[LOGO]
COMMERCIAL PORTFOLIO ADMINISTRATION
BUSINESS LOAN AGREEMENT
This Business Loan Agreement (this "Agreement") is entered into as of the
date set forth below between Union Bank of California, N.A. ("Bank") and the
undersigned ("Borrower") with respect to each and every extension of credit
(whether one or more, collectively referred to as the "Loan") from Bank to
Borrower. In consideration of the Loan. Bank and Borrower agree to the
following terms and conditions.
1. THE LOAN
1.1 THE NOTE. The Loan is evidenced by one or more promissory notes or
other evidences of indebtedness, including each amendment, extension,
renewal or replacement thereof, which are incorporated herein by this
reference (whether one or more, collectively referred to as the "Note").
- Wherever "N/A" appears in a blank in this Agreement, it means the
Subsection in which it appears is deemed deleted from this Agreement.
1.2 REVOLVING LOAN CLEAN-UP PERIOD. For any portion of the Loan which
is a revolving loan, at least N/A consecutive days during each 12 month
period the principal amount outstanding under such revolving loan must be
zero.
1.3 TERM LOAN AVAILABILITY PERIOD. For any portion of the Loan which
is a term loan, loan proceeds shall be available for disbursement from
N/A through N/A only.
1.4 FEE. Borrower shall pay to Bank a fee of $ N/A.
1.5 COLLATERAL. The payment and performance of all obligations of
Borrower under the Loan Documents is and shall be during the term of the
Loan secured by a perfected security interest in such real or personal
property collateral as is required by Bank and each security interest
shall rank in first priority unless otherwise specified in writing by Bank.
1.6 GUARANTY. The payment and performance of all obligations of
Borrower under the Loan Documents are and shall be during the term of the
Loan guaranteed by: N/A
1.7 SUBORDINATION. Certain other obligations of Borrower, namely those
certain 7 7/8% Convertible Subordinated Debentures due 2004, are junior in
payment to Bank debt and other obligations of Borrower as described in the
Indenture document dated August 18, 1994 and all subsequent Supplemental
Indentures amending that document.
2. CONDITIONS TO AVAILABILITY OF THE LOAN. Before Bank is obligated to
disburse all or any portion of the Loan, Bank must have received (a) the Note
and every other document required by Bank in connection with the Loan, each
of which must be in form and substance satisfactory to Bank (together with
this Agreement, referred to as the "Loan Documents"), (b) confirmation of the
perfection of its security interest in any collateral for the Loan, and (c)
payment of any fee required in connection with the Loan.
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants (and
each request for a disbursement of the proceeds of the Loan shall be deemed a
representation and warranty made on the date of such request) that:
3.1 Borrower is an individual or Borrower is duly organized and
existing under the laws of the state of its organization and is duly
qualified to conduct business in each jurisdiction in which its business
is conducted;
3.2 The execution, delivery and performance of the Loan Documents
executed by Borrower are within Borrower's power, have been duly
authorized, are legal, valid and binding obligations of Borrower, and
are not in conflict with the terms of any charter, bylaw, or other
organization papers of Borrower or with any law, indenture, agreement
or undertaking to which Borrower is a party or by which Borrower is bound
or affected;
3.3 All financial statements and other financial information submitted
by Borrower to Bank are true and correct in all material respects, and
there has been no material adverse change in Borrower's financial
condition since the date of the latest of such financial statement;
3.4 Borrower is properly licensed and in good standing in each state in
which Borrower is doing business, and Borrower has complied with all
laws and regulations affecting Borrower, including without limitation,
each applicable fictitious business name statute;
3.5 There is no event which is, or with notice or lapse of time or both
would be, and Event of Default (as defined in Article 6);
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 00, Xxx Xxxxxxx,
Xxxxxxxxxx 00000-0000
X.X. Xxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
000 000 0000 Fax 000 000 0000
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3.6 Borrower is not engaged in the business of extending credit for the
purpose of, and no part of the Loan will be used, directly or
indirectly, for purchasing or carrying margin stock within the meaning of
Federal Reserve Board Regulation U; and
3.7 Borrower is not aware of any fact, occurrence or circumstance which
Borrower has not disclosed to Bank in writing which has, or could
reasonably be expected to have, a material adverse effect on Borrower's
ability to repay the Loan or perform its obligations under the Loan
Documents.
4. COVENANTS. Borrower agrees, so long as the Loan or any commitment to
make any advance under the Loan is outstanding and until full and final
payment of all sums outstanding under any Loan Document, that Borrower will:
4.1 MAINTAIN:
(a) Working Capital equal to at least $ N/A . As used herein.
