CREDIT AGREEMENT
THIS AGREEMENT is entered into as of July 3, 1996, by and between FCG
ENTERPRISES, INC., a California corporation ("Borrower"), and XXXXX FARGO
BANK, NATIONAL ASSOCIATION ("Bank").
RECITAL
Borrower has requested from Bank the credit accommodations described
below (each, a "Credit" and collectively, the "Credits"), and Bank has agreed
to provide the Credits to Borrower on the terms and conditions contained
herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Bank and Borrower hereby agree as follows:
ARTICLE I
THE CREDITS
SECTION 1.1 LINE OF CREDIT.
(a) LINE OF CREDIT. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to continue to make advances to Borrower from
time to time up to and including July 3, 1997, not to exceed at any time the
aggregate principal amount of Three Million Dollars ($3,000,000.00) ("Line of
Credit"), the proceeds of which shall be used for working capital purposes.
Borrower's obligation to repay advances under the Line of Credit shall be
evidenced by a promissory note substantially in the form of Exhibit A
attached hereto ("Line of Credit Note"), all terms of which are incorporated
herein by this reference. Subject to the terms and conditions of this
Agreement, Bank hereby confirms that the Line of Credit remains in full force
and effect. Any reference in the Line of Credit to any prior loan agreement
between Bank and Borrower shall be deemed a reference to this Agreement.
(b) BORROWING AND REPAYMENT. Borrower may from time to time during the
term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at
any time exceed the maximum principal amount available thereunder, as set
forth above. Notwithstanding the foregoing, Borrower shall maintain a zero
balance on advances under the Line of Credit for a period of at least thirty
(30) consecutive days during the term of the Line of Credit.
SECTION 1.2. TERM LOAN.
(a) TERM LOAN. Bank has made a loan to Borrower in the original
principal amount of Four Million Dollars ($4,000,000.00) ("Term Loan"), on
which the outstanding principal balance as of the date hereof is
$3,666,664.00. Borrower's obligation to repay the Term Loan is evidenced by a
promissory note substantially in the form of Exhibit B attached hereto ("Term
Note"), all terms of which are incorporated herein by this reference. Subject
to the terms and conditions of this Agreement, Bank hereby confirms that the
Term Loan remains in full force and effect. Any reference in the Term Note to
any prior loan agreement between Bank and Borrower shall be deemed a
reference to this Agreement.
(b) REPAYMENT. The principal amount of the Term Loan shall be repaid
in accordance with the provisions of the Term Note.
(c) PREPAYMENT. Borrower may prepay principal on the Term Loan at any
time, in any amount and without penalty. All prepayments of principal shall
be applied on the most remote principal installment or installments then
unpaid.
SECTION 1.3. STANDBY LETTER OF CREDIT.
(a) STANDBY LETTER OF CREDIT. Bank has issued a standby letter of
credit for the account of Borrower and for the benefit of Metropolitan
Transportation Authority as security for Borrower's office location in New
York (the "Standby Letter of Credit") in the principal amount of Seventeen
Thousand Three Hundred Forty-Four Dollars ($17,344.00). The Standby Letter of
Credit has an expiration date of March 2, 1997, with automatic annual
renewals through March 2, 1998, and is subject to the additional terms of the
Application and Agreement for Standby Letter of Credit required by Bank in
connection with the issuance thereof (the "Letter of Credit Agreement").
Subject to the terms and conditions of this Agreement, Bank hereby confirms
that the Standby Letter of Credit remains in full force and effect.
(b) REPAYMENT OF DRAFTS. Each draft paid by Bank under the Standby
Letter of Credit shall be repaid by Borrower in accordance with the
provisions of the Letter of Credit Agreement.
SECTION 1.4. INTEREST/FEES.
(a) INTEREST. The outstanding principal balances of the Line of Credit
and the Term Loan shall bear interest at the rates of interest set forth in
the Line of Credit Note and the Term Note, respectively. The amount of each
draft paid by Bank under the Standby Letter of Credit shall bear interest
from the date such draft is paid by Bank to the date such amount is fully
repaid by Borrower at a rate per annum one-half percent (0.50%) above the
Prime Rate in effect from time to time.
-2-
(b) PRIME RATE. The term "Prime Rate" shall mean at any time the rate
of interest most recently announced within Bank at its principal office in
San Francisco as its Prime Rate, with the understanding that the Prime Rate
is one of Bank's base rates and serves as the basis upon which effective
rates of interest are calculated for those loans making reference thereto,
and is evidenced by the recording thereof in such internal publication or
publications as Bank may designate. Each change in the rate of interest shall
become effective on the date each Prime Rate change is announced within Bank.
(c) COMPUTATION AND PAYMENT. Interest shall be computed on the basis
of a 360-day year, actual days elapsed. Interest shall be payable at the
times and place set forth in the Line of Credit Note and the Term Note
(collectively, the "Notes").
(d) COMMITMENT FEE. Borrower shall pay to Bank a nonrefundable
commitment fee for the Line of Credit equal to $500.00, which fee shall be
due and payable in full upon execution of this Agreement.
(e) LETTER OF CREDIT FEES. Borrower shall pay to Bank fees upon the
issuance of each Letter of Credit, upon the payment or negotiation by Bank of
each draft under any Letter of Credit and upon the occurrence of any other
activity with respect to any Letter of Credit (including without limitation,
the transfer, amendment or cancellation of any Letter of Credit) determined
in accordance with Bank's standard fees and charges then in effect for such
activity.
SECTION 1.5. COLLECTION OF PAYMENTS. Borrower authorizes Bank to
collect all principal, interest and fees due under each Credit by charging
Borrower's demand deposit account number 4624-028767 with Bank, or any other
demand deposit account maintained by Borrower with Bank, for the full amount
thereof. Should there be insufficient funds, in any such demand deposit
account to pay all such sums when due, the full amount of such deficiency
shall be immediately due and payable by Borrower.
