EXHIBIT 10.4
2006 TERM NOTE
$1,500,000 Rockville, Maryland
_____ __, 2006
FOR VALUE RECEIVED, ARGAN, INC., a corporation organized under the laws of
the State of Delaware ("Argan"), SOUTHERN MARYLAND CABLE, INC., a corporation
organized under the laws of the State of Delaware ("SMC") and VITARICH
LABORATORIES, INC., a corporation organized under the laws of the State of
Delaware ("Vitarich"), jointly and severally (each of Argan, SMC and Vitarich, a
"Borrower"; Argan, SMC and Vitarich, collectively, the "Borrowers"); promise to
pay to the order of BANK OF AMERICA, N.A., a national banking association, its
successors and assigns (the "Lender"), the principal sum of ONE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($1,500,000) (the "Principal Sum"), or so much thereof
as has been or may be advanced to or for the account of the Borrowers pursuant
to the terms and conditions of the Financing Agreement (as hereinafter defined),
together with interest thereon at the rate or rates hereinafter provided, in
accordance with the following:
1. Interest.
Commencing as of the date hereof and continuing until repayment in full of
all sums due hereunder, the unpaid Principal Sum shall bear interest at the
LIBOR Rate, plus three hundred twenty five (325) basis points per annum. For
purposes hereof, the "LIBOR Rate" shall mean a daily fluctuating rate equal to
the one (1) month rate of interest (rounded upwards, if necessary to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the one
(1) month London interbank offered rate for deposits in U.S. Dollars at
approximately 11:00 A.M. (London, time), on the second preceding business day,
as adjusted from time to time in the Lender's sole discretion for
then-applicable reserve requirements, deposits insurance assessment rates and
other regulatory costs. If for any reason such rate is not available, the term
"LIBOR Rate" shall mean the fluctuating rate of interest equal to the one (1)
month rate of interest (rounded upwards, if necessary to the nearest 1/100 of
1%) appearing on Reuters Screen LIBO Page as the one (1) month London interbank
offered rate for deposits in U.S. Dollars at approximately 11:00 a.m. (London
Time) on the second preceding business day, as adjusted from time to time for
then-applicable reserve requirements, deposit insurance assessment rates and
other regulatory costs; provided, however, if more than one rate is specified on
Reuters Screen LIBO page, the applicable rate shall be the arithmetic mean of
all such rates.
The rate of interest charged under this Note shall change immediately and
contemporaneously with any change in the LIBOR Rate. All interest payable under
the terms of this Note shall be calculated on the basis of a 360-day year and
the actual number of days elapsed.
2. Payments and Maturity.
The unpaid Principal Sum, together with interest thereon at the rate or
rates provided above, shall be payable as follows:
(a) The unpaid Principal Sum together with interest shall be due and
payable in thirty-five (35) monthly installments of principal each in the amount
of $41,667.67 plus accrued and unpaid interest, commencing _____ __, 2006, and
on the last day of each month thereafter to maturity;
(b) Unless sooner paid, the unpaid Principal Sum, together with
interest accrued and unpaid thereon, shall be due and payable in full on ______
__, 2009.
Borrower hereby authorizes Lender to automatically deduct from Borrower's
account numbered 003939628068 the amount of each payment of principal (including
without limitation the principal payment due on the final maturity date) and/or
interest on the dates such payments become due. If the funds in the account are
insufficient to cover any payment, Lender shall not be obligated to advance
funds to cover the payment. At any time and for any reason, Borrower or Lender
may voluntarily terminate automatic payments as provided in this paragraph.
3. Default Interest.
Upon the occurrence of an Event of Default (as hereinafter defined), the
unpaid Principal Sum shall bear interest thereafter at the LIBOR Rate plus four
percent (4.00%) (the "Post-Default Rate") per annum until such Event of Default
is cured.
4. Late Charges.
If the Borrowers shall fail to make any payment under the terms of this
Note within ten (10) days after the date such payment is due, the Borrowers
shall pay to the Lender on demand a late charge equal to five percent (5.00%) of
such payment.
5. Application and Place of Payments.
All payments, made on account of this Note shall be applied first to the
payment of accrued and unpaid interest then due hereunder, and the remainder, if
any, shall be applied to the unpaid Principal Sum. All payments on account of
this Note shall be paid in lawful money of the United States of America in
immediately available funds during regular business hours of the Lender at its
principal office in Rockville, Maryland or at such other times and places as the
Lender may at any time and from time to time designate in writing to the
Borrowers.