"Working Capital" means the excess of current assets over current
liabilities;
(b) A ratio of current assets to current liabilities of at least
1.25 :1.00;
(c) A quick ratio of cash, accounts receivable and marketable
securities to current liabilities of at least N/A :1.00;
(d) Tangible Net Worth of at least $25,000,000.00 (As used herein
"Tangible Net Worth" means net worth increased by indebtedness of
Borrower subordinated to Bank or junior in payment to Bank debt and
decreased by patents, licenses, trademarks, trade names, goodwill
and other similar intangible assets, including capitalized software
costs, organizational expenses, and monies due from affiliates
including officers, shareholders and directors);
(e) A ratio of total liabilities to Tangible Net Worth of not
greater than 1.75:1.00 (As used herein "Total Liabilities" means
gross liabilities as per GAAP less any indebtedness of Borrower
subordinated to Bank or junior in payment to Bank debt. "Tangible
Net Worth" means net worth increased by indebtedness of Borrower
subordinated to Bank or junior in payment to Bank debt and
decreased by patents, licenses, trademarks, trade names, goodwill
and similar other intangible assets including capitalized software
costs, organizational expenses and monies due from affiliates
(including officers, shareholders and directors);
(f) A profit after taxes of not less than $ N/A , to be measured
as of the end of each fiscal N/A of Borrower for the N/A period
immediately preceding the date of measurement;
(g) A ratio of Cash Flow to Debt Service of at lease N/A :1.00.
Compliance with this subsection to be measured as of the end of
each fiscal N/A of Borrower. (As used herein, "Cash Flow" means net
profit after taxes, to which depreciation, amortization and other
non-cash expenses are added for the N/A month period immediately
preceding the date of calculation, and "Debt Service" means that
portion of long-term liabilities and capital leases coming due
within ___ months after the date of calculation); and
(h) No operating losses for any two (2) consecutive quarters.
All accounting terms used in this Agreement shall have the definitions given
them by generally accepted accounting principles, unless otherwise defined
herein.
4.2 Give written notice to Bank within 15 days of the following:
(a) Any litigation or arbitration proceeding affecting Borrower
where the amount in controversy is $ N/A or more;
(b) Any material dispute which may exist between Borrower and any
government regulatory body or law enforcement body;
(c) Any Event of Default of any event which, upon notice, or lapse
of time, or both, would become an Event of Default;
(d) Any other matter which has resulted or is likely to result in
a material adverse change in Borrower's financial condition or
operation; and
(e) Any change in Borrower's name or the location of Borrower's
principal place of business, or the location of any collateral for
the Loan, or the establishment of any new place of business or the
discontinuance of any existing place of business.
4.3 Furnish to Bank an income statement, balance sheet, and statement of
retained earnings, with supportive schedules ("Financial Statement"),
and any other financial information requested by Bank, prepared in
accordance with generally accepted accounting principles and in a form
satisfactory to Bank as follows:
(a) Within 45 days after the close of each quarter, except for the
final (month/quarter) of each fiscal year, Borrower's Financial
Statement as of the close of such period;
(b) Within 120 days after the close of each fiscal year, a copy of
Borrower's annual Financial Statement prepared by a certified
public accountant on an audited basis. Any independent certified
public accountant who prepares Borrower's Financial Statement shall
be selected by Borrower and reasonably satisfactory to Bank;
(c) Within N/A days after the close of each fiscal year, a copy of
each guarantor's annual Financial Statement;
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(d) If any portion of the Loan is a Borrowing Base Loan, within
N/A days after each calendar month end, a copy of Borrower's
monthly accounts receivable and accounts payable agings, and a
certification of compliance with the borrowing base in the
Borrowing Base Addendum attached hereto, executed by Borrower,
which certificate shall accurately report Borrower's Accounts,
Eligible Accounts, Inventory, and Eligible Inventory; and
(e) Promptly upon request, any other financial information
requested by Bank.
4.4 Furnish to Bank, on Bank's request, a copy of Borrower's and each
guarantor's most recently filed federal income tax return with all
accompanying schedules.
4.5 Pay or reimburse Bank for all costs, expenses and fees incurred by
Bank in preparing and documenting this Agreement and the Loan and all
amendments and modifications thereof, including but not limited to all
filing and recording fees, costs of appraisals, insurance and attorney's
fees, including the reasonable estimate of the allocated costs and
expenses of in-house legal counsel and staff.
4.6 Maintain and preserve Borrower's existence, present form of
business and all rights, privileges and franchises necessary or
desirable in the normal course of its business, and keep all of
Borrower's properties in good working order and condition.
