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EXHIBIT 10.5
PROMISSORY NOTE
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PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
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$200,000.00 02-06-1996 12-31-1996 9001 505 10403 6823009 10403
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References in the shaded area are for Lender's use only and do not limit the applicability of
this document to any particular loan or item.
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BORROWER: NATIONAL APPLIED COMPUTER TECHNOLOGIES LENDER: ZIONS FIRST NATIONAL BANK
744 SOUTH 400 EAST WASATCH UNIVERSITY MALL
OREM, UT 84058 111 NORTH 200 WEST
PROVO, UT 84601
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PRINCIPAL AMOUNT: INITIAL RATE: DATE OF NOTE:
$200,000.00 9.500% FEBRUARY 6, 1996
PROMISE TO PAY. NATIONAL APPLIED COMPUTER TECHNOLOGIES ("Borrower") promises to
pay to ZIONS FIRST NATIONAL BANK ("Lender"), or order, in lawful money of the
United States of America, the principal amount of Two Hundred Thousand & 00/100
Dollars ($200,000.00) or so much as may be outstanding, together with interest
on the unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in one
payment of all outstanding principal plus all accrued unpaid interest on
December 31, 1996. In addition, Borrower will pay regular quarterly payments of
accrued unpaid interest beginning May 6, 1996, and all subsequent interest
payments are due on the same day of each quarter after that. Interest on this
Note is computed on a 365/360 simple interest basis; that is, by applying the
ratio of the annual interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of days the
principal balance is outstanding. Borrower will pay Lender at lender's address
shown above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to any unpaid collection costs and any late charges, then to any unpaid
interest, and any remaining amount to principal.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the ZIONS FIRST NATIONAL
BANK BASE RATE (the "Index"). BASE RATE MEANS AN INDEX WHICH IS DETERMINED DAILY
BY THE PUBLISHED COMMERCIAL LOAN VARIABLE RATE INDEX HELD BY ANY TWO OF THE
FOLLOWING BANKS: CHEMICAL BANK, XXXXX FARGO BANK N.A., AND BANK OF AMERICA, N.T.
& S.A. IN THE EVENT NO TWO OF THE ABOVE BANKS HAVE THE SAME PUBLISHED RATE, THE
BANK HAVING THE MEDIAN RATE WILL ESTABLISH LENDERS' BASE RATE. IF, FOR ANY
REASON BEYOND THE CONTROL OF LENDER, ANY OF THE AFOREMENTIONED XXXXX BECOMES
UNACCEPTABLE AS A REFERENCE FOR THE PURPOSE OF DETERMINING THE BASE RATE USED
HEREIN, LENDER MAY, FIVE DAYS AFTER POSTING NOTICE, IN LENDERS' OFFICES,
SUBSTITUTE ANOTHER COMPARABLE BANK FOR THE ONE DETERMINED UNACCEPTABLE. AS USED
IN THIS PARAGRAPH, "COMPARABLE BANK" SHALL MEAN ONE OF THE TEN LARGEST
COMMERCIAL BANKS HEADQUARTERED IN THE UNITED STATES OF AMERICA. THIS DEFINITION
OF BASE RATE IS TO BE STRICTLY INTERPRETED AND IS NOT INTENDED TO SERVE ANY
PURPOSE OTHER THAN PROVIDING AN INDEX TO DETERMINE THE VARIABLE INTEREST RATE
USED HEREIN. IT IS NOT THE LOWEST RATE AT WHICH LENDER MAY MAKE LOANS TO ANY OF
ITS CUSTOMERS, EITHER NOW OR IN THE FUTURE. Lender will tell Borrower the
current Index rate upon Xxxxxxxx's request. Borrower understands that Lender may
make loans based on other rates as well. The interest rate change will not occur
more often than each DAY. The index currently is 8.250% per annum. The interest
rate to be applied to the unpaid principal balance of this Note will be at a
rate of 1.250 percentage points over the index, resulting in an initial rate of
9.500% per annum. NOTICE: Under no circumstances will the interest rate on this
Note be more than the maximum rate allowed by applicable law.