6. Prepayment.
The Borrowers may prepay the Principal Sum in whole or in part upon five
(5) days prior written notice to the Lender without premium or penalty.
7. Financing Agreement and Other Financing Documents.
This Note is the "2006 Term Note" described in the Amended and Restated
Financing and Security Agreement of even date herewith by and among the
Borrowers and the Lender (as amended, modified, restated, substituted, extended
and renewed at any time and from time to time, the "Financing Agreement"). The
indebtedness evidenced by this Note is included within the meaning of the term
"Obligations" as defined in the Financing Agreement. The term "Financing
Documents" as used in this Note shall mean collectively this Note, the Revolving
Credit Note, the Term Note, the Financing Agreement and any other instrument,
agreement, or document previously, simultaneously, or hereafter executed and
delivered by any Borrower and/or any other Person, singularly or jointly with
any other Person, evidencing, securing, guaranteeing, or in connection with the
Principal Sum, this Note, the Term Note and/or the Financing Agreement.
2
8. Security.
This Note is secured as provided in the Financing Agreement.
9. Events of Default.
The occurrence of any one or more of the following events shall constitute
an event of default (individually, an "Event of Default" and collectively, the
"Events of Default") under the terms of this Note:
(a) The failure of any Borrower to pay to the Lender within five (5)
days of when due any and all amounts payable by any Borrower to the Lender under
the terms of this Note; or
(b) The occurrence of an Event of Default (as defined therein) under
the terms and conditions of any of the other Financing Documents.
10. Remedies.
Upon the occurrence of an Event of Default, at the option of the Lender,
all amounts payable by the Borrowers to the Lender under the terms of this Note
shall immediately become due and payable by the Borrowers to the Lender without
notice to the Borrowers or any other Person, and the Lender shall have all of
the rights, powers, and remedies available under the terms of this Note, any of
the other Financing Documents and all applicable laws. The Borrowers and all
endorsers, guarantors, and other parties who may now or in the future be
primarily or secondarily liable for the payment of the indebtedness evidenced by
this Note hereby severally waive presentment, protest and demand, notice of
protest, notice of demand and of dishonor and non-payment of this Note and
expressly agree that this Note or any payment hereunder may be extended from
time to time without in any way affecting the liability of the Borrowers,
guarantors and endorsers.
11. Confessed Judgment.
Upon the occurrence of an Event of Default, each Borrower hereby
authorizes any attorney designated by the Lender or any clerk of any court of
record to appear for the Borrowers in any court of record and confess judgment
without prior hearing against the Borrowers in favor of the Lender for and in
the amount of the unpaid Principal Sum, all interest accrued and unpaid thereon,
all other amounts payable by any Borrower to the Lender under the terms of this
Note or any of the other Financing Documents, costs of suit, and attorneys' fees
of fifteen percent (15%) of the unpaid Principal Xxx and interest then due
hereunder. By its acceptance of this Note, the Lender agrees that in the event
the Lender exercises at any time its right to confess judgment under this Note,
the Lender shall use its best efforts to obtain legal counsel who will charge
the Lender for its services on an hourly basis, at its customary hourly rates
and only for the time and reasonable expenses incurred. In no event shall the
Lender enforce the legal fees portion of a confessed judgment award for an
amount in excess of the fees and expenses actually charged to the Lender for
services rendered by its counsel in connection with such confession of judgment
and/or the collection of sums owed to the Lender. In the event the Lender
receives, through execution upon a confessed judgment, payments on account of
attorneys' fees in excess of such actual attorneys' fees and expenses incurred
by the Lender, then, after full repayment and satisfaction of all of the
obligations under and in connection with this Note, the Financing Agreement and
all of the other Financing Documents, the Lender shall refund such excess amount
to the Borrowers. Each Borrower hereby releases, to the extent permitted by
applicable law, all errors and all rights of exemption, appeal, stay of
execution, inquisition, and other rights to which any Borrower may otherwise be
entitled under the laws of the United States of America or of any state or
possession of the United States of America now in force or which may hereafter
be enacted. The authority and power to appear for and enter judgment against the
Borrowers shall not be exhausted by one or more exercises thereof or by any
imperfect exercise thereof and shall not be extinguished by any judgment entered
pursuant thereto. Such authority may be exercised on one or more occasions or
from time to time in the same or different jurisdictions as often as the Lender
shall deem necessary or desirable, for all of which this Note shall be a
sufficient warrant.