4.7 Maintain and keep in force insurance with companies acceptable to
Bank and in such amounts and types, including without limitation fire
and public liability insurance, as is usual in the business carried on
by Borrower, or as Bank may reasonably request. Such insurance polices
must be in form and substance satisfactory to Bank.
4.8 Maintain adequate books, accounts and records and prepare all
financial statements required hereunder in accordance with generally
accepted accounting principles, and in compliance with the regulations
of any governmental regulatory body having jurisdiction over Borrower or
Borrower's business and permit employees or agents of Bank at any
reasonable time to inspect Borrower's assets and properties, and to
examine or audit Borrower's books, accounts and records and make copies
and memoranda thereof.
4.9 At all times comply with, or cause to be complied with, all laws,
statutes, rules, regulations, orders and directions of any governmental
authority having jurisdiction over Borrower or Borrower's business, and
all material agreements to which Borrower is a party.
4.10 Except as provided in this Agreement, or in the ordinary course of
its business as currently conducted, not make any loans or advances,
become a guarantor or surety, pledge its credit or properties in any
manner, or extend credit.
4.11 Not purchase the debt or equity of another person or entity except
for savings accounts and certificates of deposit of Bank, direct U.S.
Government obligations and commercial paper issued by corporations with
top ratings of Moody's or Standard & Poor's, provided that all such
permitted investments shall mature within one year of purchase.
4.12 Not create, assume or suffer to exist any mortgage, encumbrance,
security interest, pledge or lien ("Lien") on Borrower's real or
personal property, whether now owned or hereafter acquired, or upon the
income or profits thereof except the following: (a) Liens in favor of
Bank, (b) Liens for taxes or other items not delinquent or contested in
good faith, or (c) other Liens which do not exceed in the aggregate
$ N/A at any one time.
4.13 Not sell or discount any account receivable or evidence of
indebtedness, except to Bank, not borrow any money or become
contingently liable for money borrowed, except pursuant to agreements
made with Bank.
4.14 Neither liquidate, dissolve, enter into any consolidation, merger,
partnership, or other combination; nor convey, sell or lease all or the
greater part of its assets or business; nor purchase or lease all or the
greater part of the assets or business of another.
4.15 Not engage in any business activities or operations substantially
different from or unrelated to present business activities and
operations.
4.16 Not, in any single fiscal year of Borrower, expand or incur
obligations of more than $ N/A.
4.17 Not, in any single fiscal year of Borrower, enter into any lease of
real or personal property which would cause Borrower's aggregate annual
obligations under all such real and personal property leases to exceed
$ N/A.
4.18 Borrower will promptly, upon demand by Bank, take such further
action and execute all such additional documents and instruments in
connection with this Agreement as Bank in its reasonable discretion
deems necessary, and promptly supply Bank with such other information
concerning its affairs as Bank may request from time to time.
5. EVENTS OF DEFAULT. The occurrence of any of the following events ("Events
of Default") shall terminate any obligation on the part of Bank to make or
continue the Loan and automatically, unless otherwise provided under the Loan
Documents, shall make all sums of interest and principal and any other
amounts owing under the Loan immediately due and payable, without notice of
default, presentment or demand for payment, protest or notice of nonpayment
or dishonor, or any other notices or demands:
5.1 Borrower shall default in the due and punctual payment of the
principal of or the interest on the Note or any of the Loan Documents;
5.2 Any default shall occur under the Note;
5.3 Borrower shall default in the due performance or observance of any
covenant or condition of the Loan Document;
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5.4 Any guaranty or subordination agreement required hereunder is
breached or becomes ineffective, or any guarantor or subordinating
creditor dies or disavows or attempts to revoke or terminate such
guaranty or subordination agreement; or
6. MISCELLANEOUS.
6.1 The rights, powers and remedies given to Bank hereunder shall be
cumulative and not alternative and shall be in addition to all rights,
powers, and remedies given to Bank by law against Borrower or any other
person, including but not limited to Bank's rights of setoff or banker's
lien.
6.2 Any forbearance or failure or delay by Bank in exercising any
right, power or remedy hereunder shall not be deemed a waiver thereof
and any single or partial exercise of any right, power or remedy shall
not preclude the further exercise thereof. No waiver shall be effective
unless it is in writing and signed by an officer of Bank.
6.3 The benefits of this Agreement shall inure to the successors and
assigns of Bank and the permitted successors and assignees of Borrower,
and any assignment by Borrower without Bank's consent shall be null and
void.
6.4 This Agreement and all other agreements and instruments required by
Bank in connection herewith shall be governed by and construed according
to the laws of the State of California.
