UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)
DUNES HOTELS & CASINOS INC.
(Name of Issuer)
COMMON STOCK, $0.50 PAR VALUE
(Title of Class of Securities)
265440107
(CUSIP Number)
THOMAS STEELE
GENERAL FINANCIAL SERVICES, INC.
8441 E. 32nd Street N.
Wichita, KS 67226
(316) 636-1070
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 13, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Section 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box / /.
Page 1 of 9
<PAGE>
SCHEDULE 13D
CUSIP NO. 265440107
1 Name of Reporting Person
IRS Identification Nos. of Above Person (entities only)
GFS ACQUISITION COMPANY, INC.
2. Check the appropriate Box if a Member of a Group (a) /x/
(b) / /
3. SEC Use Only
4. Source of Funds BK, WC
5. Check Box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) / /
6. Citizenship or Place of Organization KANSAS
7. Sole Voting Power
NUMBER OF SHARES -0-
8. Shared Voting Power
BENEFICIALLY OWNED 3,853,422
(See Item 5)
BY EACH REPORTING 9. Sole Dispositive Power
-0-
PERSON WITH 10. Shared Dispositive Power
3,853,422
(See Item 5)
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,853,422
(See Item 5)
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain shares of Common Stock / /
13. Percent of Class Represented by Amount in Row (11)
60.4%
(See Item 5)
14. Type of Reporting Person
CO
Page 2 of 9
<PAGE>
SCHEDULE 13D
CUSIP NO. 265440107
1 Name of Reporting Person
IRS Identification Nos. of Above Person (entities only)
GENERAL FINANCIAL SERVICES, INC.
2. Check the appropriate Box if a Member of a Group (a) /x/
(b) / /
3. SEC Use Only
4. Source of Funds BK, WC
5. Check Box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) / /
6. Citizenship or Place of Organization KANSAS
7. Sole Voting Power
NUMBER OF SHARES -0-
8. Shared Voting Power
BENEFICIALLY OWNED 3,853,422
(See Item 5)
BY EACH REPORTING 9. Sole Dispositive Power
-0-
PERSON WITH 10. Shared Dispositive Power
3,853,422
(See Item 5)
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,853,422
(See Item 5)
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain shares of Common Stock / /
13. Percent of Class Represented by Amount in Row (11)
60.4%
(See Item 5)
14. Type of Reporting Person CO
Page 3 of 9
<PAGE>
SCHEDULE 13D
CUSIP NO. 265440107
1 Name of Reporting Person
IRS Identification Nos. of Above Person (entities only)
STEVE K. MILLER
2. Check the appropriate Box if a Member of a Group (a) /x/
(b) / /
3. SEC Use Only
4. Source of Funds NOT APPLICABLE
5. Check Box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e) / /
6. Citizenship or Place of Organization
UNITED STATES
7. Sole Voting Power
NUMBER OF SHARES -0-
8. Shared Voting Power
BENEFICIALLY OWNED 3,853,422
(See Item 5)
BY EACH REPORTING 9. Sole Dispositive Power
-0-
PERSON WITH 10. Shared Dispositive Power
3,853,422
(See Item 5)
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,853,422
(See Item 5)
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain shares of Common Stock / /
13. Percent of Class Represented by Amount in Row (11)
60.4%
(See Item 5)
14. Type of Reporting Person IN
Page 4 of 9
<PAGE>
This Amendment No. 4 to Schedule 13D supplements the information contained
in the Schedule 13D dated June 4, 1999, as amended by Amendment No. 1 dated July
22, 1999, Amendment No. 2 dated August 27, 1999 and Amendment No. 3 dated
September 15, 1999 (collectively, the "Schedule 13D"), filed by GFS Acquisition
Company, Inc., a Kansas corporation ("GFS Acquisition"), General Financial
Services, Inc., a Kansas corporation and sole shareholder of GFS Acquisition
("GFS"), and Mr. Steve K. Miller who owns 100% of GFS and is the sole officer
and director of each of GFS and GFS Acquisition.
ITEM 1. SECURITY AND ISSUER.
No change.
ITEM 2. IDENTITY AND BACKGROUND.
No change.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information in the Schedule 13D is supplemented with the following
information.
In addition, to the purchases of Common Stock previously reported, GFS
Acquisition has made the following purchases:
Date of Acquisition Number of Shares Acquired Total Purchase Price
October 10, 1999 15,000 $11,250
October 15, 1999 7,500 $ 5,625
October 20, 1999 5,000 $ 4,000
January 13, 2000 51,000 $39,780
January 14, 2000 290,000 $336,400
The October purchases were paid for from GFS Acquisition's working capital
funds. GFS borrowed the funds to finance the January purchases under a a
Business Loan Agreement dated November 15, 1999 between GFS and Commerce Bank,
N.A., a copy of which is attached hereto as Exhibit 3. GFS contributed the
borrowed funds to GFS Acquisition.
ITEM 4. PURPOSE OF TRANSACTION.
The information in the Schedule 13D is supplemented with the following
information.