SECTION 1.6. COLLATERAL.
As security for all indebtedness of Borrower to Bank, Borrower hereby
grants to Bank security interests of first priority in all Borrower's
accounts receivable and other rights to payment, general intangibles and
equipment.
All of the foregoing shall be evidenced by and subject to the terms of
such security agreements, financing statements, deeds of trust and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank. Borrower shall reimburse Bank immediately upon demand
for all costs and expenses incurred by Bank in connection with any of the
foregoing security, including without limitation, filing and
-3-
recording fees and costs of appraisals, audits and title insurance.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Bank,
which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of all obligations of Borrower to
Bank subject to this Agreement.
SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized
and existing and in good standing under the laws of the State of California,
and is qualified or licensed to do business (and is in good standing as a
foreign corporation, if applicable) in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify
or to be so licensed could have a material adverse effect on Borrower.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement, the Notes,
and each other document, contract and instrument required hereby or at any
time hereafter delivered to Bank in connection herewith (collectively, the
"Loan Documents") have been duly authorized, and upon their execution and
delivery in accordance with the provisions hereof will constitute legal,
valid and binding agreements and obligations of Borrower or the party which
executes the same, enforceable in accordance with their respective terms.
SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any
law or regulation, or contravene any provision of the Articles of
Incorporation or By-Laws of Borrower, or result in any breach of or default
under any contract, obligation, indenture or other instrument to which
Borrower is a party or by which Borrower may be bound.
SECTION 2.4. LITIGATION. There are no pending, or to the best of
Borrower's knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of Borrower other than those disclosed by
Borrower to Bank in writing prior to the date hereof.
SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The financial
statement of Borrower dated December 31, 1995, a true copy of which has been
delivered by Borrower to Bank prior to the date hereof, (a) is complete and
correct and presents fairly the financial condition of Borrower, (b)
discloses all liabilities of Borrower that are required to be reflected or
reserved against
-4-
under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) has been prepared in accordance
with generally accepted accounting principals consistently applied. Since
the date of such financial statement there has been no material adverse
change in the financial condition of Borrower, nor has Borrower mortgaged,
pledged, granted a security interest in or otherwise encumbered any of its
assets or properties except in favor of Bank or as otherwise permitted by
Bank in writing.
SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any
pending assessments or adjustments of its income tax payable with respect to
any year.
SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture,
contract or instrument to which Borrower is a party or by which Borrower may
be bound that requires the subordination in right of payment of any of
Borrower's obligations subject to this Agreement to any other obligation of
Borrower.
SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, all permits, franchises and licenses required and rights to all
trademarks, trade names, patents, and fictitious names, if any, necessary to
enable it to conduct the business in which it is now engaged in compliance
with applicable law.
SECTION 2.9. ERISA. Borrower is in compliance in all material respects
with all applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended or recodified from time to time ("ERISA"); Borrower has
not at any time maintained or been obligated to contribute to a defined
benefit pension plan (as defined in ERISA).
SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.
SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to
Bank in writing prior to the date hereof, Borrower is in compliance in all
material respects with all applicable Federal or state environmental,
hazardous waste, health and safety statutes, and any rules or regulations
adopted pursuant thereto, which govern or affect any of Borrower's operations
and/or properties, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Resource
Conservation and Recovery Act of 1976, the Federal Toxic Substances Control
Act and the California Health and Safety Code, as any of the same may be
amended, modified or supplemented from time to time. None of the operations
of Borrower is the subject of any Federal or state investigation evaluating
whether any remedial action involving a
-5-
material expenditure is needed to respond to a release of any toxic or
hazardous waste or substance into the environment. Borrower has no material
contingent liability in connection with any release of any toxic or hazardous
waste or substance into the environment.
SECTION 2.12. LEGAL STATUS OF THE ASOP. ASOP is a plan qualified
under Sections 401 (a) and (k) of the Internal Revenue Code (the "Code") and
an employee stock ownership plan as described in Section 4975 (e)(7) of the
Code and Section 407 (d)(6) of ERISA and has been duly established by the
Board of Directors of Borrower.
SECTION 2.13. EXEMPT TRANSACTIONS. Neither the sale of stock to ASOP
under the Associate Profit Sharing 401 (k) and Stock Ownership Plan dated
December 1, 1995, ("ASOP Agreement"), nor the financing of such purchase
pursuant to the ASOP Loan Agreement ("ASOP Loan Agreement"), dated December
18, 1995, by and between Borrower and ASOP and the related promissory note
("ASOP Note") constitute prohibited transactions under Section 4975(c) of the
Code, Sections 406 and 407 of ERISA, or the regulations thereunder. The loan
evidenced by the ASOP Loan Agreement will constitute an "exempt loan" under
Treasury Reg. Section 54.4975-7(b)(1)(iii). The use of the proceeds of the
Term Loan by Borrower will not violate any federal or state tax, labor,
securities of other law, including, but not limited to, the provisions of
the Code or ERISA or any regulations thereunder.
ARTICLE III
CONDITIONS
SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation
of Bank to grant any of the Credits is subject to the fulfillment to Bank's
satisfaction of all of the following conditions:
(a) APPROVAL OF BANK COUNSEL. All legal matters incidental to the
granting of each of the Credits shall be satisfactory to Bank's counsel.
(b) DOCUMENTATION. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed:
(i) This Agreement and the Notes.
(ii) Corporate Borrowing Resolution.
(iii) Certificate of Incumbency.
(iv) Continuing Security Agreement: Rights to Payment.
(v) Security Agreement: Equipment.
(vi) Uniform Commercial Code - Financing Statements.
(vii) Opinion from Borrower's outside ESOP counsel as to the legality and
enforceability of the ASOP Loan.
