Exhibit 10.2
RIDER TO BUSINESS LOAN AGREEMENT
(UNCOLLECTED FUNDS AGREEMENT)
This Rider to Business Loan Agreement ("Rider") is attached to and made
a part of that certain Business Loan Agreement ("Agreement") executed by
I/OMAGIC CORPORATION ("Borrower") in favor of Chinatrust Bank (U.S.A.)
("Lender") in correction with certain credit facilities granted by Lender to
Borrower in the principal sum of $14,000,00.00 evidenced, in part, by a Change
In Terms Agreement dated 04-09-2002 executed by Borrower in favor of Lender in
the principal sum of $14,000,000.00 ("Note"). Borrower has requested Lender to
provide Uncollected Funds utilization credit to Borrower for certain deposits
made by Borrower in its deposit account(s) with Lender. Lender is willing to
provide such Uncollected Funds utilization credit subject to the terms and
conditions hereinafter set forth. Capitalized terms not defined herein shall
have the meaning ascribed to it in the Agreement. In consideration for the
credit facilities extended by Lender to or at the request of Borrower, Borrower
agrees as follows:
1. ADDITIONAL DEFINITIONS. 1n addition to any other term defined
in the Agreement, the following words shall have the following
meanings when used in this Rider.
a. "Account Agreement" shall mean the Account Agreement
and Disclosure of Lender, Business Checking-Analyzed
Schedule, Signature Card, and other documents as may
be amended, substituted or replaced from time to
time, with respect to any deposit account Borrower
has with Lender.
b. "Advance" or "Advances" shall mean any advances or
disbursement of loan proceeds by Lender pursuant to
the Agreement and this Rider.
c. "Advance Rate" shall mean the variable rate of
interest per annum based on a 365/360 day year equal
to 0.75% over Wall Street Journal prime rate. Under
no circumstances will the interest rate be less than
5.50% per annum.
d. "Overdraft Protection Facility" shall mean the credit
availability under which the Borrower can request
cash Advances to cover any accounts with Lender which
are overdrawn.
e. "Uncollected Funds" shall mean any and all items,
including, but not limited to, checks, drafts, and
other items and instruments deposited by Borrower,
payable by a third party to Borrower, in Borrower's
deposit account # 00000000 maintained with Lender
which items have not yet been paid by the payer of
said items as a result of the Bank having to put a
hold on the funds pursuant to the Account Agreement,
any Banking Regulation or because of the time
necessary for an item to be paid by the payer when
submitted through normal banking channels. The term
"Uncollected Funds" does not include those checks,
drafts and other items and instruments drawn on or
payable by Lender or presented for direct collection
by Lender or transferred through an electronic funds
transfer system or through an automated clearing
house, or any other funds which Lender determines, in
its sole discretion and judgment, to exclude for
purposes of making an Uncollected Funds Advance.
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f. "Uncollected Funds Obligations" shall mean any and
all obligations owing from Borrower to Lender, from
time to time, arising from any and all Uncollected
Funds Advances.
g. "Uncollected Funds Line of Credit" shall mean the
Line of Credit granted to Borrower pursuant to this
Rider for the purpose of covering all items deposited
into Borrower's deposit accounts with Lender which
are Uncollected Funds.
h. "Uncollected Funds Limit" shall mean Advances made on
Uncollected Funds not to exceed the sum of
$1,000,000.00.
i. "Uncollected Funds Line of Credit Rate" shall mean
the variable rate of interest per annum equal to
5.000% over Wall Street Journal New York prime rate
based on a 365/365day year.
2. UNCOLLECTED FUNDS FACILITY. (If no Overdraft Protection
Facility is granted)
a. Fees on Uncollected Funds Advances shall accrue on
the date such Advances are made and calculated based
on the Uncollected Funds Line of Credit Rate.
b. The aggregate amount of Uncollected Funds Advances in
all of Borrower's deposit accounts with Lender shall
not exceed the Uncollected Funds Limit.
c. Borrower agrees not to permit the outstanding balance
of the Uncollected Funds Obligations to exceed the
amount set forth in Paragraph 2b above.
d. Until the Maturity Date (as defined in the Note),
unless sooner terminated as provide in the Agreement,
Borrower may use the Uncollected Funds Line of Credit
in accordance with the terms and conditions of this
Rider.
e. Lender shall assess a monthly usage fee on Borrower's
Uncollected Funds Line of Credit as set forth in this
Rider and the Account Agreement. 1f not specifically
stated in the Account Agreement, the monthly usage
fee shall be calculated on a daily basis by using the
Uncollected Funds Line of Credit rate based on a
365/365 year.