As previously reported, on June 3, 1999, GFS purchased from the Federal
Depository Insurance Corporation, as Manager of the FSLIC Resolution Fund, as
successor-in-interest to the Federal Savings and Loan Insurance Corporation and
as successor and assignee of EurekaBank, formerly know as Eureka Federal Savings
and Loan Association (the "FDIC"), for $1,126,496.55 any and all rights and
interests of the FDIC under an order issued on September 8, 1986 (the
Page 5 of 9
<PAGE>
"Judgment") in the matter of Eureka Federal Savings and Loan Association v. John
B. Anderson, Edith Anderson, Maxim, Inc., Dunes Hotels and Casinos Inc. and
Baby Grand Corp., in the District Court, Clark County, Nevada, Case No. A245662,
instituted in 1985. Pursuant to the terms of the Judgment, Mr. Anderson pledged
3,000,000 shares of Common Stock of the Dunes Hotels and Casinos, Inc. (the
"Issuer") to secure the Judgment (the "Judgment Shares"). On June 3, 1999, GFS
contributed its interest in the Judgment to GFS Acquisition. Mr. Anderson is in
default under the Judgment and GFS Acquisition intends to exercise its rights
under the Judgment and related security agreements to acquire direct ownership
of the Judgment Shares. The Judgment Shares represent approximately 47.1% of the
outstanding shares of Common Stock.
On July 6, 1999, the Issuer filed a complaint in interpleader in the
Superior Court of the State of California for the County of Yolo entitled Dunes
Hotels and Casinos, Inc. vs. J.B.A. Investments, Inc., a Nevada Corporation,
General Financial Services, Inc., a Kansas Corporation, GFS Acquisition Company,
a Kansas Corporation, John B. Anderson, an Individual, Edith Anderson, an
Individual, Cedar Development Company, a Nevada Corporation, Federal Deposit
Insurance Corporation, a Federally Chartered Corporation, and Does 1-25, under
case number CVCV99-993 (the "State Action"). At the time of filing the State
Action, the Issuer deposited the Judgment Shares with the Court. The Issuer has
reported that it filed the State Action to resolve conflicting claims concerning
who has the power to transfer and otherwise dispose of the Judgment Shares and
by whom voting and other rights connected with the Judgment Shares may be
exercised.
On July 9, 1999, GFS and GFS Acquisition filed a complaint against the
Issuer in the United States District Court Northern District of New York under
case number 99-CV-1072 LEK/DRH. GFS and GFS Acquisition are seeking, among other
things, a permanent injunction requiring the Issuer to give possession of the
Judgment Shares to GFS and requiring the calling of a special meeting of the
shareholders of the Issuer. GFS and GFS Acquisition are also seeking a
preliminary injunction granting them similar relief pending the outcome of the
action and granting expedited discovery.
The cases were consolidated and transferred to the United States District
Court District of Nevada under case number CVS-S-99-1470-PMP (RJJ). On January
5, 2000, the court ruled that the Issuer is required to hold an annual meeting
on or before April 14, 2000 and that GFS Acquisition may vote the Judgement
Shares at the meeting. At this point the court has not definitively ruled as to
whether GFS Acquisition is the owner of the Judgement Shares. At this time, the
reporting persons are unable to predict the outcome of this litigation.
GFS Acquisition intends to propose a slate of directors to be elected at
the annual meeting. At this time, GFS Acquisition has not determined which
persons it intends to nominate for election to the Issuer's Board of Directors.
Since GFS Acquisition will be entitled to vote a majority of the shares eligible
to vote at the shareholders meeting, the reporting persons believe that the
election of their nominees is assured. The reporting persons do not intend to
solicit any proxies in connection with the annual meeting.
Page 6 of 9
<PAGE>
Depending on market conditions and other factors that GFS Acquisition may
deem material to its investment decision, GFS Acquisition may continue to
purchase additional shares of Common Stock in the open market or in private
transactions or it may dispose of all or a portion of the shares of Common Stock
that it now owns or hereafter may acquire. While GFS Acquisition retains all
options for potential future actions, its present expectations are to remain a
significant stockholder of the Issuer, and as such to have influence upon future
corporate developments of the Issuer. If GFS Acquisition obtains control of the
Issuer, it will evaluate the Issuer to determine whether to initiate plans or
proposals that relate to or that would result in any of the actions specified in
clauses (a) through (j) of Item 4 of Schedule 13D of the Act.
GFS and Mr. Miller reserve the right to acquire or dispose of shares of
Common Stock, depending upon circumstances existing from time to time, including
market conditions.
Except as set forth in this Item 4, none of GFS Acquisition, GFS nor Mr.
Miller have any present plans or proposals that relate to or that would result
in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule
13D of the Act. However, GFS Acquisition, GFS and Mr. Miller reserve the right
to formulate such plans or proposals, and to take such action with respect to
any or all of such matters and any other matters as they may determine.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As a result of the acquisition of the additional shares described in
Item 3, GFS Acquisition beneficially owned as of January 14, 2000, 3,853,422
shares of Common Stock, which it believes to be 60.4% of the outstanding shares
of Common Stock of the Issuer.
As the sole shareholder of GFS Acquisition, GFS beneficially owns the
3,853,422 shares of Common Stock beneficially owned by GFS Acquisition on
January 14, 2000. As described above, GFS believes these shares to be 60.4% of
the outstanding shares of Common Stock of the Issuer.
As the President, sole director and sole shareholder of GFS and President
and sole director of GFS Acquisition, Mr. Miller beneficially owns the 3,853,422
shares of Common Stock beneficially owned by GFS Acquisition on January 14,
2000. As described above, Mr. Miller believes these shares to be 60.4% of the
outstanding shares of Common Stock of the Issuer.