-6-
(viii) ASOP Loan Agreement and Stock Purchase Agreement.
(ix) Resolution of the ASOP's ASOP Committee approving the transactions
involving ASOP described herein.
(x) Executed copies of ASOP and related documents.
(xi) Financial opinion from ASOP's valuation adviser.
(xii) Such other documents as Bank may require under any other Section of
this Agreement.
(c) FINANCIAL CONDITION. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower, nor any material decline, as determined by Bank, in the market
value of any collateral required hereunder or a substantial or material
portion of the assets of Borrower.
(d) INSURANCE. Borrower shall have delivered to Bank evidence of
insurance coverage on all Borrower's property, in form, substance, amounts,
covering risks and issued by companies satisfactory to Bank, and where
required by Bank, with loss payable endorsements in favor of Bank.
SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of
bank to make each extension of credit requested by Borrower hereunder shall
be subject to the fulfillment to Bank's satisfaction of each of the following
conditions:
(a) COMPLIANCE. The representations and warranties contained herein and
in each of the other Loan Documents shall be true on and as of the date of
the signing of this Agreement and on the date of each extension of credit by
Bank pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date,
no Event of Default as defined herein, and no condition, event or act which
with the giving of notice or the passage of time or both would constitute
such an Event of Default, shall have occurred and be continuing or shall
exist.
(b) DOCUMENTATION. Bank shall have received all additional documents
which may be required in connection with such extension of credit.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all
obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise
consents in writing:
SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest,
fees or other liabilities due under any of
-7-
the Loan Documents at the times and place and in the manner specified therein.
SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books and records
in accordance with generally accepted accounting principles consistently
applied, and permit any representative of Bank, at any reasonable time, to
inspect, audit and examine such books and records, to make copies of the same,
and to inspect the properties of Borrower.
SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the
following, in form and detail satisfactory to Bank:
(a) not later than 90 days after and as of the end of each fiscal year,
an audited financial statement of Borrower, prepared by an independent
certified public accountant reasonably acceptable to Bank, to include
balance sheet, income statement, statement of cash flow, and source and
application of funds statement;
(b) not later than 45 days after and as of the end of each fiscal
quarter, a financial statement of Borrower, prepared by Borrower, to include
balance sheet and income statement;
(c) from time to time such other information as Bank may reasonably
request.
SECTION 4.4. COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower's
continued existence and with the requirements of all laws, rules, regulations
and orders of any governmental authority applicable to Borrower and/or its
business.
SECTION 4.5. INSURANCE. Maintain and keep in force insurance of the
types and in amounts customarily carried in lines of business similar to that
of Borrower, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank form time to time at Bank's request schedules setting forth
all insurance then in effect.
SECTION 4.6. FACILITIES. Keep all properties useful or necessary to
Borrower's business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.
SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due
any and all indebtedness, obligations, assessments and taxes, both real or
personal, including without
-8-
limitation Federal and state income taxes and state and local property taxes
and assessments, except such (a) as Borrower may in good faith contest or as
to which a bona fide dispute may arise, and (b) for which Borrower has made
provision, to Bank's satisfaction, for eventual payment thereof in the event
Borrower is obligated to make such payment.
SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of
any litigation pending or threatened against Borrower.
SECTION 4.9. FINANCIAL CONDITION. Maintain Borrower's financial condition
as follows using generally accepted accounting principles consistently
applied and used consistently with prior practices (except to the extent
modified by the definitions herein):
(a) Current Ratio not at any time less than 1.5 to 1.0, with "Current
Ratio" defined as total current assets divided by total current liabilities.
(b) Tangible Net Worth not at any time less than $9,000,000.00, with
"Tangible Net Worth" defined as the aggregate of total stockholders' equity
plus subordinated debt less any intangible assets.
(c) Total Liabilities divided by Tangible Net Worth not at any time
greater than 1.60 to 1.0, with "Total Liabilities" defined as the aggregate
of current liabilities and non-current liabilities less subordinated debt, and
with "Tangible Net Worth" as defined above.
(d) Net income after taxes not less than $1,500,000.00 on an annual
basis, determined as of each fiscal year end, and pre-tax profit not less
than $250,000.00 on a quarterly basis, determined as of each fiscal quarter
end.
(e) EBITDA Coverage Ratio not less than 3.5 to 1.0 as of each fiscal year
end, with "EBITDA" defined as net profit before tax plus interest expense
(net of capitalized interest expense), depreciation expense and amortization
expense, and with "EBITDA Coverage Ratio" defined as EBITDA divided by the
aggregate of total interest expense plus the prior period current maturity of
long-term debt and the prior period current maturity of subordinated debt.
SECTION 4.10. NOTICE TO BANK. Promptly (but in no event more than five
(5) days after the occurrence of each such event or matter) give written
notice to Bank in reasonable detail of: (a) the occurrence of any Event of
Default, or any condition, event or act which with the giving of notice or the
passage of time or both would constitute an Event of Default; (b) any change
in the name or the organizational structure of Borrower; (c) the
occurrence and nature of any Reportable Event or Prohibited Transaction, each
as defined in ERISA, or any funding deficiency
-9-
with respect to any Plan, or any investigation or audit of the ASOP by the
Department of Labor or the Internal Revenue Service; or (d) any termination
or cancellation of any insurance policy which Borrower is required to
maintain, or any uninsured or partially uninsured loss through liability or
property damage, or through fire, theft or any other cause affecting
Borrower's property. For purposes of this Agreement, "Business Day" means any
day except a Saturday, Sunday or any other day designated as a holiday under
Federal or California statute or regulation.