3
12. Expenses.
Each Borrower promises to pay to the Lender on demand by the Lender all
costs and expenses incurred by the Lender in connection with the collection and
enforcement of this Note, including, without limitation, reasonable attorneys'
fees and expenses and all court costs.
13. Notices.
Any notice, request, or demand to or upon the Borrowers or the Lender
shall be deemed to have been properly given or made when delivered in accordance
with Section 8.1 of the Financing Agreement.
14. Miscellaneous.
Each right, power, and remedy of the Lender as provided for in this Note
or any of the other Financing Documents, or now or hereafter existing under any
applicable law or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power, or remedy provided for in this Note or any
of the other Financing Documents or now or hereafter existing under any
applicable law, and the exercise or beginning of the exercise by the Lender of
any one or more of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by the Lender of any or all such other rights,
powers, or remedies. No failure or delay by the Lender to insist upon the strict
performance of any term, condition, covenant, or agreement of this Note or any
of the other Financing Documents, or to exercise any right, power, or remedy
consequent upon a breach thereof, shall constitute a waiver of any such term,
condition, covenant, or agreement or of any such breach, or preclude the Lender
from exercising any such right, power, or remedy at a later time or times. By
accepting payment after the due date of any amount payable under the terms of
this Note, the Lender shall not be deemed to waive the right either to require
prompt payment when due of all other amounts payable under the terms of this
Note or to declare an Event of Default for the failure to effect such prompt
payment of any such other amount. No course of dealing or conduct shall be
effective to amend, modify, waive, release, or change any provisions of this
Note.
4
Until such time as the Lender is not committed to extend further credit to
the Borrowers and all Obligations of the Borrowers to the Lender have been
indefeasibly paid in full in cash, and subject to and not in limitation of the
provisions set forth in the next following paragraph below, no Borrower shall
have any right of subrogation (whether contractual, arising under the bankruptcy
code or otherwise), reimbursement or contribution from any Borrower or any
guarantor, nor any right of recourse to its security for any of the debts and
obligations of any Borrower which are the subject of this Note. Except as
otherwise expressly permitted by the Financing Agreement, any and all present
and future debts and obligations of any Borrower to any other Borrower are
hereby subordinated to the full payment and performance of all present and
future debts and obligations to the Lender under this Note and the Financing
Agreement and the Financing Documents, provided, however, notwithstanding
anything set forth in this Note to the contrary, prior to the occurrence of a
payment Default, the Borrowers shall be permitted to make payments on account of
any of such present and future debts and obligations from time to time in
accordance with the terms thereof.
Each Borrower further agrees that, if any payment made by any Borrower or
any other person is applied to this Note and is at any time annulled, set aside,
rescinded, invalidated, declared to be fraudulent or preferential or otherwise
required to be refunded or repaid, or the proceeds of any property hereafter
securing this Note is required to be returned by the Lender to any Borrower, its
estate, trustee, receiver or any other party, including, without limitation,
such Borrower, under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or repayment, such
Borrower's liability hereunder (and any lien, security interest or other
collateral securing such liability) shall be and remain in full force and
effect, as fully as if such payment had never been made, or, if prior thereto
any such lien, security interest or other collateral hereafter securing such
Borrower's liability hereunder shall have been released or terminated by virtue
of such cancellation or surrender, this Note (and such lien, security interest
or other collateral) shall be reinstated in full force and effect, and such
prior cancellation or surrender shall not diminish, release, discharge, impair
or otherwise affect the obligations of such Borrower in respect of the amount of
such payment (or any lien, security interest or other collateral securing such
obligation).
The JOINT AND SEVERAL obligations of each Borrower under this Note shall
be absolute, irrevocable and unconditional and shall remain in full force and
effect until the outstanding principal of and interest on this Note and all
other Obligations or amounts due hereunder and under the Financing Agreement and
the Financing Documents shall have been indefeasibly paid in full in cash in
accordance with the terms thereof and this Note shall have been canceled.