(b) No change.
(c) See Item 3. Other than the transactions listed in Item 3 (including
transactions previously reported), no other transactions in the Common Stock of
the Issuer were effected by GFS Acquisition, GFS or Mr. Miller during the past
sixty days.
(d) No change.
(e) Not applicable.
Page 7 of 9
<PAGE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
No change.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
*Exhibit 1. Statement of Joint Filing.
*Exhibit 2. Promissory Note dated December 28, 1998 made by GFS
in favor of Citizens Bank and Trust Company.
**Exhibit 3. Business Loan Agreement dated November 15, 1999 between
GFS and Commerce Bank, N.A.
- -----
* Previously filed as an Exhibit to the Schedule 13D dated June 4, 1999
filed by the reporting persons.
** Filed herewith.
Page 8 of 9
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
GFS ACQUISITION COMPANY, INC.
January 21, 2000 By: /s/ Steve K. Miller
-------------------------------------
Steve K. Miller, President
GENERAL FINACIAL SERVICES, INC.
January 21, 2000 By: /s/ Steve K. Miller
-------------------------------------
Steve K. Miller, President
January 21, 2000 /s/ Steve K. Miller
-------------------------------------
Steve K. Miller
Page 9 of 9
BUSINESS LOAN AGREEMENT
<TABLE>
<CAPTION>
- ------------------- --------------- ---------------- ------------ ------- ------------- ------------ ----------- ----------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$500,000.00 11-15-1999 11-01-2000 0001 4A0 0002 2200002 64605
- ------------------- --------------- ---------------- ------------ ------- ------------- ------------ ----------- ----------
References in the shaded area are for Lender's 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.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Borrower: General Financial Lender: Commerce Bank, N.A.
Services, Inc. Independence Banking Center
8441 E. 32nd Street 125 N. Penn
Wichita, KS 67226 PO Box 587
Independence, KS 67310
================================================================================
THIS BUSINESS LOAN AGREEMENT dated November 15, 1999, is made and executed
between General Financial Services, Inc. ("Borrower") and Commerce Bank, N.A.
("Lender") on the following terms and conditions. Borrower has received prior
commercial loans from Lender or has applied to Lender for a commercial loan or
loans or other financial accommodations, including those which may be described
on any exhibit or schedule attached to this Agreement ("Loan"). Borrower
understands and agrees that: (A) in granting, renewing, or extending any Loan,
Lender is relying upon Borrower's representations, warranties, and agreements as
set forth in this Agreement, and (B) all such Loans shall be and remain subject
to the terms and conditions of this Agreement.
TERM: This Agreement shall be effective as of November 15, 1999, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, in principal, interest, costs, expenses,
attorneys' fees, and other fees and charges, or until November 1, 2000.
Collateral Records. Borrower does now, and at all times hereafter shall,
keep correct and accurate records of the Collateral, all of which records
shall be available to Lender or Lender's representative upon demand for
inspection and copying at any reasonable time. The above is an accurate
and complete list of all locations at which Borrower keeps or maintains
business records concerning Borrower's collateral.
Collateral Schedules. Concurrently with the execution and delivery of this
Agreement, Borrower shall execute and deliver to Lender schedules of in
form and substance satisfactory to the Lender. Thereafter supplemental
schedules shall be delivered according to the following schedule:
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender the following
documents for the Loan: (1) the Note; (2) guaranties; (3) together with
all such Related Documents as
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
Lender may require for the Loan; all in form and substance satisfactory to
Lender and Lender's counsel.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and deliver of this Agreement, the Note and the
Related Documents. In addition, Borrower shall have provided such other
resolutions, authorizations, documents and instruments as Lender or its
counsel, may require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement
or under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any indebtedness exists:
Organization. Borrower is a corporation for profit which is, and at all
times shall be, duly organized, validly existing, and in good standing
under and by virtue of the laws of the State of Kansas. Borrower is duly
authorized to transact business in all other states in which Borrower is
doing business, having obtained all necessary filings, governmental
licenses and approvals for each state in which Borrower is doing business.
Specifically, Borrower is, and at all times shall be, duly qualified as a
foreign corporation in all states in which the failure to so qualify would
have a material adverse effect on its business or financial condition.
Borrower has the full power and authority to own its properties and to
transact the business in which it is presently engaged or presently
proposes to engage. Borrower maintains an office at 8441 E. 32nd Street,
Wichita, KS 67226. Unless Borrower has designated otherwise in writing,
the principal office is the office at which Borrower keeps its books and
records including its records concerning the Collateral. Borrower will
notify Lender of any change in the location of Borrower's principal
office. Borrower shall do all things necessary to preserve and to keep in
full force and effect its existence, rights and privileges, and shall
comply with all regulations, rules, ordinances, statutes, orders and
decrees of any governmental or quasi-governmental authority or court
applicable to Borrower and Borrower's business activities.
Assumed Business Names. Borrower has filed or recorded all documents or
filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete list
of all assumed business names under which Borrower does business:
None.
Page 2
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
Authorization. Borrower's execution, delivery, and performance of this
Agreement and all the Related Documents have been duly authorized by all
necessary action by Borrower and do not conflict with, result in a
violation of, or constitute a default under (1) any provision of
Borrower's articles of incorporation or organization, or bylaws, or any
agreement or other instrument binding upon Borrower or (2) any law,
governmental regulation, court decree, or order applicable to Borrower or
to Borrower's properties.