PREPAYMENT. Xxxxxxxx agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject to
refund upon early payment (whether voluntary or as a result of default), except
as otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Xxxxxx in writing, relieve Xxxxxxxx of
Xxxxxxxx's obligation to continue to make payments of accrued unpaid interest.
Rather, they will reduce the principal balance due.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to lender by Borrower or on
Xxxxxxxx's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Xxxxxxxx becomes insolvent, a receiver is
appointed for any part of Xxxxxxxx's property, Xxxxxxxx makes an assignment for
the benefit of creditors, or any proceeding is commenced either by borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Xxxxxxxx's property on or in which Xxxxxx has a lien or security
interest. This includes a garnishment of any of Xxxxxxxx's accounts with Xxxxxx.
(g) Any of the events described in this default section occurs with respect to
any guarantor of this Note. (h) A material adverse change occurs in Borrower's
financial condition, or Xxxxxx believes the prospect of payment or performance
of the Indebtedness is impaired.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if borrower, after receiving written notice from Lender demanding
cure of such default; (a) cures the default within fifteen (15) days; or (b) if
the cure requires more than fifteen (15) days, immediately initiates steps which
Lender deems in Xxxxxx's sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Xxxxxx may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note to 4.250
percentage points over the Index. The interest rate will not exceed the maximum
rate permitted by applicable law. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Xxxxxxxx also will pay Lender that
amount. This includes, subject to any limits under applicable law, Xxxxxx's
reasonable attorneys' fees and Xxxxxx's legal expenses whether or not there is a
lawsuit, including reasonable attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services. If
not prohibited by applicable law, Xxxxxxxx also will pay any court costs, in
addition to all other sums provided by law. THIS NOTE HAS BEEN DELIVERED TO
LENDER AND ACCEPTED BY XXXXXX IN THE STATE OF UTAH. IF THERE IS A LAWSUIT,
XXXXXXXX AGREES UPON XXXXXX'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF UTAH COUNTY, THE STATE OF UTAH. SUBJECT TO THE PROVISIONS ON
ARBITRATION, THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF UTAH.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Xxxxxxxx's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA, Xxxxx, and trust
accounts. Borrower authorizes Xxxxxx, to the extent permitted by applicable law,
to charge or setoff all sums owing on this Note against any and all such
accounts.
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02-06-1996 PROMISSORY NOTE PAGE 2
(CONTINUED)
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LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested orally by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing. All
communications, instructions, or directions by telephone or otherwise to Lender
are to be directed to Xxxxxx's office shown above. The following party or
parties are authorized to request advances under the line of credit until Xxxxxx
receives from Borrower at Xxxxxx's address shown above written notice of
revocation of their authority: XXXXXX X. XXXXXX, PRESIDENT; AND XXXX XXXXX XXXX,
VICE-PRESIDENT. Xxxxxxxx agrees to be liable for all sums either: (a) advanced
in accordance with the instructions of an authorized person or (b) credited to
any of Xxxxxxxx's accounts with Xxxxxx. The unpaid principal balance owing on
this Note at any time may be evidenced by endorsements on this Note or by
Xxxxxx's internal records, including daily computer print-outs. Lender will have
no obligation to advance funds under this Note if: (a) Borrower or any guarantor
is in default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (b) Borrower or any guarantor ceases doing business or is
insolvent; (c) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor's guarantee of this Note or any other loan with
Lender; or (d) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender.
ARBITRATION DISCLOSURES:
1. AS USED IN THIS ARBITRATION SECTION, THE TERM "PARTIES" MEANS THE LENDER,
ANY OTHER SIGNERS HERETO AND PERMITTED SUCCESSORS AND ASSIGNS.
2. ARBITRATION IS USUALLY FINAL AND BINDING ON THE PARTIES AND SUBJECT TO
ONLY VERY LIMITED REVIEW BY A COURT.
3. THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT, INCLUDING THEIR
RIGHT TO A JURY TRIAL.
4. PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND DIFFERENT FROM
COURT PROCEEDINGS.