SECTION 4.11. EXISTENCE AND QUALIFICATION OF ASOP. Preserve and maintain
the existence and qualified status of the ASOP under Sections 401(a) and (k)
and 4975(e)(7) of the Code, and comply in all material respects with the
applicable requirements of ERISA. Borrower shall file complete Applications
for Determination (on Forms 5300 and 5309) with the Internal Revenue Service
("IRS") on or before the due date for filing Borrower's tax return (including
extensions) for the fiscal year ending December 31, 1995, and, with respect
to ASOP shall amend the provisions of the ASOP in such manner as the IRS may
require in order to obtain a favorable determination letter. Borrower shall
supply Bank with a copy of such determination letter within ten days of
receipt by Borrower.
SECTION 4.12. ASOP CONTRIBUTIONS. Borrower shall cause the ASOP to
promptly use all cash contributed to the ASOP to make payments on the loan
under the ASOP Loan Agreement, unless Borrower shall have first obtained
Bank's written consent.
ARTICLE V
NEGATIVE COVENANTS
Borrower further covenants that so long as Bank reamins committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether direct
or contingent, liquidated or unliquidated) of Borrower to Bank under any of
the Loan Documents remain outstanding, and until payment in full of all
obligations of Borrower subject hereto, Borrower will not without Bank's
prior written consent:
SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any of the
Credits except for the purposes stated in Article I hereof.
SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or permit to
exist any indebtedness or liabilities resulting from borrowings, loans or
advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to
Bank, and (b) any other liabilities of Borrower existing as of, and disclosed
to Bank prior to, the date hereof.
SECTION 5.3. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity; make any
-10-
substantial change in the nature of Borrower's business as conducted as of
the date hereof; acquire all or substantially all of the assets of any other
entity; nor sell, lease, transfer or otherwise dispose of all or a
substantial or material portion of Borrower's assets except in the ordinary
course of its business.
SECTION 5.4. GUARANTIES. Guarantee or become liable in any way as
surety, endorser (other than as endorser of negotiable instruments for
deposit or collection in the ordinary course of business), accommodation
endorser or otherwise for, nor pledge or hypothecate any assets of Borrower
as security for, any liabilities or obligations of any other person or
entity, except any of the foregoing in favor of Bank.
SECTION 5.5. LOANS, ADVANCES, INVESTMENTS. Make any loans or advances
to or investments in any person or entity, except for loans or advances to
employees not to exceed an aggregate of $100,000.00; and except for loans to
stockholders to finance stock purchases, not to exceed an aggregate of
$3,000,000.00.
SECTION 5.6. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's stock
now or hereafter outstanding, nor redeem, retire, repurchase or otherwise
acquire any shares of any class of Borrower's stock now or hereafter
outstanding.
SECTION 5.7. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to
exist a security interest in, or lien upon, all or any portion of Borrower's
assets now owned or hereafter acquired, except any of the foregoing in favor
of Bank or which is existing as of, and disclosed to Bank in writing prior
to, the date hereof.
SECTION 5.8. DEFINED BENEFIT PENSION PLAN. Adopt or become obligated
to contribute to a defined benefit pension plan (as defined in ERISA).
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal, interest, fees or
other amounts payable under any of the Loan Documents.
(b) Any financial statement or certificate furnished to Bank in
connection with, or any representation or warranty made by Borrower or any
other party under this Agreement or any other Loan Document shall prove to be
incorrect, false or misleading in any material respect when furnished or made.
-11-
(c) Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those referred to in subsections (a) and (b) above), and with
respect to any such default which by its nature can be cured, such default
shall continue for a period of thirty (30) days from its occurrence.
(d) Any default in the payment or performance of any obligation, or any
defined event of default, under the terms of any contract or instrument
(other than any of the Loan Documents) pursuant to which Borrower has
incurred any debt or other liability to any person or entity, where the total
of such obligations and/or face amount of such contracts or instruments
exceeds an aggregate of $50,000.00.
(e) Any default in the payment or performance of any obligation, or any
defined event of default, under the terms of any contract or instrument
(other than any of the Loan Documents) pursuant to which Borrower has
incurred any debt or other liability to Bank.
(f) The filing of a notice of judgment lien against Borrower; or the
recording of any abstract of judgment against Borrower in any county in which
Borrower has an interest in real property; or the service of a notice of levy
and/or of a writ of attachment or execution, or other like process, against
the assets of Borrower; or the entity of a judgment against Borrower.
(g) Borrower shall become insolvent, or shall suffer or consent to or
apply for the appointment of a receiver, trustee, custodian or liquidator of
itself or any of its property, or shall generally fail to pay its debts as
they become due, or shall make a general assignment for the benefit of
creditors; Borrower shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with creditors
or any other relief under the Bankruptcy Reform Act, Title 11 of the United
States Code, as amended or recodified from time to time ("Bankruptcy Code"),
or under any state or Federal law granting relief to debtors, whether now or
hereafter in effect; or any involuntary petition or proceeding pursuant to
the Bankruptcy Code or any other applicable state or Federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower and is not dismissed within 30 days following date of filing
thereof, or Borrower shall file an answer admitting the jurisdiction of the
court and the material allegations of any involuntary petition; or Borrower
shall be adjudicated a bankrupt, or an order for relief shall be entered
against Borrower by any court of competent jurisdiction under the Bankruptcy
Code or any other applicable state or Federal law relating to bankruptcy,
reorganization or other relief for debtors which such adjudication or order
for relief is not reversed, vacated or dismissed within 30 days following the
date of filing thereof.
-12-
(h) There shall exist or occur any event or condition which Bank in good
faith believes impairs, or is substantially likely to impair, the prospect of
payment or performance by Borrower of its obligations under any of the Loan
Documents.
(i) The dissolution or liquidation of Borrower; or Borrower, or any of
its directors, stockholders or members, shall take action seeking to effect
the dissolution or liquidation of Borrower.
(j) Any change in ownership during the term of this Agreement of an
aggregate of twenty-five percent (25%) or more of the common stock of
Borrower; provided however, that the initial purchase of shares of Borrower's
stock by ASOP as set forth in the ASOP Loan Agreement shall be excluded
hereunder.
(k) Any violation of the Code, ERISA, any regulations thereunder or any
laws or regulations applicable to the ASOP which is deemed by Bank, in the
good faith exercise of its discretion, to have a material adverse effect upon
Borrower or ASOP, including, but not limited to, the occurrence of a
prohibited transaction within the meaning of Section 4975(c) of the Code or
Sections 406 or 407 of ERISA.
(l) The determination by any court or governmental agency or authority
that ASOP is not a qualified plan under Sections 401 (a) or (k) of the Code
or an ESOP under Section 4975(e)(7) of the Code or that the Term Loan or any
of the related transactions violate the Code, ERISA or any regulation
thereunder, or constitute a prohibited transaction within the meaning of
Section 4975(c) of the Code or Section 406 or 407 of ERISA.
SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default:
(a) all indebtedness of Borrower under each of the Loan Documents, any term
thereof to the contrary notwithstanding, shall at Bank's option and without
notice become immediately due and payable without presentment, demand,
protest or notice of dishonor, all of which are hereby expressly waived by
Borrower; (b) the obligation, if any, of Bank to extend any further credit
under any of the Loan Documents shall immediately cease and terminate; and
(c) Bank shall have all rights, powers and remedies available under each of
the Loan Documents, or accorded by law, including without limitation the
right to resort to any or all security for any of the Credits and to exercise
any or all of the rights of a beneficiary or secured party pursuant to
applicable law. All rights, powers and remedies of Bank may be exercised at
any time by Bank and from time to time after the occurrence of an Event of
Default, are cumulative and not exclusive, and shall be in addition to any
other rights, powers or remedies provided by law or equity.
-13-
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive
or otherwise affect any other or further exercise thereof or the exercise of
any other right, power or remedy. Any waiver, permit, consent or approval of
any kind by Bank of any breach of or default under any of the Loan Documents
must be in writing and shall be effective only to the extent set forth in
such writing.
SECTION 7.2. NOTICES. All notices, requests and demands which any
party is required or may desire to give to any other party under any
provision of this Agreement must be in writing delivered to each party at the
following address:
BORROWER: FCG ENTERPRISES, INC.
000 X. Xxxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxxxxx 00000
BANK: XXXXX FARGO BANK, NATIONAL ASSOCIATION
South Bay Regional Commercial Banking Xxxxxx
000 Xxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxxxxx 00000
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit
in the U.S. mail, first class and postage prepaid; and (c) if sent by
telecopy, upon receipt.
SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay
to Bank immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys' fees (to include
outside counsel fees and all allocated costs of Bank's in-house counsel),
incurred by Bank in connection with (a) the negotiation and preparation of
this Agreement and the other Loan Documents, Bank's continued administration
hereof and thereof, and the preparation of any amendments and waivers hereto
and thereto, (b) the enforcement of Bank's rights and/or the collection of
any amounts which become due to Bank under any of the Loan Documents, and (c)
the prosecution or defense of any action in any way related to any of the
Loan Documents, including without limitation, any action for declaratory
relief, and including any of the foregoing incurred in connection with any
bankruptcy proceeding relating to Borrower.
-14-
SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however,
that Borrower may not assign or transfer its interest hereunder without
Bank's prior written consent. Bank reserves the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, Bank's rights and benefits under each of the Loan Documents. In
connection therewith, Bank may disclose all documents and information which
Bank now has or may hereafter acquire relating to any of the Credits, Borrower
or its business, or any collateral required hereunder.
SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
Loan Documents constitute the entire agreement between Borrower and Bank with
respect to the Credits and supersede all prior negotiations, communications,
discussions and correspondence concerning the subject matter hereof. This
Agreement may be amended or modified only by a written instrument executed by
each party hereto.
SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and
their respective permitted successors and assigns, and no other person or
entity shall be a third party beneficiary of, or have any direct or indirect
cause otion-v or claim in connection with, this Agreement or any other of the
Loan Documents to which it is not a party.
SECTION 7.7. TIME. Time is of the essence of each and every provision
of this Agreement and each other of the Loan Documents.
SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or any
remaining provisions of this Agreement.
SECTION 7.9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 7.11. ARBITRATION.
(a) ARBITRATION. Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in
accordance with the terms of this Agreement. A "Dispute" shall mean any
action, dispute, claim or controversy of any kind, whether in contract or
tort, statutory or common law, legal or equitable, now existing or hereafter
arising under or in connection with, or in any way pertaining to, any of the
Loan Documents, or any past, present or future extensions of credit
-15-
and other activities, transactions or obligations of any kind related
directly or indirectly to any of the Loan Documents, including without
limitation, any of the foregoing arising in connection with the exercise of
any self-help, ancillary or other remedies pursuant to any of the Loan
Documents. Any party may by summary proceedings bring an action in court to
compel arbitration of a Dispute. Any party who fails or refuses to submit to
arbitration following a lawful demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
Dispute.
(b) GOVERNING RULES. Arbitration proceedings shall be administered by
the American Arbitration Association ("AAA") or such other administrator as
the parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
Loan Documents. The arbitration shall be conducted at a location in
California selected by the AAA or other administrator. If there is any
inconsistency between the terms hereof and any such rules, the terms and
procedures set forth herein shall control. All statutes of limitation
applicable to any Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters directly relevant
to the Dispute being arbitrated. Judgment upon any award rendered in an
arbitration may be entered in any court having jurisdiction; provided
however, that nothing contained herein shall be deemed to be a waiver by any
party that is a bank of the protections afforded to it under 12 U.S.C.
Section 91 or any similar applicable state law.