Financial Information. Each of Borrower's financial statements supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change
in Borrower's financial condition subsequent to the date of the most
recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
constitute legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
Year 2000. Borrower warrants and represents that all software utilized in
the conduct of its business will have appropriate capabilities and
compatibility for operation to handle calendar dates falling on or after
January 1, 2000, and all information pertaining to such calendar dates, in
the same manner and with the same functionality as the software does
respecting calendar dates falling on or before December 31, 9999. Further
the Borrower warrants and represents that the data-related user interface
functions, data-fields, and data-related program instructions and
functions of the Software include the indication of the century.
Hazardous Substances. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: (1) During the period of
Borrower's ownership of Borrower's Collateral, there has been no use,
generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance by any person on, under,
about or from any of the Collateral. (2) Borrower has no knowledge of, or
reason to believe that there has been (a) any breach or violation of any
Environmental Laws; (b) any use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any Hazardous
Substance on, under, about or from the Collateral by any prior owners or
occupants of any of the Collateral; or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters.
(3) Neither Borrower nor any tenant, contractor, agent or other authorized
user of any of the Collateral shall use, generate, manufacture, store,
treat, dispose of or release any Hazardous Substance on, under, about or
from any of the Collateral; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws,
regulations, and ordinances, including without limitation all
Environmental Laws. Borrower authorized Lender and its agents to enter
upon the Collateral to make such inspections and tests as Lender may deem
appropriate to determine compliance of the Collateral with this section of
the Agreement. Any inspection or tests made by Lender shall be at
Borrower's expense and
Page 3
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
for Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are
based on Borrower's due diligence in investigating the Collateral for
hazardous waste and hazardous substances. Borrower hereby (1) releases and
waives any future claims against Lender for indemnity or contribution in
the event Borrower becomes liable for cleanup or other costs under any
such laws, and (2) agrees to indemnify and hold harmless Lender against
any and all claims, losses, liabilities, damages, penalties, and expenses
which Lender may directly or indirectly sustain or suffer resulting from a
breach of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened release
of a hazardous waste or substance on the properties. The provisions of
this section of the Agreement, including the obligation to indemnify,
shall survive the payment of the indebtedness and the termination,
expiration or satisfaction of this Agreement and shall not be affected by
Lender's acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns
and reports that are or were required to be filed, have been filed, and
all taxes, assessments and other governmental charges have been paid in
full, except those presently being or to be contested by Borrower in good
faith in the ordinary course of business and for which adequate reserves
have been provided.
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in ever material respect on the date as of which
such information is dated or certified; and none of such information is or
will be incomplete by omitting to state any material fact necessary to
make such information not misleading.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements (if
any), and all Related Documents are binding upon the signers thereof, as
well as upon their successors, representatives and assigns, and are
legally enforceable in accordance with their respective terms.
Page 4
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so
long as this Agreement remains in effect, Borrower will:
Notices of Claims and Litigation. Promptly inform Lender in writing of (1)
all material adverse changes in Borrower's financial condition, and (2)
all existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of
Borrower or the financial condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with GAAP,
applied on a consistent basis, and permit Lender to examine and audit
Borrower's books and records at all reasonable times.
Financial Statements. Furnish Lender with the following:
(1) Annual Statements. As soon as available, but in no event later
than ninety (90) days after the end of each fiscal year, Borrower's
balance sheet and income statement for the year ended, prepared by
Borrower.
(2) Interim Statements. As soon as available, but in no event later
than 20 days after the end of each month, Borrower's balance sheet and
profit and loss statement for the period ended, prepared by Borrower.
All financial reports required to be provided under this Agreement shall
be prepared in accordance with GAAP, applied on a consistent basis, and
certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and
statements, as Lender may request from time to time.
Financial Covenants and Ratios. Comply with the following covenants and
ratios:
Working Capital Requirements. Maintain Working Capital in excess
of $300,000.00
Tangible Net worth Requirements. Maintain a minimum Tangible Net
worth of not less than $1,000,000.00.
Except as provided above, all computations made to determine
compliance with the requirements contained in this paragraph shall be
made in accordance with generally accepted accounting principles,
applied on a consistent basis, and certified by Borrower as being
true and correct.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower" properties and operations, in form, amounts, coverages and with
insurance companies acceptable to Lender. Borrower, upon request of
Lender, will deliver to Lender from time to time the
Page 5
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
policies or certificates of insurance in form satisfactory to Lender,
including stipulations that coverages will not be cancelled or diminished
without at least ten (10) days prior written notice to Lender, including
stipulations that coverages will not be cancelled or diminished without at
least ten (10) days prior written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage in favor of
Lender will not be impaired in any way by any act, omission or default of
Borrower or any other person. In connection with all policies covering
assets in which lender holds or is offered a security interest for the
Loans, Borrower will provide Lender with such lender's loss payable or
other endorsements as Lender may require.
Insurance Reports. Furnish to lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (1) the
name of the insurer; (2) the risks insured; (3) the amount of the policy;
(4) the properties insured; (5) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (6) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually) Borrower will
have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for borrower's business
operations, unless specifically consented to the contrary by lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every kind
and nature, imposed upon Borrower or its properties, income, or profits,
prior to the date on which penalties would attach, and all lawful claims
that, if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profits.
Performance. Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower
and Lender. Borrower shall notify Lender immediately in writing of any
default in connection with any agreement.
Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner.
Compliance with Governmental Requirements. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the
Page 6
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
conduct of Borrower's properties, business and operations, and to the use
or occupancy of the Collateral, including without limitation, the
Americans with Disabilities Act. Borrower may contest in good faith any
such law, ordinance, or regulation and withhold compliance during any
proceeding, including appropriate appeals, so long as Borrower has
notified Lender in writing prior to doing so and so long as, in Lender's
sole opinion, Lender's interests in the Collateral are not jeopardized.
Lender may require Borrower to post adequate security or a surety bond,
reasonably satisfactory to Lender, to protect Lender's interest.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral from the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, account, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such party
to permit Lender free access to such records at all reasonable times and
to provide Lender with copies of any records it may request, all at
Borrower's expense.
Compliance Certificates. Unless waived in writing by Lender, provide
Lender at least annually and at the time of each disbursement of Loan
proceeds, with a certificate executed by Borrower's chief financial
officer, or other officer or person acceptable to Lender, certifying that
the representations and warranties set forth in this Agreement are true
and correct as of the date of the certificate and further certifying that,
as of the date of the certificate, no Event of Default exists under this
Agreement.
Environmental Compliance and Reports. Borrower shall comply in all
respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or omission
on Borrower's part or on the part of any third party, on property owned
and/or occupied by Borrower, any environmental activity where damage may
result to the environment, unless such environmental activity is pursuant
to and in compliance with the conditions of a permit issued by the
appropriate federal, state or local governmental authorities; shall
furnish to Borrower promptly and in any event within thirty (30) days
after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or
omission on Borrower's part in connection with any environmental activity
whether or not there is damage to the environment and/or other natural
resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, assignments,
financing statements, instruments, documents and other agreements as
Lender or its attorneys may reasonably request to evidence and secure the
Loans and to perfect all Security interests.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this
Page 7
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
Agreement or any Related Documents, including but not limited to Borrower's
failure to discharge or pay when due any amounts Borrower is required to
discharge or pay under this Agreement or any Related Documents, Lender on
Borrower's behalf may (but shall not be obligated to) take any action that
Lender deems appropriate, including but not limited to discharging or paying all
taxes, liens, security interests, encumbrances and other claims, at any time
levied or placed on any Collateral and paying all costs for insuring,
maintaining and preserving any Collateral. All such expenditures incurred or
paid by Lender for such purposes will then bear interest at the rate charged
under the Note from the option, will (A) be payable on demand; (B) be added to
the balance of the Note and be apportioned among and be payable with any
installment payments to become due during either (1) the term of any applicable
insurance policy; or (2) the remaining term of the Note; or (C) be treated as a
balloon payment which will be due and payable at the Note's maturity. Any
Collateral also will secure payment of these amounts. Such right shall be in
addition to all other rights and remedies to which Lender may be entitled upon
Default.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Indebtedness and Liens. (1) except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (2) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's Assets
(except as allowed as Permitted Liens), or (3) sell with recourse any of
Borrower's accounts, except to Lender.
Transfer and Liens. Fail to continue to own all of Borrower's assets,
except for routine transfers, use or depletion in the ordinary course of
Borrower's business. Borrower agrees not to create or grant to any person,
except Lender, any lien, security interest, encumbrances, cloud on title,
mortgage, pledge or similar interest in any of Borrower's property, even
in the ordinary course of Borrower's business. Borrower agrees not to
sell, convey, grant, lease, give, contribute, assign, or otherwise
transfer any of Borrower's assets, except for sales of inventory or leases
of goods in the ordinary course of Borrower's business.
Continuity of Operations. (1) engage in any business activities
substantially different than those in which Borrower is presently engaged,
(2) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, or (3) pay any
dividends on Borrower's stock (other than dividends payable in its stock),
provided, however, that notwithstanding the foregoing, but only so long as
no Event of Default has occurred and is continuing or would result from
the payment of dividends, if Borrower is a "Subchapter S Corporation" (as
defined in the Internal Revenue Code of 1986, as amended), Borrower may
pay cash dividends on its stock to its shareholders from time to time in
amounts necessary to enable the shareholders to pay income taxes and make
estimated income tax payments to satisfy their liabilities under federal
and state law which arise solely from their status as Shareholders of a
Subchapter S Corporation
Page 8
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
because of their ownership of shares of Borrower's stock, or purchase or
retire any of Borrower's outstanding shares or alter or amend Borrower's
capital structure.
Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money
or assets, (2) purchase, create or acquire any interest in any other
enterprise or entity, or (3) incur any obligation as surety or guarantor
other than in the ordinary course of business.
Cessation of Advances. If Lender has made any commitment to make any Loan
to Borrower, whether under this Agreement or under any other agreement,
Lender shall have no obligation to make Loan Advances or to disburse Loan
proceeds if: (1) Borrower or any Guarantor is in default under the terms
of this Agreement or any of the Related Documents or any other agreement
that Borrower or any Guarantor has with Lender; (2) Borrower or any
Guarantor dies, becomes incompetent or becomes insolvent, files a petition
in bankruptcy or similar proceedings, or is adjudged a bankrupt; (3) there
occurs a material adverse change in Borrower's financial condition, in the
financial condition of any Guarantor, or in the value of any Collateral
securing any Loan; or (4) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan
or any other loan with Lender; or (5) Lender in good faith deems itself
insecure, even though no Event of Default shall have occurred.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in
all Borrower's accounts with Lender (whether checking, savings, or some other
account). This includes all accounts Borrower holds jointly with someone else
and all accounts Borrower may open in the future. However, this does not include
any IRA or Keogh accounts, or any trust accounts for which the grant of a
security interest would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.
DEFAULT. Each of the following shall constitute an Event of Default under
this Agreement:
Payment Default. Borrower fails to make any payment when due under the
Loan.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement 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
or any Grantor's ability to repay the Loans or perform their respective
obligations under this Agreement 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
Agreement, the 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.
Page 9
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
Insolvency. The dissolution or termination of Borrower's existence as a
going 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 workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral document to create a valid and perfected security interest or
lien) at any time and for any reason.
Creditor or Forfeiture Proceedings. Commencement of foreclosure 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 claim which is the basis 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 an amount
determined by Lender, in its 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. In the event of a
death, Lender, at its 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 of twenty-five percent
(25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or
performance of the Loan is impaired.
Insecurity. Lender in good faith believes itself insecure.
Right to Cure. If any default, other than a default on indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (12) months, it
may be cured (and no Event of Default will have occurred) if Borrower or
Grantor, as the case may be, after receiving written notice from Lender
demanding cure of such default: (1) cure the default within fifteen (15)
days; or (2) if the cure requires more than fifteen (15) days, immediately
initiate steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continue and complete all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
Page 10
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Borrower shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
Attorneys' Fees; Expenses. Lender may hire or pay someone else to help
enforce this Agreement, and Borrower shall pay the costs and expenses of
such enforcement. Costs and expenses include all reasonable costs incurred
in the collection of the Loan, including but not limited to, court costs,
attorneys' fees and collection agency fees, except that such costs of
collection shall not include recovery of both attorneys' fees and
collection agency fees.
Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or define
the provisions of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loan to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to
privacy Borrower may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation
interests. Borrower also agrees that the purchasers of any such
participation interests will be considered as the absolute owners of such
interests in the Loan and will have all the rights granted under the
participation agreement or agreements governing the sale of such
participation interests. Borrower further waives all rights of offset or
Page 11
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
counterclaim that it may have now or later against Lender or against any
purchaser of such participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrower's obligation under
the Loan irrespective of the failure or insolvency of any holder of any
interest in the Loan. Borrower further agrees that the purchaser of any
such participation interests may enforce its interests irrespective of any
personal claims or defenses that Borrower may have against Lender.
Governing Law. This Agreement will be governed by, construed and
enforced in accordance with federal law and the laws of the State of
Kansas. This Agreement has been accepted by Lender in the State of
Kansas.
No Waiver by Lender. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not prejudice or constitute
a waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or between
Lender and any Grantor, shall constitute a waiver of any of Lender's
rights or of any of Borrower's or any Grantor's obligations as to any
future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall
not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
Notices. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its
address for notices under this Agreement by giving formal written notice
to the other parties, specifying that the purpose of the notice is to
change the party's address. For notice purposes, Borrower agrees to keep
Lender informed at all times of Borrower's current address. Unless
otherwise provided or required by law, if there is more than one Borrower,
any notice given by Lender to any Borrower is deemed to be notice given to
all Borrowers.
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance. If feasible, the
offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified,
it shall be considered deleted from this Agreement. Unless otherwise
required by law the illegality, invalidity, or unenforceability of any
provision of this Agreement shall not affect the legality, validity or
unenforceability of any other provision of this Agreement.
Page 12
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower"
as used in this Agreement shall include all of Borrower's subsidiaries and
affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any of Borrower's subsidiaries or
affiliates.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind Borrower's successors and assigns and shall
inure to the benefit of Lender, its successors and assigns. Borrower shall
not, however, have the right to assign Borrower's rights under this
Agreement or any interest therein, without the prior written consent of
Lender.
Survival of Representations and Warranties. Borrower understands and
agrees that in extending Loan Advances, Lender is relying on all
representations, warranties, and covenants made by Borrower in this
Agreement or in any certificate or other instrument delivered by Borrower
to Lender under this Agreement or the Related Documents. Borrower further
agrees that regardless of any investigation made by Lender, all such
representations, warranties and covenants will survive the extension of
Loan Advances and delivery to Lender of the Related Documents, shall be
continuing in nature, shall be deemed made and redated by Borrower at the
time each loan advance is made, and shall remain in full force and effect
until such time as Borrower's indebtedness shall be paid in full, or until
this Agreement shall be terminated in the manner provided above, whichever
is the last to occur.
Time Is of the Essence. Time is of the essence in the performance of
this Agreement.
Waive Jury. All parties to this Agreement hereby waive the right to any
jury trial in any action, proceeding, or counterclaim brought by an party
against any other party.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:
Advance. The word "Advance" means a disbursement of Loan funds made, or to
be made, to Borrower or on Borrower's behalf on a line of credit or
multiple advance basis under the terms and conditions of this Agreement.
Agreement. The word "Agreement" means this Business Loan Agreement, as
this Business Loan Agreement may be amended or modified from time to
time, together with
Page 13
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
all exhibits and schedules attached to this Business and Loan Agreement
from time to time.
Borrower. The word "Borrower" means General Financial Services, Inc.,
and all other persons and entities signing the Note in whatever capacity.
Collateral. The word "Collateral" means all property and assets granted as
collateral security for a Loan, whether real or personal property, whether
granted directly or indirectly, whether granted now or in the future, and
whether granted in the form of a security interest, mortgage, collateral
mortgage, deed of trust, assignment, pledge, chattel mortgage, crop
pledge, chattel mortgage, collateral chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract or otherwise.
Default. The word "Default" means the Default set forth in this
Agreement in the section titled "Default".
Environmental Laws. The words "Environmental Laws" mean any and all
state, federal and local statutes, regulations and ordinances relating
to the protection of human health or the environment, including without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986,
Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., or other applicable state or
federal laws, rules or regulations adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the Events of
Default set forth in this Agreement in the default section of this
Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
Grantor. The word "Grantor" means each and all of the persons or entities
granting a Security Interest in any Collateral for the Loan, including
without limitation all Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor to
Lender, including without limitation a guaranty of all or part of the
Note.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest
together with all other indebtedness, and costs and expenses for which
Borrower is responsible under this Agreement or under any of the Related
Documents. In addition, and without limitation,
Page 14
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
the term "indebtedness" includes all amounts identified in the Revolving
Line of Credit and Future Advances paragraphs as contained in one or more
of the Related Documents.
Lender. The word "Lender" means Commerce Bank, N.A., its successors and
assigns.
Loan. The word "Loan" means any and all loans and financial accommodations
from Lender to Borrower whether now or hereafter existing, and however
evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule
attached to this Agreement from time to time.
Note. The word "Note" means the Note executed by Borrower in the principal
amount of $500,000.00 dated November 15, 1999, together with all renewals
of, extensions of, modifications of, refinancings of, consolidations of,
and substitutions for the note or credit agreement.
Permitted Liens. The words "Permitted Liens" mean (1) liens and security
interests securing indebtedness owed by Borrower to Lender; (2) liens for
taxes, assessments, or similar charges either not yet due or being
contested in good faith; (3) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary
course of business and securing obligations which are not yet delinquent;
(4) purchase and money liens or purchase money security interests upon
which any property acquired or held by Borrower in the ordinary course of
business to secure indebtedness outstanding on the date of this Agreement
or permitted to be incurred under the paragraph of this Agreement titled
"Indebtedness and Liens"; (5) liens and security interests which, as of
the date of this Agreement, have been disclosed to and approved by the
Lender in writing; and (6) those liens and security interests which in the
aggregate constitute an immaterial and insignificant monetary amount with
respect to the net value of Borrower's assets.
Related Documents. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with
the Loan.
Security Agreement. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
Security Interest. The words "Security Interest" mean, without limitation,
any and all types of collateral security, present and future, whether in
the form of a lien, charge, encumbrance, mortgage, deed of trust, security
deed, assignment, pledge, crop pledge, chattel mortgage, collateral
chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien or title retention contract, lease
or consignment intended as a security device, or any other security or
lien interest whatsoever whether created by law, contract, or otherwise.
Page 15
<PAGE>
BUSINESS LOAN AGREEMENT
(Continued)
================================================================================
- --------------------------------------------------------------------------------
Borrower's NO ORAL AGREEMENTS. This written agreement is the final expression
Initials: of the agreement between Lender and Borrower and may not be
contradicted by evidence of any prior oral agreement or of a
contemporaneous oral agreement between Lender and Borrower.
/s/ SKM NONSTANDARD TERMS. The following space contains all nonstandard
_______ terms, including all previous oral agreements, if any, between
Lender and Borrower:
- ------------
Lender's
Initials:
_______ By initialing the boxes to the left, Lender and Borrower
affirm that no unwritten oral agreement exists between them.
- --------------------------------------------------------------------------------
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS
DATED NOVEMBER 15, 1999.
BORROWER:
GENERAL FINANCIAL SERVICES, INC.
By:/s/ Steve K. Miller
_____________________________________
Steve K. Miller, President/Secretary of General
Financial Services, Inc.
LENDER:
COMMERCE BANK, N.A.
x_________________________________________
Authorized Signer
Page 16
<PAGE>
PROMISSORY NOTE
<TABLE>
<CAPTION>
- ------------------- --------------- ---------------- ------------ ------- ------------- ------------ ----------- ----------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$500,000.00 11-15-1999 11-01-2000 0001 4A0 0002 2200002 64605
- ------------------- --------------- ---------------- ------------ ------- ------------- ------------ ----------- ----------
References in the shaded area are for Lender's 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.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Borrower: General Financial Services, Inc. Lender: Commerce Bank, N.A.
8441 E. 32nd Street Independence Banking Center
Wichita, KS 67226 125 N. Penn
PO Box 687
Independence, KS 67301
================================================================================
Principal Initial Date of
Amount: $500,000.00 Rate: 9.250% Note: November 15, 1999
PROMISE TO PAY. General Financial Services, Inc. ("Borrower") promises to pay to
Commerce Bank, N.A. ("Lender"), or order, in lawful money of the United States
of America, the principal amount of Five Hundred Thousand & 00/100 Dollars
($500,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on November 1, 2000. In addition, Borrower will
pay regular monthly payments of all accrued unpaid interest due as of each
payment date, beginning December 1, 1999, with all subsequent interest payments
to be due on the same day of each month after that. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges. 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 Lender's 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 per annum rate from time
to time announced by lender at its main office as the prime rate, or as the case
may, the base, reference or other rate then in use for commercial loan reference
purposes, not necessarily the lowest or even a favored rate, which serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, (the "Index"). Lender will tell Borrower the current
Index rate upon Borrower's request. The interest rate change will not occur more
often than each say. Rates of interest tied to the Index shall change with and
be effective on the date of each change in the Index. Borrower understands that
Lender may make loans based on other rates as well. The Index currently is
8.250% 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 an initial rate of 9.250% per annum. NOTICE: Under no circumstances
will the interest rate on this Note be more than the maximum rate allowed by
applicable law.
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PROMISSORY NOTE
(Continued)
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PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier 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 of accrued unpaid interest.
Rather, early payments will reduce the principal balance due. 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 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: Commerce Bank, N.A.;
Independence Banking Center; 125 N. Penn; PO Box 687; Independence, KS 67301.
LATE CHARGE. If a payment is 15 days or more late Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $50.00,
whichever is less.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to 4,000 percentage points over
the Index. 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.
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PROMISSORY NOTE
(Continued)
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Insolvency. The dissolution or termination of Borrower's existence as a
going 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 workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure 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 claim which is the basis 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 an amount
determined by Lender, in its 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. In the event of a
death, Lender, at its 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 of twenty-five percent
(25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or
performance of this Note is impaired.
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 fifteen (15) days; or (2) 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.
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PROMISSORY NOTE
(Continued)
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LENDER'S RIGHTS. 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 who is not
Lender's salaried employee to help collect the loan if Borrower does not pay.
Borrower will be liable for all reasonable costs incurred in the collection of
the loan, including but not limited to, court costs, attorneys' fees and
collection agency fees, except that such costs of collection shall not include
recovery of both attorneys' fees and collection agency fees.
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.
GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Kansas. This Note
has been accepted by Lender in the State of Kansas.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in
all Borrower's accounts with Lender (whether checking, savings, or some other
account). This includes all accounts Borrower holds jointly with someone else
and all accounts Borrower may open in the future. However, this does not include
any IRA or Keogh accounts, or any trust accounts for which the grant of a
security interest would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested orally by Borrower or as provided in this paragraph.
All oral requests shall be confirmed in writing on the day of the request. All
communications, instructions, or directions by telephone or otherwise to Lender
are to be directed to Lender's office shown above. The following persons
currently are authorized to request advances and authorize payments under the
line of credit until Lender receives from Borrower, at Lender's address shown
above, written notice of revocation of their authority: Steve K. Miller,
President/Secretary of General Financial Services, Inc.; and Fadl Mashnouk, Vice
President of General Financial Services, Inc. Borrower agrees to be liable for
all sums either: (A) advanced in accordance with the instructions of an
authorized person or (B) credited to any of Borrower's accounts with Lender. The
unpaid principal balance owing on this Note at any time may be evidenced by
endorsements on this Note or by Lender's internal records, including daily
computer print-outs. Lender will have no obligation to advance funds under this
Note if: (A) Borrower or any guarantor is in default under the terms of this
Note or any agreement that Borrower or any guarantor has with Lender, including
any agreement made in connection with the signing of this Note; (B) Borrower or
any guarantor ceases doing business or is insolvent; (C) any guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such guarantor's
guarantee of this Note or any other loan with Lender; (D) Borrower has applied
funds provided pursuant to this Note for purposes other than those authorized by
Lender; or (E) Lender in good faith believes itself insecure.
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PROMISSORY NOTE
(Continued)
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DISCRETIONARY LINE OF CREDIT. Notwithstanding any other provisions contained in
this Line of Credit Note to the contrary, Borrower acknowledges and agrees that
any and all advances under this Line of Credit Note may be made or withheld in
the sole discretion of Lender. Borrower is not obligated to borrow under this
Line of Credit Note, nor is Lender obligated to honor any request(s) for
advances; this Line of Credit Note is executed merely to facilitate the easier
extension of credit, and may be canceled by Borrower or Lender at any time, with
or without cause or excuse.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation maker 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 of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.
- --------------------------------------------------------------------------------
Borrower's Initials NO ORAL AGREEMENTS. This written agreement is the final
expression of the agreement between Lender and Borrower
and may not be contradicted by evidence or any prior oral
agreement or of a contemporaneous oral agreement between
Lender and Borrower.
/s/ SKM NONSTANDARD TERMS. The following space contains all
_______ nonstandard terms, including all previous oral
agreements, if any, between Lender and Borrower:
- ----------------------
Lender's Initials
____________ By initialing the boxes to the left, Lender and Borrower
affirm that no unwritten oral agreement exists between
them.
- --------------------------------------------------------------------------------
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 ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
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PROMISSORY NOTE
(Continued)
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BORROWER:
GENERAL FINANCIAL SERVICES, INC.
By: /s/ Steve K. Miller
_______________________________________
Steve K. Miller, President/Secretary of
General Financial Services, Inc.
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