owed by such obligor, (iii) purchase goods and services from such obligor pursuant to a take-or-pay contract, or (iv) maintain the capital, working capital, solvency or general financial condition of such obligor, whether or not any such arrangement is listed on the balance sheet of such other Person or referred to in a footnote thereto, but shall not include endorsements of items for collection in the ordinary course of business.  The amount of any Guarantee shall be equal to the amount of the obligation so guaranteed or, if not a fixed or determined amount, the maximum amount guaranteed.

 

b.   “Indebtedness” means at a particular time, without duplication, (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or other debt security, (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current liabilities incurred in the ordinary course of business), (iv) any commitment by which a Person assures a creditor against loss (including, without limitation, contingent reimbursement obligations with respect to letters of credit), (v) any obligations for which a Person is obligated pursuant to a Guarantee, (vi) any obligations under capitalized leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss, (vii) any indebtedness secured by a Lien on a Person’s assets and (viii) any unsatisfied obligation for “withdrawal liability” to a “multiemployer plan” as such terms are defined under ERISA.

 

c.   “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

 

 

THE OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT (THE “SECURITY AGREEMENT”) DATED AS OF THE DATE HEREOF AND EXECUTED BYAE BIOFUELS, INC. FOR THE BENEFIT OF THE LENDER.  ADDITIONAL RIGHTS OF THE LENDER ARE SET FORTH IN THE SECURITY AGREEMENT.

 

3. 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 Chief Executive Officer, President or any Vice President to request Advances. 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 operating expenses in connection with the operations of the Borrower.

 

4. INTEREST. All sums advanced pursuant to this Loan Agreement shall bear interest from the date each Advance is made until paid in full at the rate of ten percent (10%) per annum, simple interest (the "EFFECTIVE RATE").

 

5. REPAYMENT. 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.

 

6. REPRESENTATIONS AND WARRANTIES. In order to induce Lender to enter into this Loan 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 Utah with the power to own its assets and to transact business in California, and in such other states where its business is conducted.

 

7. EVENTS OF DEFAULT. An event of default will occur if any of the following events occurs:

 

a.   Failure to pay any principal or interest hereunder within sixty (60) days after the same becomes due.

 

b.   Any representation or warranty made by Borrower in this Loan 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.   The Borrower or AE Biofuels, Inc., a Nevada corporation (the “Parent Company”) defaults (i) in payment of any amounts under any indenture, loan agreement or other instrument under which any evidence of Indebtedness of the Borrower or the Parent Company exceeding $100,000 in principal amount has been or hereafter may be issued, (ii) in compliance with the terms, covenants or other provisions of any such indenture, loan agreement or other instrument and the effect of such default in compliance is to permit the acceleration of the stated maturity of such Indebtedness (whether or not actually accelerated) or (in the case of demand obligations) results in demand for payment of such Indebtedness;

 

d.   The Borrower or the Parent Company shall default in the performance or observance of any provision of any agreement or commitment (other than those relating to Indebtedness) and such default has or might have a Material Adverse Effect;

 

e.   Default by Borrower in the observance or performance of any other covenant or agreement contained in this Loan Agreement, other than a default constituting a separate and distinct event of default under this Section 7.

 

f.   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.

 

8. REMEDIES. Upon the occurrence and during the continuance of an Event of Default as defined above, Lender may (i) declare the entire unpaid principal balance, together with accrued interest thereon, to be immediately due and payable; and (ii) exercise all rights and remedies available under this Agreement, the Security Agreement and applicable law. 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 Loan 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.

 

9. NOTICE. All notices, demands or other communications to be given or delivered pursuant to the terms of this Loan Agreement shall be in writing and shall be deemed to have been given when delivered personally to the recipient, sent to the recipient by reputable overnight courier services (charges prepaid) or mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, addressed to the party to which notice is being given as follows:

 

If to Borrower:

International Biodiesel, Inc.

20400 Stevens Creek Blvd., Suite 700

Cupertino, CA 95014

Attn:  Chief Executive Officer

If to Lender:

Laird Q. Cagan

10600 N. De Anza Blvd., Suite 250

Cupertino, CA 95014

 

10. GENERAL PROVISIONS. All representations and warranties made in this Loan Agreement and the Note and in any certificate delivered pursuant thereto shall survive the execution and delivery of this Loan Agreement and the making of any loans hereunder. This Loan 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 Loan Agreement, any Note issued pursuant hereto, and all documents and instruments associated herewith will be governed by and construed and interpreted in accordance with the laws of the State of California. Time is of the essence hereof. This Loan 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 Loan Agreement may not be amended or modified except in writing signed by the parties.

 

 

IN WITNESS WHEREOF, this Loan Agreement has been duly executed by the parties hereto as of the 17 day of August, 2009.

 

BORROWER:
INTERNATIONAL BIODIESEL, INC.
By:	/s/ Eric McAfee
Title:	President/CEO
LENDER:
	/s/ Laird Q. Cagan
	Laird Q. Cagan

 

 

THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OR ASSIGNED TO ANY US PERSON AND EVERY PURCHASER OR SUBSEQUENT HOLDER OF THIS NOTE WILL BE REQUIRED TO CERTIFY THAT IT IS NOT A US PERSON AND IS NOT ACQUIRING THE SECURITIES FOR THE ACCOUNT OR BENEFIT OF ANY US PERSON.

THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY OTHER APPLICABLE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY OTHER APPLICABLE SECURITIES LAW, INCLUDING STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION THEREFROM, OR IN A TRANSACTION NOT SUBJECT THERETO.

 

	PROMISSORY NOTE
$5,000,000.00
August 17, 2009		Cupertino, California

 

This Promissory Note (the "NOTE") is made and executed as of the date referred to above, by and between International Biodiesel, Inc., a Nevada corporation (the "BORROWER"), and Laird Q. Cagan ("LENDER"). By this Note, the Borrower promises and agrees to pay to the order of Lender, at 10600 N. De Anza Blvd., Suite 250, Cupertino, CA 95014 at such other place as Lender may designate in writing, the principal sum of Five Million and 00/100 Dollars ($5,000,000.00), or the aggregate unpaid principal amount of all advances made by Lender to Borrower pursuant to the terms of a Revolving Line of Credit Agreement (the "LOAN AGREEMENT") of even date herewith, whichever is less, together with interest thereon on the dates set forth in the Loan Agreement.  Borrower shall pay accrued interest on the outstanding principal balance under the Note at the interest rates and on the dates specified in the Loan Agreement.   This Note is subject to the provisions of the Loan Agreement.

 

THE OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT (THE “SECURITY AGREEMENT”) DATED AS OF THE DATE HEREOF AND EXECUTED FOR THE BENEFIT OF THE LENDER.  ADDITIONAL RIGHTS OF LENDER ARE SET FORTH IN THE SECURITY AGREEMENT.

 

Upon the occurrence and during the continuance of any one or more Events of Default, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable, all as provided in the Loan Agreement.

 

Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

 

 

The Borrower hereof waives presentment for payment, protest, demand, notice of protest, notice of dishonor, and notice of nonpayment, and expressly agrees that this Note, or any payment hereunder, may be extended from time to time by the Lender without in any way affecting its liability hereunder.

 

This Note and the rights and obligations of the parties under this Note shall be governed by and construed and enforced in accordance with the laws of California.