6.5 Should any one or more provisions of this Agreement be determined to
be illegal or unenforceable, all other provisions nevertheless shall be
effective. In the event of any conflict between the provisions of this
Agreement and the provisions of any note or reimbursement agreement
evidencing any indebtedness hereunder, the provisions of such note or
reimbursement agreement shall prevail.
6.6 Except for documents and instruments specifically referenced
herein, this Agreement constitutes the entire agreement between Bank and
Borrower regarding the Loan and and all prior communications, verbal or
written, between Borrower and Bank shall be of no further effect or
evidentiary value.
6.7 The section and subsection headings herein are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
6.8 This Agreement may be amended only in writing signed by all parties
hereto.
6.9 Borrower and Bank may execute one or more counterparts to this
Agreement, each of which shall be deemed an original, but taken together
shall be one and the same instrument.
6.10 Any notices or other communications provided for or allowed
hereunder shall be effective only when given by one of the following
methods and addressed to the respective party at its address given with
the signatures at the end of this Agreement and shall be considered to
have been validly given: (a) upon delivery, if delivered personally;
(b) upon receipt, if mailed, first class postage prepaid, with the
United States Postal Service; (c) on the next business day if sent by
overnight courier service of recognized standing; and (d) upon
telephoned confirmation of receipt, if telecopied.
7. ADDITIONAL PROVISIONS. The following additional provision, if any,
are hereby made part of this Agreement:
The following additional provisions, if any, are hereby made a part of this
Agreement:
7.1 Borrower shall pay to Bank a non-refundable fee to be payable in
arrears on the last day of each calendar quarter and on maturity date,
and to be computed at a rate per annum equal to 1.25% on the average
daily unused amount on this line of credit during such quarter.
7.2 If anything within this agreement is in conflict with any prior
agreement with Borrower or any Guarantor, then this agreement
supersedes such prior agreement(s).
THIS AGREEMENT is executed on behalf of the parties as of October 4, 1996.
Union Bank of California, N.A. ("Bank") The XxxXxxx Xxxxxxxxxx Corporation ("Borrower)
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxx
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Xxxxx Xxxxxx Title: President & CEO
Title: Vice President
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Address where notices to Bank are to be sent: Address where notices to Borrower are to be sent:
Los Angeles Headquarters Banking Office The XxxXxxx Xxxxxxxxxx Corp.
000 Xxxxx Xxxxxxxx Xxxxxx 000 X. Xxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx Attn: Xxxxxx X. Xxxxx, President
Fax Number: (000) 000-0000 Fax Number: (000) 000-0000
Telephone No.: (000) 000-0000 Telephone No.: (000) 000-0000
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FIRST AMENDMENT
TO THE BUSINESS LOAN AGREEMENT
THIS FIRST AMENDMENT TO THE BUSINESS LOAN AGREEMENT [this "First Amendment"]
dated as of February 21, 1997, is made and entered into by and between THE
XXXXXXX-XXXXXXXXXX CORPORATION, a Delaware Corporation ("Borrower"), and
UNION BANK OF CALIFORNIA, N.A. ("Bank").
RECITALS:
A. Borrower and Bank are parties to that certain Business Loan Agreement
dated October 4, 1996, (the "Agreement"), pursuant to which Bank agreed to
extend credit to borrower.
B. Borrower and Bank desire to amend the Agreement subject to the terms and
conditions of this First Amendment.
AGREEMENT
In consideration of the above recitals and of the mutual covenants and
conditions contained herein, Borrower and Bank agree as follows:
1. DEFINED TERMS. Initially capitalized terms used herein which are not
otherwise defined shall have the meanings assigned thereto in the Agreement.
2. AMENDMENTS TO THE AGREEMENT.
(a) Section 1.4 Fee of the Agreement is hereby amended by substituting
"The borrower shall pay to Bank a non-refundable commitment fee of .15%,
payable up-front."
(b) Section 4.1(b) A ratio of current assets to current liabilities of
the Agreement is hereby amended by substituting the rate of "N/A:1.0" for the
rate of "1.25:1.00."
(c) Section 4.1(c) A quick ratio of the Agreement is hereby amended by
substituting the ratio of "1.25:1.00" for the ratio "N/A:1.00";
(d) Section 4.1(d) Tangible net Worth of the Agreement is hereby
amended by substituting "at least $25,000,000.00 on January 31, 1997 to be
increased annually by 40% of each year's net income" for "at least
$25,000,000.00."