The Borrowers each shall be jointly and severally liable on the payment of
the Obligations as and when due and payable in accordance with the provisions of
this Note, the Financing Agreement and the other Financing Documents. The term
"Borrowers" when used in this Note shall include all of the Borrowers,
individually and jointly, and the Lender may (without notice to or consent of
any or all of the Borrowers and with or without consideration) release,
compromise, settle with, proceed against any or all of the Borrowers without
affecting, impairing, lessening or releasing the obligations of the other
Borrower hereunder.
5
15. Partial Invalidity.
In the event any provision of this Note (or any part of any provision) is
held by a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision (or remaining part of the affected
provision) of this Note; but this Note shall be construed as if such invalid,
illegal, or unenforceable provision (or part thereof) had not been contained in
this Note, but only to the extent it is invalid, illegal, or unenforceable.
16. Captions.
The captions herein set forth are for convenience only and shall not be
deemed to define, limit, or describe the scope or intent of this Note.
17. Applicable Law.
Each Borrower acknowledges and agrees that this Note shall be governed by
the laws of the State of Maryland, even though for the convenience and at the
request of the Borrowers, this Note may be executed elsewhere.
18. Consent to Jurisdiction.
Each Borrower irrevocably submits to the jurisdiction of any state or
federal court sitting in the State of Maryland over any suit, action, or
proceeding arising out of or relating to this Note or any of the other Financing
Documents. Each Borrower irrevocably waives, to the fullest extent permitted by
law, any objection that any Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and any
claim that any such suit, action, or proceeding brought in any such court has
been brought in an inconvenient forum. Final judgment in any such suit, action,
or proceeding brought in any such court shall be conclusive and binding upon the
Borrowers and may be enforced in any court in which any Borrower is subject to
jurisdiction by a suit upon such judgment, provided that service of process is
effected upon the Borrowers as provided in this Note or as otherwise permitted
by applicable law.
19. Service of Process.
Each Borrower hereby irrevocably designates and appoints CT Corporation,
Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, as
each Borrower's authorized agent to receive on each Borrower's behalf service of
any and all process that may be served in any suit, action, or proceeding
instituted in connection with this Note in any state or federal court sitting in
the State of Maryland. If such agent shall cease so to act, the Borrowers shall
irrevocably designate and appoint without delay another such agent in the State
of Maryland satisfactory to the Lender and shall promptly deliver to the Lender
evidence in writing of such agent's acceptance of such appointment and its
agreement that such appointment shall be irrevocable.
6
Each Borrower hereby consents to process being served in any suit, action,
or proceeding instituted in connection with this Note by (a) the mailing of a
copy thereof by certified mail, postage prepaid, return receipt requested, to
each Borrower and (b) serving a copy thereof upon the agent hereinabove
designated and appointed by each Borrower as each Borrower's agent for service
of process. Each Borrower irrevocably agrees that such service shall be deemed
in every respect effective service of process upon the Borrowers in any such
suit, action or proceeding, and shall, to the fullest extent permitted by law,
be taken and held to be valid personal service upon the Borrowers. Nothing in
this Section shall affect the right of the Lender to serve process in any manner
otherwise permitted by law or limit the right of the Lender otherwise to bring
proceedings against the Borrowers in the courts of any jurisdiction or
jurisdictions.
20. WAIVER OF TRIAL BY JURY.
EACH BORROWER AND THE LENDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH ANY BORROWER AND THE LENDER MAY BE PARTIES, ARISING OUT OF
OR IN ANY WAY PERTAINING TO (A) THIS NOTE OR (B) THE FINANCING DOCUMENTS. IT IS
AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF
ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS
AGAINST PARTIES WHO ARE NOT PARTIES TO THIS NOTE.
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY EACH BORROWER,
AND EACH BORROWER HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION
HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT. EACH BORROWER FURTHER REPRESENTS THAT IT
HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT
EACH HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
7
IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
under seal by their duly authorized officers as of the date first written above.
WITNESS/ATTEST: ARGAN, INC.
By: (Seal)
------------------------- ---------------------
Name:
Title:
WITNESS: SOUTHERN MARYLAND CABLE, INC.
By: (Seal)
------------------------- ---------------------
Name:
Title:
WITNESS/ATTEST: VITARICH LABORATORIES, INC.
By: (Seal)
------------------------- ---------------------
Name:
Title:
