EXHIBIT 10.79
SUBORDINATED DEMAND PROMISSORY NOTE
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U.S. $ 500,000.00 Mountain View, California
February 10, 1999
For Value Received, the undersigned INTELLISYS GROUP, INC. (the
"Borrower") promises to pay, on demand, to the order of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the
"Lender") at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at
such other places as may be designated by Lender (the "Note"), the principal
amount of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00).
The undersigned promises to pay interest on the principal amount
hereof remaining unpaid from time to time at the Applicable Rate.
APPLICABLE RATE:
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"Applicable Rate" shall mean, for any day, a fluctuating rate of
interest equal to the rate of interest publicly announced from time to time by
▇▇▇▇▇ Fargo Bank ("Bank"), or its successor, in San Francisco, California as its
"Prime Rate." Borrower acknowledges that Bank lends at rates both above and
below its Prime Rate, and Borrower further acknowledges that Bank's Prime Rate
is not represented or intended to be the lowest or most favorable rate of
interest offered by Bank.
DEFAULT RATE:
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In addition to all other rights contained in this Note, if a Default
(defined herein) occurs and as long as a Default continues, all outstanding
Obligations shall bear interest at the Applicable rate plus 3% ("Default
Rate"). The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.
INTEREST AND FEE(S) COMPUTATION (ACTUAL/360):
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Interest and fees, if any, shall be computed on the basis of a 360-day
year for the actual number of days in the applicable period ("Actual/360
Computation"). The Actual/360 Computation determines the annual effective yield
by taking the stated (nominal) rate for a year's period and then dividing said
rate by 360 to determine the daily periodic rate to be applied for each day in
the applicable period. Application of the Actual/360 Computation produces an
annualized effective rate exceeding that of the nominal rate.
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USURY:
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If at any time the effective interest rate under this Note would, but
for this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.
FORM OF PAYMENT:
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Any and all payments of any nature made or required to be made under
this Note shall be made in lawful money of the United States collectable on the
date of payment as provided in the Asset Purchase Agreement.
SUBORDINATION:
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(a) The Lender agrees that the indebtedness evidenced by this Note is
subordinated in right of payment, to the extent and in the manner provided
herein and in the Sanwa Business Credit Corporation Subordination Agreement, to
the prior payment in full of all Senior Debt, and that the subordination is for
the benefit of the holders of Senior Debt.
(b) For the purposes of this Note, the following definitions shall
apply:
(1) "Debt" of any person means any indebtedness, contingent or
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otherwise, in respect of borrowed money (whether or not the recourse
of the lender is to the whole of the assets of such person or only to
a portion thereof), or evidenced by bonds, notes, debentures or
similar instruments or letters of credit, or representing the balance
deferred and unpaid of the purchase price of any property or interest
therein, except any such balance that constitutes a trade payable, if
and to the extent such indebtedness would appear as a liability upon a
balance sheet of such person prepared on a consolidated basis in
accordance with generally accepted accounting principles.
(2) "Senior Debt" means all Debt (present or future) created,
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incurred, assumed or guaranteed by Borrower (and all renewals,
extensions or refundings thereof) with Sanwa Business Credit
Corporation or any successor or replacement lender, unless the
instrument under which such Debt is created, incurred, assumed or
guaranteed expressly provides that such Debt is not senior or superior
in right of payment to the Lender.
(c) Upon any distribution to creditors of Borrower in a liquidation or
dissolution of Borrower or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to Borrower or its property, holders
of Senior Debt shall be
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entitled to receive payment in full in cash of the principal of and interest
(including interest accruing after the commencement of any such proceeding) to
the date of payment on the Senior Debt before Lender shall be entitled to
receive any payment of principal of or interest on the Note.
(d) Upon the final maturity of any Senior Debt by lapse of time,
acceleration or otherwise, all such Senior Debt shall first be paid in full, or
such payment duly provided for in cash or in a manner satisfactory to the
holders of such Senior Debt, before any payment is made by Borrower or any
person acting on behalf of Borrower on account of the principal or interest of
the Note.
(e) Borrower may not pay principal of or interest on the Note if:
(1) a default on Senior Debt occurs and is continuing that permits
holders of such Senior Debt to accelerate its maturity, and
(2) the default is the subject of judicial proceedings or ▇▇▇▇▇▇▇▇
receives a notice of the default from a person who holds Senior Debt.
If Borrower receives any such notice, a subsequent notice received
within nine months thereafter relating to the same issue of Senior
Debt shall not be effective for purposes of this provision.
(f) Borrower shall resume payments on the Note and may acquire the
Note when:
(1) the default is cured or waived, or
(2) 120 days pass after the notice is given if the default is not the
subject of judicial proceedings,
if this Note otherwise permits the payment or acquisition at that time.
(g) If payment of the Note is accelerated because of an Event of
Default, Borrower shall promptly notify holders of Senior Debt of the
acceleration. Borrower shall pay the Note when 120 days pass after the
acceleration occurs if the Note permits the payment at that time; provided,
however, that if no Senior Debt is outstanding at the time of such acceleration
Borrower shall pay the Note in accordance with the provisions of this Note.
(h) If a payment is made to the Lender that because of this
subordination provision should not have been made to them, the Lender shall hold
such payment in trust for holders of Senior Debt and pay it over to them as
their interests may appear; provided, however, that if neither Borrower nor the
holders of the Senior Debt notify the Lender within 120 days after the payment
is made that such payment should not have been made, the
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Lender shall no longer be deemed to be holding such payment in trust pursuant to
this subsection (h).
(i) This subordination provision defines the relative rights of ▇▇▇▇▇▇
and holders of Senior Debt. Nothing in this provision shall:
(1) impair, as between Borrower and Lender, the obligation of
Borrower, which is absolute and unconditional, to pay principal of and
interest on the Note in accordance with its terms;
(2) affect the relative rights of ▇▇▇▇▇▇ and creditors of Borrower
other than holders of Senior Debt; or
(3) prevent Lender from exercising their available remedies upon a
Default or Event of Default, subject to the rights of holders of
Senior Debt to receive payments otherwise payable to Lender.
(j) If Borrower fails because of this subordination provision to pay
principal of or interest on the Note on the due date, the failure is still a
Default or Event of Default.
(k) No right of any holder of Senior Debt to enforce the subordination
of the indebtedness evidenced by the Note shall be impaired by any act or
failure to act by Borrower or by its failure to comply with this subordination
provision.
REQUIRED PAYMENTS AND LOAN MATURITY:
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This Note shall be due and payable by Borrower on the demand of Lender
including all accrued and unpaid interest hereunder.
LATE CHARGE:
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If any payment required hereunder is not received by holder when due,
a late charge of five percent (5.0%) of each overdue required payment shall be
charged for the purpose of defraying the expenses incident to handling said
delinquent payment(s).
APPLICATION OF PAYMENTS:
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Payments shall be applied first to interest and the remainder to the
principal balance. Payments, if less than the amount required, shall be applied
in the sole discretion of holder and acceptance of such payments shall not be a
waiver of the rights of the holder hereof to require scheduled payments.
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VOLUNTARY PREPAYMENT CLAUSE:
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This Note may be prepaid at any time in whole or in part.
DEFAULT:
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If any of the following occurs, a default ("Default") under this Note
shall exist: Nonpayment; Nonperformance. The failure of timely payment or
performance of the Obligations or Default under this Note or any other Loan
Documents. Cessation; Bankruptcy. The death of, appointment of guardian for,
dissolution of, termination of existence of, loss of good standing status by,
appointment of a receiver for, assignment for the benefit of creditors of, or
commencement of any bankruptcy or insolvency proceeding by or against the
Borrower, its Subsidiaries or Affiliates, if any, or any general partner of or
the holder(s) of the majority ownership interests of Borrower, or any party to
the Loan Documents. Material Business Alteration. Without prior written
consent of lender, a material alteration in the kind or type of Borrower's
business.
REMEDIES UPON DEFAULT:
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If a Default occurs under this Note, Lender may at any time
thereafter, take the following actions: Acceleration Upon Default. Accelerate
the maturity of this Note and all other Obligations, and all of the Obligations
shall be immediately due and payable. Cumulative. Exercise any rights and
remedies as provided under the Note and other Loan Documents, or as provided by
law or equity.
COSTS:
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Undersigned agrees to reimburse holder for all costs and expenses,
including, without limitation, all reasonable attorneys' fees incurred in the
enforcement or collection of this Note or any judgment obtained hereon.
LAWS:
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This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of California applicable to contracts
made and performed in such state, without regard to the principles thereof
regarding conflicts of laws, and any applicable laws of the United States of
America and may not be amended except by a written document executed by the
holder and maker.
PARTIES IN INTEREST:
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This Note shall bind Borrower and its successor and assigns. This
Note shall not be assigned or transferred by Lender without the express prior
written consent of ▇▇▇▇▇▇▇▇, except by will or, in default thereof, by operation
of law.
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MARGINAL CAPTIONS:
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The marginal captions appearing on this Note are for reference
purposes only and shall not in any way limit or otherwise affect the meaning,
content or interpretation of this Note.
INTELLISYS GROUP, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
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