(e) Section 4.1(e) A ratio of total liabilities to Tangible Net Worth
of the Agreement is hereby amended by substituting the ratio of "2.25:1.00"
for the ratio "1.75:1.00"
(f) Section 4.12(c) of the Agreement is hereby amended by substituting
"(c) equipment leases in the normal course of business" for "(c) other Liens
which do not exceed in the aggregate $N/A at any one time."
(g) Section 4.14 of the Agreement is hereby amended in its entirety as
follows: "Neither liquidate, dissolve, enter into any consolidation, merger,
partnership, or other combination; nor convey, sell or lease all or the
greater part of its assets or business."
(h) Section 4.19 of the Agreement is hereby added in its entirety as
follows: "Not use any portion of the Loan for hostile or unfriendly
acquisition of another company or its operations.
(i) Section 4.20 of the Agreement is hereby added in its entirety as
follows: "On any acquisition over $3,000,000.00, a pro-forma compliance
certificate will be provided to Bank before the acquisition is finalized
certifying that the acquisition will not cause a default under the existing
covenants and that it complies to all Bank requirements.
(j) Section 7.1 Rate per annum of the Agreement is hereby amended by
substituting ".30%" for "1.25%."
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3. This FIRST Amendment shall become effective as of the date hereof
when, and only when, Bank shall have received all of the following, in form
and substance satisfactory to Bank:
(a) The counterpart of this FIRST Amendment, duly executed by
Borrower;
(b) The $15,000,000.00 Note, duly executed by Borrower;
(c) The $22,500.00 fee in connection with this FIRST Amendment; and,
(d) Such other documents, instruments or agreements as Bank may
reasonably deem necessary.
4. RATIFICATION. Except as specifically amended hereinabove, the
Agreement shall remain in full force and effect and is hereby ratified and
confirmed.
5. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as
follows:
(a) Each of the representations and warranties contained in the
Agreement, as may be amended hereby, is hereby reaffirmed as of the
date hereof, each as if set forth herein;
(b) The execution, delivery and performance of the FIRST Amendment
and any other instruments or documents in connection herewith are
within Borrower's power, have been duly authorized, are legal, valid
and binding obligations of Borrower, and are not in conflict with the
terms of any charter, bylaw, or other organization papers of Borrower
or with any law, indenture, agreement or undertaking to which Borrower
is a party or by which Borrower is bound or affected;
(c) No event has occurred and is continuing or would result from
this FIRST Amendment which constitutes or would constitute an Event of
Default under the Agreement.
6. GOVERNING LAW. This FIRST Amendment and all other instruments or
documents in connection herewith shall be governed by and construed according
to the laws of the State of California.
7. COUNTERPARTS. This FIRST Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
WITNESS the due execution hereof as of the date first above written.
THE XXXXXXX-XXXXXXXXXX CORPORATION UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx Xxxxxx
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Title: CFO Title: VP
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UNION
BANK OF
CALIFORNIA
SECOND AMENDMENT
TO THE BUSINESS LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (this "Second Amendment") dated as of
April 21, 1998, is made and entered into by and between THE
XXXXXXX-XXXXXXXXXX CORPORATION, a Delaware Corporation ("Borrower"), and
UNION BANK OF CALIFORNIA, N.A. ("Bank").
RECITALS:
A. Borrower and Bank are parties to that certain Business Loan Agreement
dated October 4, 1996 (the "Agreement") and that certain First Amendment
dated February 21, 1997 (the "First Amendment"), pursuant to which Bank
agreed to extend credit to Borrower.
B. Borrower and Bank desire to amend the Agreement subject to the terms and
conditions of this Second Amendment.
AGREEMENT:
In consideration of the above recitals and of the mutual covenants and
conditions contained herein, Borrower and Bank agree as follows:
1. DEFINED TERMS. Initially capitalized terms used herein which are not
otherwise defined shall have the meanings assigned thereto in the Agreement.
2. AMENDMENTS TO THE AGREEMENT.
(a)Section 4.1(d) Tangible Net Worth of the Agreement is hereby amended
by substituting "at least $30,000,000 on January 31, 1998 to be increased
annually by 40% of each year's net income" for "at least $25,000,000 on
January 31, 1997 to be increased annually by 40% of each year's net income."
3. EFFECTIVENESS OF THE SECOND AMENDMENT. This SECOND Amendment shall
become effective as of the date hereof when, and only when, Bank shall have
received all of the following, in form and substance satisfactory to Bank:
(a) The counterpart of this SECOND Amendment, duly executed by Borrower;
(b) The $15,000,000 Note, duly executed by Borrower;
(c) The $22,500 fee in connection with this SECOND Amendment; and,
(d) Such other documents, instruments or agreements as Bank may
reasonably deem necessary.