3. UNCOLLECTED FUNDS/OVERDRAFT PROTECTION FACILITY.
a. The aggregate usage of Uncollected Funds in all of
Borrower's deposit accounts with Lender and the
outstanding balance of Advance drawn under Overdraft
Protection Facility shall not exceed $N/A.
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b. A usage fee on Uncollected Funds Line of Credit shall
accrue on the date such usage is made of the
Uncollected Funds and is calculated by using
Uncollected Funds Line of Credit Rate.
c. Interest on outstanding balance of Advances drawn
under the Overdraft Protection Facility shall be
calculated daily by using the Advance Rate based on a
365/365 year.
d. Borrower agrees not to permit the aggregate amount of
outstanding balance of the Uncollected Funds
Obligations and outstanding balance of Advances under
the Overdraft Protection Facility to exceed the
amount set forth in Paragraph 3a above.
e. Until the Maturity Date (as defined in the Note),
unless sooner terminated as provided in the
Agreement, Borrower may use the Uncollected Funds
Line of Credit and Overdraft Protection Facility in
accordance with the terms and conditions of this
Rider.
f. Lender shall assess a monthly usage fee on Borrower's
Uncollected Fund Facility and Overdraft Protection
Facility and Borrower shall pay interest monthly on
any Advances made by Lender as set forth in this
Rider and the Account Agreement. If not specifically
stated in the Account Agreement, the usage fee to be
paid monthly is the interest due on the Uncollected
Funds Line of Credit.
4. USAGE AGAINST UNCOLLECTED FUNDS. Borrower acknowledges and
agrees that any Uncollected Funds Advance is a loan from
Lender to Borrower under the Agreement and constitutes a
separate, independent obligation of Borrower to Lender under
the Agreement. Borrower further acknowledges and agrees that
the terms set forth in the Agreement and in this Rider are in
addition to any term, provision and condition in the Account
Agreement, including, but not limited to, any and all fees,
costs, interest due on uncollected Funds for which an
Uncollected Funds Advance is not made under the Agreement and
fees for returned items and overdrafts and do not act as a
waiver, amendment, substitution or release of any of
Borrower's obligation to Lender under the Account Agreement.
5. SECURITY INTEREST. Borrower hereby grants, assigns, pledges
and hypothecates to Lender all of Borrower's right, title and
interest in and to all deposit accounts maintained by Borrower
with Lender as security for each and all of the obligations of
Borrower to Lender under the Agreement and the Related
Documents.
6. INDEMNIFICATION. Borrower shall indemnify, defend and hold
Lender harmless from and against any and all claims, demands,
liabilities, damages, costs, expenses of any kind whatsoever,
arising out of any advances made by Lender hereunder or
Lender's refusal or failure to make any Advances hereunder.
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7. TERMS OF THE BUSINESS LOAN AGREEMENTS. All terms, conditions
and covenants set forth in the Agreement are incorporated
herein by this reference. In the event of any conflict in the
terms, conditions and covenants in the Agreement and this
Rider, the terms of this Rider shall control.
8. TERMINATION OF LENDER'S OBLIGATION TO ADVANCE. Lender's
obligation to make any Advances on either the Uncollected
Funds Line of Credit and/or the Overdraft Protection Facility
shall cease on the Maturity Date of the Note and in the event
that Borrower (1) fails to make any payment due to Lender
pursuant to the Agreement, the Rider, the Account Agreement,
the Related Documents or with respect to any obligation of any
kind with Lender, (2) exceeds the amount of usage under the
Uncollected Funds Line of Credit or Overdraft Protection
Facility, (3) breaches any term, condition or covenant of the
Agreement, Rider, Account Agreement, the Related Documents or
any other document evidencing obligations due to Lender, (4)
if Lender in good faith believes that Borrower will be unable
to pay any and all sums due to Lender, (5) if Borrower is in
default of any obligation of any kind or nature to Lender or
to any other person, (6) a Petition pursuant to any Chapter of
the Bankruptcy Code or any other insolvency statute or law is
filed by or against Borrower, or (7) if a Receiver is
appointed over Borrower's assets.
9. FAILURE TO MAKE PAYMENTS. In the event that Borrower fails to
pay any sums due pursuant to this Rider, Borrower shall be
liable to pay a late charge for any payment due to Lender in
the sum of five percent of payment due or $5.00, whichever is
greater, Additionally, in the event Borrower fails to pay any
sum due pursuant to this Rider, the Advance Rate and/or the
Uncollected Funds Line of Credit Rate shall be increased by an
additional 5%.
BORROWER
I/OMAGIC CORPORATION
/S/ Xxxx Xxxxxxx
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By: Xxxx Xxxxxxx, President/Secretary
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