(c) NO WAIVER; PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary
remedies, including without limitation injunctive relief, sequestration,
attachment, garnishment or the appointment of a receiver, from a court of
competent jurisdiction before, after or during the pendency of any
arbitration or other proceeding. The exercise of any such remedy shall not
waive the right of any party to compel arbitration or reference hereunder.
(d) ARBITRATOR QUALIFICATIONS AND POWERS; AWARDS. Arbitrators must be
active members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive laws
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the state of California, (ii) may
grant any remedy or relief that a court of the state of California could
order or grant within the scope
-16-
hereof and such ancillary relief as is necessary to make effective any award,
and (iii) shall have the power to award recovery of all costs and fees, to
impose sanctions and to take such other actions as they deem necessary to
the same extent a judge could pursuant to the Federal Rules of Civil
Procedures, the California Rules of Civil Procedure or other applicable law.
Any Dispute in which the amount in controversy is $5,000,000 or less shall be
decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all
hearings and deliberations.
(e) JUDICIAL REVIEW. Notwithstanding anything herein to the contrary,
in any arbitration in which the amount in controversy exceeds $25,000,000,
the arbitrators shall be required to make specific, written findings of fact
and conclusions of law. In such arbitrations (A) the arbitrators shall not
have the power to make any award which is not supported by substantial
evidence or which is based on legal error, (B) an award shall not be binding
upon the parties unless the findings of fact are supported by substantial
evidence and the conclusions of law are not erroneous under the substantive
law of the state of California, and (C) the parties shall have in addition to
the grounds referred to in the Federal Arbitration Act for vacating,
modifying or correcting an award the right to judicial review of (1) whether
the findings of fact rendered by the arbitrators are supported by substantial
evidence, and (2) whether the conclusions of law are erroneous under the
substantive law of the state of California. Judgment confirming an award in
such a proceeding may be entered only if a court determines the award is
supported by substantial evidence and not based on legal error under the
substantive law of the state of California.
(f) REAL PROPERTY COLLATERAL; JUDICIAL REFERENCE. Notwithstanding
anything herein to the contrary, no Dispute shall be submitted to arbitration
if the Dispute concerns indebtedness secured directly or indirectly, in whole
or in part, by any real property unless (i) the holder of the mortgage, lien
or security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or
benefits that might accrue to them by virtue of the single action rule
statute of California, thereby agreeing that all indebtedness and obligations
of the parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If
any such Dispute is not submitted to arbitration, the Dispute shall be
referred to a referee in accordance with California Code of Civil Procedure
Section 638 et seq., and this general reference agreement is intended to be
-17-
specifically enforceable in accordance with said Section 638. A referee with
the qualifications required herein for arbitrators shall be selected pursuant
to the AAA's selection procedures. Judgment upon the decision rendered by a
referee shall be entered in the court in which such proceeding was commenced
in accordance with California Code of Civil Procedure Sections 644 and 645.
(g) MISCELLANEOUS. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose
the existence, content or results thereof, except for disclosures of
information by a party required in the ordinary course of its business, by
applicable law or regulation, or to the extent necessary to exercise any
judicial review rights set forth herein. If more than one agreement for
arbitration by or between the parties potentially applies to a Dispute, the
arbitration provision most directly related to the Loan Documents or the
subject matter of the Dispute shall control. This arbitration provision shall
survive termination, amendment or expiration of any of the Loan Documents or
any relationship between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
XXXXX FARGO BANK,
FCG ENTERPRISES, INC. NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxx X. Xxxxxxx
--------------------------------- -------------------------
Title: Vice President, Finance Xxxx X. Xxxxxxx
------------------------------ Vice President
-18-
"EXHIBIT A"
XXXXX FARGO BANK REVOLVING LINE OF CREDIT NOTE
--------------------------------------------------------------------------------
$3,000,000.00 LONG BEACH, CALIFORNIA
JULY 3, 1996
FOR VALUE RECEIVED, the undersigned FCG ENTERPRISES, INC. ("Borrower")
promises to pay to the order of XXXXX FARGO BANK, NATIONAL ASSOCIATION
("Bank") at its office at SOUTH BAY RCBO, 000 XXXX XXXXX XXXX XXXXX 000, XXXX
XXXXX, XX 00000, or at such other place as the holder hereof may designate,
in lawful money of the United States of America and in immediately available
funds, the principal sum of $3,000,000.00, or so much thereof as may be
advanced and be outstanding, with interest thereon, to be computed on each
advance from the date of its disbursement as set forth herein.
INTEREST:
(a) INTEREST. The outstanding principal balance of this Note shall bear
interest at a rate per annum (computed on the basis of a 360-day year, actual
days elapsed) .50000% above the Prime Rate in effect from time to time. The
"Prime Rate" is a base rate that Bank from time to time establishes and which
serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto. Each change in the rate of interest
hereunder shall become effective on the date each Prime Rate change is
announced within Bank.
(b) PAYMENT OF INTEREST. Interest accrued on this Note shall be payable
on the 3RD day of each MONTH, commencing AUGUST 3, 1996.
(c) DEFAULT INTEREST. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note
shall bear interest until paid in full at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to 4%
above the rate of interest from time to time applicable to this Note.
BORROWING AND REPAYMENT:
(a) BORROWING AND REPAYMENT. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions of this Note and of the Credit Agreement between Borrower and Bank
defined below; provided however, that the total outstanding borrowings under
this Note shall not at any time exceed the principal amount stated above. The
unpaid principal balance of this obligation at any time shall be the total
amounts advanced hereunder by the holder hereof less the amount of principal
payments made hereon by or for any Borrower, which balance may be endorsed
hereon from time to time by the holder. The outstanding principal balance of
this Note shall be due and payable in full on JULY 3, 1997.
(b) ADVANCES. Advances hereunder, to the total amount of the principal
sum available hereunder, may be made by the holder at the oral or written
request of (i) XXXXX X. XXXX OR XXXXXX X. XXXX OR XXXXXX X. XXXXXXXX, any one
acting alone, who are authorized to request advances and direct the
disposition of any advances until written notice of the revocation of such
authority is received by the holder at the office designated above, or
(ii) any person, with respect to advances deposited to the credit of any
account of any Borrower with the holder, which advances, when so deposited,
shall be conclusively presumed to have been made to or for the benefit of
each Borrower regardless of the fact that persons other than those authorized
to request advances may have authority to draw against such account. The
holder shall have no obligation to determine whether any person requesting an
advance is or has been authorized by any Borrower.
(c) APPLICATION OF PAYMENTS. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions
of that certain Credit Agreement between Borrower and Bank dated as of JULY
3, 1996, as amended from time to time (the "Credit Agreement"). Any default
in the payment or performance of any obligation under this Note, or any
defined event of default under the Credit Agreement, shall constitute an
"Event of Default" under this Note.
MISCELLANEOUS:
(a) REMEDIES. Upon the occurrence of any Event of Default as defined in
the Credit Agreement, the holder of this Note, at the holder's option, may
declare all sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder
shall immediately cease and terminate. Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel),
incurred by the holder in connection with the enforcement of the holder's
rights and/or the collection of any amounts which become due to the holder
under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for
declaratory relief, and including any of the foregoing incurred in connection
with any bankruptcy
REVOLVING LINE OF CREDIT NOTE, PAGE 1
proceeding relating to any Borrower.
(b) OBLIGATIONS JOINT AND SEVERAL. Should more than one person or
entity sign this Note as a Borrower, the obligations of each such Borrower
shall be joint and several.
(c) GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of California, except to the extent
Bank has greater rights or remedies under Federal law, whether as a national
bank or otherwise, in which case such choice of California law shall not be
deemed to deprive Bank of any such rights and remedies as may be available
under Federal law.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
FCG ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------
Title: Vice President
--------------------------
REVOLVING LINE OF CREDIT NOTE, PAGE 2
"EXHIBIT B"
XXXXX FARGO BANK TERM NOTE
--------------------------------------------------------------------------------
$4,000,000.00 Long Beach, California
December 4, 1995
FOR VALUE RECEIVED, the undersigned FCG ENTERPRISES, INC. ("Borrower")
promises to pay to the order of XXXXX FARGO BANK, NATIONAL ASSOCIATION
("Bank") at its office at South Bay RCBO, 000 Xxxx Xxxxx Xxxx Xxxxx 000, Xxxx
Xxxxx, XX 00000, or at such other place as the holder hereof may designate,
in lawful money of the United States of America and in immediately available
funds, the principal sum of $4,000,000.00, with interest thereon as set forth
herein.
INTEREST:
(a) INTEREST. The outstanding principal balance of this Note shall bear
interest at a rate per annum (computed on the basis of a 360-day year, actual
days elapsed) .50000% above the Prime Rate in effect from time to time. The
"Prime Rate" is a base rate that Bank from time to time establishes and which
serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto. Each change in the rate of interest
hereunder shall become effective on the date each Prime Rate change is
announced within Bank.
(b) PAYMENT OF INTEREST. Interest accrued on this Note shall be payable
on the 4th day of each month, commencing January 4, 1996.
(c) DEFAULT INTEREST. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note
shall bear interest until paid in full at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to 4%
above the rate of interest from time to time applicable to this Note.
REPAYMENT AND PREPAYMENT:
(a) REPAYMENT. Principal shall be payable on the 4th day of each month
in installments of $55,556.00 each, commencing January 4, 1996, and
continuing up to and including November 4, 2001, with a final installment
consisting of all remaining unpaid principal due and payable in full on
December 4, 2001.
(b) APPLICATION OF PAYMENTS. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.
(c) PREPAYMENT. Borrower may prepay principal on this Note at any time,
in any amount and without penalty. All prepayments of principal shall be
applied on the most remote principal installment or installments then unpaid.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions
of that certain Credit Agreement between Borrower and Bank dated as of
December 4, 1995, as amended from time to time (the "Credit Agreement"). Any
default in the payment or performance of any obligation under this Note, or
any defined event of default under the Credit Agreement, shall constitute an
"Event of Default" under this Note.
MISCELLANEOUS:
(a) REMEDIES. Upon the occurrence of any Event of Default as defined in
the Credit Agreement, the holder of this Note, at the holder's option, may
declare all sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder
shall immediately cease and terminate. Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel),
incurred by the holder in connection with the enforcement of the holder's
rights and/or the collection of any amounts which become due to the holder
under this Note, and the prosecution or defense of any action in any way
related to this Note, including, without limitation, any action for
declaratory relief, and including any of the foregoing incurred in connection
with any bankruptcy proceeding relating to any Borrower.
(c) GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of California, except to the extent
Bank has greater rights or remedies under Federal law, whether as a national
bank or otherwise, in which case such choice of California law shall not be
deemed to deprive Bank of any such rights and remedies as may be available
under Federal law.
TERM NOTE-PRINCIPAL/INTEREST SEPARATE, PAGE 1
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
FCG ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------
Title: Vice President Finance
--------------------------
TERM NOTE-PRINCIPAL/INTEREST SEPARATE, PAGE 2
[LETTERHEAD]
November 19, 1997
FCG ENTERPRISES, INC.
000 X. Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Gentlemen:
This letter is to confirm that Xxxxx Fargo Bank, National Association
("Bank") has agreed to extend the maturity date of that certain credit
accommodation granted by Bank to FCG ENTERPRISES, Inc. ("Borrower") in the
maximum principal amount of Three Million Dollars ($3,000,000.00) pursuant to
the terms and conditions of that certain Credit Agreement between Bank and
Borrower dated as of July 3, 1996, as amended from time to time (the
"Agreement").
The maturity date of said credit accommodation is hereby extended until
December 31, 1997. Until such date, all terms and conditions of the Agreement
which pertain to said credit accommodation shall remain in full force and
effect, except as expressly modified hereby. The promissory note dated as of
July 3, 1996, executed by Borrower and payable to the order of Bank which
evidences said credit accommodation, a copy of which is attached hereto as
EXHIBIT A (the "Note"), shall be deemed modified as of the date this letter
is acknowledged by Borrower to reflect the new maturity date set forth above.
All other terms and conditions of the Note remain in full force and effect,
without waiver or modification.
Borrower acknowledges that Bank has not committed to make any renewal or
further extension of the maturity date of the above-described credit
accommodation beyond the new maturity date specified herein, and that any
such renewal or further extension remains in the sole discretion of Bank.
This letter constitutes the entire agreement between Bank and Borrower with
respect to the maturity date extension for the above-described credit
accommodation, and supersedes all prior negotiations, discussions and
correspondence concerning said extension.
FCG ENTERPRISES, INC.
November 19, 1997
Page 2
Please acknowledge your acceptance of the terms and conditions contained
herein by dating and signing one copy below and returning it to my attention
at the above address on or before November 30, 1997.
Very truly yours,
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Xxxxxx Xxxxxx
Relationship Manager
Acknowledged and accepted as of November 20, 1997:
FCG ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------------
Title: Vice President, CFO
--------------------------------
[LOGO] "EXHIBIT A" Page 1 of 2
XXXXX FARGO BANK REVOLVING LINE OF CREDIT NOTE
--------------------------------------------------------------------------------
$3,000,000.00 Long Beach, California
July 3, 1998
FOR VALUE RECEIVED, the undersigned FCG ENTERPRISES, INC. ("Borrower")
promises to pay to the order of XXXXX FARGO BANK NATIONAL ASSOCIATION
("Bank") at its office at South Bay RCBO, 000 Xxxx Xxxxx Xxxx., Xxxxx 000,
Xxxx Xxxxx, XX 00000, or at such other place as the holder hereof may
designate, in lawful money of the United States of America and in immediately
available funds, the principal sum of $3,000,000.00, or so much thereof as
may be advanced and be outstanding, with interest thereon, to be computed on
such advance from the date of its disbursement as set forth herein.
INTEREST:
(a) INTEREST. The outstanding principal balance of this Note shall bear
interest at a rate per annum (computed on the basis of a 365-day year,
actual days elapsed) .80000% above the Prime Rate in effect from time to
time. The "Prime Rate" is a base rate that Bank from time to time establishes
and which serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto. Each change in the rate
of interest hereunder shall become effective on the date each Prime Rate
change is announced within Bank.
(b) PAYMENT OF INTEREST. Interest accrued on this Note shall be payable on
the 3rd day of each month, commencing August 3, 1998.
(c) DEFAULT INTEREST. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note
shall bear interest until paid in full at an increased rate per annum
(computed on the basis of a 365-day year, actual days elapsed) equal to 4%
above the rate of interest from time to time applicable to this Note.
BORROWING AND REPAYMENT:
(a) BORROWING AND REPAYMENT. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions of this Note and of the Credit Agreement between Borrower and Bank
defined below; provided however, that the total outstanding borrowings under
this Note shall not at any time exceed the principal amount stated above. The
unpaid principal balance of this obligation at any time shall be the total
amounts advanced hereunder by the holder hereof less the amount of principal
payments made hereon by or for any Borrower, which balance may be endorsed
hereon from time to time by the holder. The outstanding principal balance of
this Note shall be due and payable in full on July 3, 1997.
(b) ADVANCES. Advances hereunder, to the total amount of the principal sum
available hereunder, may be made by the holder at the oral or written request
of (i) XXXXX X. XXXX or XXXXXX X. XXXX or XXXXXX X. XXXXXXXX, any one acting
alone, who are authorized to request advances and direct the disposition of
any advances until written notice of the revocation of such authority is
received by the holder at the office designated above, or (ii) any person,
with respect to advances deposited to the credit of any account of any
Borrower with the holder, which advances, when so deposited, shall be
conclusively presumed to have been made to or for the benefit of each
Borrower regardless of the fact that persons other then those authorized to
request advances may have authority to draw against such account. The holder
shall have no obligation to determine whether any person requesting an
advance is or has been authorized by any Borrower.
(c) APPLICATION OF PAYMENTS. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions
of that certain Credit Agreement between Borrower and Bank dated as of July
3, 1998, as amended from time to time (the "Credit Agreement"). Any default
in the payment or performance of any obligation under this Note, or any
defined event of default under the Credit Agreement, shall constitute an
"Event of Default" under this Note.
MISCELLANEOUS:
(a) REMEDIES. Upon the occurrence of any Event of Default as defined in
the Credit Agreement, the holder of this Note, at the holder's option, may
declare all sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder
shall immediately cease and terminate. Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel),
incurred by the holder in connection with the enforcement of the holder's
rights and/or the collection of any amounts which become due to the holder
under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for
declaratory relief, and including any of the foregoing incurred in connection
with any bankruptcy
REVOLVING LINE OF CREDIT NOTE, PAGE 1
Page 2 of 2
proceeding relating to any Borrower.
(b) OBLIGATIONS JOINT AND SEVERAL. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.
(c) GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of California, except to the extent
Bank has greater rights or remedies under Federal law, whether as a national
bank or otherwise, in which case such choice of California law shall not be
deemed to deprive Bank of any such rights and remedies as may be available
under Federal law.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
FCG ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxx
-------------------------
Title: Vice President
---------------------
REVOLVING LINE OF CREDIT NOTE, PAGE 2