4. RATIFICATION. Except as specifically amended hereinabove, the Agreement
shall remain in full force and effect and is hereby ratified and confirmed.
5. REPRESENTATION AND WARRANTIES. Borrower represents and warrants as
follows:
(a) Each of the representations and warranties contained in the
Agreement, as may be amended hereby, is hereby reaffirmed as of the date
hereof, each as if set forth herein;
(b) The execution, delivery and performance of the SECOND Amendment and
any other instruments or documents in connection herewith are within
Borrower's power, have been duly authorized, are legal, valid and binding
obligations of Borrower, and are not in conflict with the terms of any
charter, bylaw, or other organization papers of Borrower or with any law,
indenture, agreement or undertaking to which Borrower is a party or by which
Borrower is bound or affected;
(c) No event has occurred and is continuing or would result from this
SECOND Amendment which constitutes or would constitute an Event of Default
under the Agreement.
6. GOVERNING LAW. This SECOND Amendment and all other instruments or
documents in connection herewith shall be governed by and construed according
to the laws of the State of California.
7. COUNTERPARTS. This SECOND Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
WITNESS the due execution hereof as of the date first above written.
THE XXXXXXX-XXXXXXXXXX CORPORATION UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxxx X. Xxxxx By: [ILLEGIBLE]
------------------------------ --------------------------
Title: President Title: Vice President
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UNION
BANK OF
CALIFORNIA
PROMISSORY NOTE
(BASE RATE)
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Borrower Name THE XXXXXXX-XXXXXXXXXX CORPORATION
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Borrower Address Office 21061 Loan Number 5624724538 0080-00-0-000
000 XXXXXXXX XXXX -------------------------------------------------------------
XXX XXXXXXX, XX 00000-0000 Maturity Date JULY 3, 2000 Amount $15,000,000.00
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$15,000,000.00 Date APRIL 6, 1998
FOR VALUE RECEIVED, on JULY 3, 2000, the undersigned ("Debtor") promises to
pay to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated
below, the principal sum of FIFTEEN MILLION AND NO/100 Dollars
($15,000,000.00), or so much thereof as is disbursed, together with interest
on the balance of such principal from time to time outstanding, at the per
annum rate or rates and at the times set forth below.
1. INTEREST PAYMENTS. Debtor shall pay interest on the 3RD day of each MONTH
(commencing MAY 3, 1998). Should interest not be paid when due, it shall
become part of the principal and bear interest as herein provided. All
computations of interest under this note shall be made on the basis of a year
of 360 days, for actual days elapsed.
a. BASE INTEREST RATE. At Debtor's option, amounts outstanding hereunder
in minimum amounts of at least $100,000.00 shall bear interest at a rate,
based on an index selected by Debtor, which is 1.90% per annum in excess of
Bank's LIBOR-Rate for the Interest Period selected by Debtor, acceptable to
Bank.
No Base Interest Rate may be changed, altered or otherwise modified
until the expiration of the Interest Period selected by Debtor. The
exercise of interest rate options by Debtor shall be as recorded in
Bank's records, which records shall be prima facie evidence of the
amount borrowed under either interest option and the interest rate;
provided, however, that failure of Bank to make any such notation in its
records shall not discharge Debtor from its obligations to repay in full
with interest all amounts borrowed. In no event shall any Interest
Period extend beyond the maturity date of this note.
To exercise this option, Debtor may, from time to time with respect
to principal outstanding on which a Base Interest Rate is not accruing,
and on the expiration of any Interest Period with respect to principal
outstanding on which a Base Interest Rate has been accruing, select an
index offered by Bank for a Base Interest Rate Loan and an Interest
Period by telephoning an authorized lending officer of Bank located at
the banking office identified below prior to 10:00 a.m., Pacific time,
on any Business Day and advising that officer of the selected index, the
Interest Period and the Origination Date selected (which Origination
Date, for a Base Interest Rate Loan based on the LIBOR-Rate, shall
follow the date of such selection by no more than two (2) Business
Days).
Bank will mail a written confirmation of the terms of the selection
to Debtor promptly after the selection is made. Failure to send such
confirmation shall not affect Bank's rights to collect interest at the
rate selected. If, on the date of the selection, the index selected is
unavailable for any reason, the selection shall be void. Bank reserves
the right to fund the principal from any source of funds notwithstanding
any Base Interest Rate selected by Debtor.
b. VARIABLE INTEREST RATE. All principal outstanding hereunder which
is not bearing interest at a Base Interest Rate shall bear interest at a
rate per annum equal to the Reference Rate, which rate shall vary as
and when the Reference Rate changes.
At any time prior to the maturity of this note, subject to the
provisions of paragraph 4, below, of this note, Debtor may borrow, repay
and reborrow hereon so long as the total outstanding at any one time
does not exceed the principal amount of this note. Debtor shall pay all
amounts due under this note in lawful money of the United States at
Bank's LOS ANGELES HEADQUARTERS COMMERCIAL BANKING Office, or such other
office as may be designated by Bank, from time to time.
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2. LATE PAYMENTS. If any payment required by the terms of this note shall
remain unpaid ten days after same is due, at the option of Bank, Debtor shall
pay a fee of $100 to Bank.
3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option
of Bank, and, to the extent permitted by law, interest shall be payable on
the outstanding principal under this note at a per annum rate equal to five
percent (5%) in excess of the interest rate specified in paragraph 1.b,
above, calculated from the date of default until all amounts payable under
this note are paid in full.
4. PREPAYMENT.
a. Amounts outstanding under this note bearing interest at a rate
based on the Reference Rate may be prepaid in whole or in part at any
time, without penalty or premium. Debtor may prepay amounts
outstanding under this note bearing interest at a Base Interest Rate
in whole or in part provided Debtor has given Bank not less than five
(5) Business Days prior written notice of Debtor's intention to make
such prepayment and pays to Bank the liquidated damages due as a
result. Liquidated Damages shall also be paid, if Bank, for any other
reason, including acceleration or foreclosure, receives all or any
portion of principal bearing interest at a Base Interest Rate prior
to its scheduled payment date. Liquidated Damages shall be an amount
equal to the present value of the product of: (i) the difference (but
not less than zero) between (a) the Base Interest Rate applicable to
the principal amount which is being prepaid, and (b) the return which
Bank could obtain if it used the amount of such prepayment of
principal to purchase at bid price regularly quoted securities issued
by the United States having a maturity date most closely coinciding
with the relevant Base Rate Maturity Date and such securities were
held by Bank until the relevant Base Rate Maturity Date ("Yield
Rate"); (ii) a fraction, the numerator of which is the number of days
in the period between the date of prepayment and the relevant Base
Rate Maturity Date and the denominator of which is 360; and (iii) the
amount of the principal so prepaid (except in the event that
principal payment are required and have been made as scheduled under
the terms of the Base Interest Rate Loan being prepaid, then an
amount equal to the lesser of (A) the amount prepaid or (B) 50% of
the sum of (1) the amount prepaid and (2) the amount of principal
scheduled under the terms of the Base Interest Rate Loan being
prepaid to be outstanding at the relevant Base Rate Maturity Date).
Present value under this note is determined by discounting the above
product to present value using the Yield Rate as the annual discount
factor.
b. In no event shall Bank be obligated to make any payment or refund
to Debtor, nor shall Debtor be entitled to any setoff or other claim
against Bank, should the return which Bank could obtain under this
prepayment formula exceed the interest that Bank would have received
if no prepayment had occurred. All prepayments shall include payment
of accrued interest on the principal amount so prepaid and shall be
applied to payment of interest before application to principal. A
determination by Bank as to the prepayment fee amount, if any, shall
be conclusive.
c. Bank shall provide Debtor a statement of the amount payable on
account of prepayment. Debtor acknowledges that (i) Bank establishes
a Base Interest Rate upon the understanding that it apply to the Base
Interest Rate Loan for the entire Interest Period, and (ii) any
prepayment may result in Bank incurring additional costs, expenses or
liabilities; and Debtor agrees to pay these liquidated damages as a
reasonable estimate of the costs, expenses and liabilities of Bank
associated with such prepayment.
5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but
not be limited to, any of the following: (a) the failure of Debtor to make
any payment required under this note when due; (b) any breach,
misrepresentation or other default by Debtor, any guarantor, co-maker,
endorser, or any person or entity other than Debtor providing security for
this note (hereinafter individually and collectively referred to as the
"Obligor") under any security agreement, guaranty or other agreement between
Bank and any Obligor; (c) the insolvency of any Obligor or the failure of any
Obligor generally to pay such Obligor's debts as such debts become due; (d)
the commencement as to any Obligor of any voluntary or involuntary proceeding
under any laws relating to bankruptcy, insolvency, reorganization,
arrangement, debt adjustment or debtor relief; (e) the assignment by any
Obligor for the benefit of such Obligor's creditors; (f) the appointment, or
commencement of any proceeding for the appointment of a receiver, trustee,
custodian or similar official for all or substantially all of any Obligor's
property; (g) the commencement of any proceeding for the dissolution or
liquidation of any Obligor; (h) the termination of existence or death of any
Obligor; (i) the revocation of any guaranty or subordination agreement given
in connection with this note; (j) the failure of any Obligor to comply with
any order, judgement, injunction, decree, writ or demand of any court or
other public authority; (k) the filing or recording against any Obligor, or
the property of any Obligor, of any notice of levy, notice to withhold, or
other legal process for taxes other than property taxes; (l) the default by
any Obligor personally liable for amounts owed hereunder on any obligation
concerning the borrowing of money; (m) the issuance against any Obligor, or
the property of any Obligor, of any writ of attachment, execution, or other
judicial lien; or (n) the deterioration of the financial condition of any
Obligor which results in Bank deeming itself, in good faith, insecure. Upon
the occurrence of any such default, Bank, in its discretion, may cease to
advance funds hereunder and may declare all obligations under this note
immediately due and payable; however, upon the occurrence of an event of
default under d, e, f, or g, all principal and interest shall automatically
become immediately due and payable.
6. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note
are not paid when due, Debtor promises to pay all costs and expenses,
including reasonable attorneys' fees, incurred by Bank in the collection or
enforcement of this note. Debtor and any endorsers of this note, for the
maximum period of time and the full extent permitted by law, (a) waive
diligence, presentment, demand, notice of nonpayment, protest, notice of
protest, and notice of every kind; (b) waive the right to assert the defense
of any statute of limitations to any debt or obligation hereunder; and (c)
consent to renewals and extensions of time for the payment of any amounts
due under this note. If this note is signed by more than one party, the term
"Debtor" includes each of the undersigned and any successors in interest
thereof; all of whose liability shall be joint and several. Any married
person who signs this note agrees that recourse may be had against the
separate property of that person for any obligations hereunder. The receipt
of any check or other item of payment by Bank, at its option, shall not be
consent a payment on account until such check or other item of payment is
honored when presented for payment at the drawee bank. Bank may delay the
credit of such payment based upon Bank's schedule of funds availability, and
interest under this note shall accrue until the funds are deemed collected.
In any action brought under or arising out of this note, Debtor and any
Obligor, including their successors and assigns, hereby consent to the
jurisdiction of any competent court within the State of
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California, as provided in any alternative dispute resolution agreement
executed between Debtor and Bank, and consent to service of process by any
means authorized by said state's law. The term "Bank" includes, without
limitation, any holder of this note. This note shall be construed in
accordance with and governed by the laws of the State of California. This
note hereby incorporates any alternative dispute resolution agreement
previously, concurrently or hereafter executed between Debtor and Bank.
7. DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below: "BASE INTEREST RATE" means a rate of interest
based on the LIBOR-Rate. "BASE INTEREST RATE LOAN" means amounts outstanding
under this note that bear interest at a Base Interest Rate. "BASE RATE
MATURITY DATE" means the last day of the Interest Period with respect to
principal outstanding under a Base Interest Rate Loan. "BUSINESS DAY" means a
day on which bank is open for business for the funding of corporate loans,
and, with respect to the rate of interest based on the LIBOR Rate, on which
dealings in U.S. dollar deposits outside of the United States may be carried
on by Bank. "INTEREST PERIOD" means with respect to funds bearing interest
at a rate based on the LIBOR Rate, any calendar period of one, three, six,
nine or twelve months. In determining an Interest Period, a month means a
period that starts on one Business Day in a month and ends on and includes the
day preceding the numerically corresponding day in the next month. For any
month in which there is no such numerically corresponding day, then as to
that month, such day shall be deemed to be the last calendar day of such
month. Any Interest Period which would otherwise and on a non-Business Day
shall end on the next succeeding Business Day unless that is the first day of
a month, in which event such Interest Period shall end on the next preceding
Business Day. "LIBOR RATE" means a per annum rate of interest (rounded
upward, if necessary, to the nearest 1/100 of 1%) at which dollar deposits, in
immediately available funds and in lawful money of the United States would be
offered to Bank, outside of the United States, for a term coinciding with the
Interest Period selected by debtor and for an amount equal to the amount of
principal covered by Debtor's interest rate selection, plus Bank's costs,
including the costs, if any, of reserve requirements. "ORIGINATION DATE"
means the first day of the Interest Period. "REFERENCE RATE" means the rate
announced by Bank from time to time at its corporate headquarters as its
Reference Rate. The Reference Rate is an index rate determined by Bank from
time to time as a means of pricing certain extensions of credit and is
neither directly tied to any external rate of interest or index nor
necessarily the lowest rate of interest charged by Bank at any given time.
THE XXXXXXX XXXXXXXXXX CORPORATION
By /s/ Xxxxxx X. Xxxxx
-------------------------------
Title President
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