5. ARBITRATORS' AWARDS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF
RULINGS BY ARBITRATORS IS STRICTLY LIMITED.
6. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS
AFFILIATED WITH THE BANKING INDUSTRY.
7. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE
AMERICAN ARBITRATION ASSOCIATION.
ARBITRATION PROVISIONS:
(a) Any controversy or claim between or among the parties, including but not
limited to those arising out of or relating to this Agreement or any
agreements or instruments relating hereto or delivered in connection
herewith, and including but not limited to a claim based on or arising from
an alleged tort, shall at the request of any party be determined by
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration proceedings shall be
conducted in Salt Lake City, Utah. The arbitrator(s) shall have the
qualifications set forth in subparagraph (c) hereto. All statutes of
limitations which would otherwise be applicable in a judicial action brought
by a party shall apply to any arbitration or reference proceedings hereunder.
(b) In any judicial action or proceeding arising out of or relating to this
Agreement or any agreements or instruments relating hereto or delivered in
connection herewith, including but not limited to a claim based on or arising
from an alleged tort, if the controversy or claim is not submitted to
arbitration as provided and limited in subparagraph (a) hereto, all decisions
of fact and law shall be determined by a reference in accordance with Rule 53
of the Federal Rules of Civil Procedure or Rule 53 of the Utah Rules of Civil
Procedure or other comparable, applicable reference procedure. The parties
shall designate to the court the referee(s) selected under the auspices of
the American Arbitration Association in the same manner as arbitrators are
selected in Association-sponsored arbitration proceedings. The referee(s)
shall have the qualifications set forth in subparagraph (c) hereto.
(c) The arbitrator(s) or referee(s) shall be selected in accordance with the
rules of the American Arbitration Association from panels maintained by the
Association. A single arbitrator or referee shall be knowledgeable in the
subject matter of the dispute. Where three arbitrators or referees conduct an
arbitration or reference proceeding, the claim shall be decided by a majority
vote of the three arbitrators or referees, at least one of whom must be
knowledgeable in the subject matter of the dispute and at least one of whom
must be a practicing attorney. The arbitrator(s) or referee(s) shall award
recovery of all costs and fees (including reasonable attorneys' fees,
administrative fees, arbitrators' fees, and court costs). The arbitrator(s)
or referee(s) also may grant provisional or ancillary remedies such as, for
example, injunctive relief, attachment, or the appointment of a receiver,
either during the pendency of the arbitration or reference proceeding or as
part of the arbitration or reference award.
(d) Judgment upon an arbitration or reference award may be entered in any
court having jurisdiction, subject to the following limitation: the
arbitration or reference award is binding upon the parties only if the amount
does not exceed Four Million Dollars ($4,000,000.00); if the award exceeds
that limit, either party may commence legal action for a court trial de novo.
Such legal action must be filed within thirty (30) days following the date of
the arbitration or reference award; if such legal action is not filed within
that time period, the amount of the arbitration or reference award shall be
binding. The computation of the total amount of an arbitration or reference
award shall include amounts awarded for arbitration fees, attorneys' fees,
interest, and all other related costs.
(e) At the Lender's option, foreclosure under a deed of trust or mortgage may
be accomplished either by exercise of a power of sale under the deed of trust
or by judicial foreclosure. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests
such action for judicial relief.
(f) Notwithstanding the applicability of other law to any other provision of
this Agreement, the Federal Arbitration Act, 9 U.S.C. 1 et seq., shall apply
to the construction and interpretation of this arbitration paragraph.
TIME OUT OF DEBT. FOR A PERIOD OF AT LEAST 30 DAYS EACH CALENDAR YEAR, 30 DAYS
OF WHICH MUST BE CONSECUTIVE, BORROWER SHALL NOT HAVE AN OUTSTANDING BALANCE
UNDER THE PROMISSORY NOTE DATED MARCH 31, 1995 IN THE AMOUNT OF $200,000.00.
RENEWAL. THIS PROMISSORY NOTE IS A RENEWAL OF A PROMISSORY NOTE DATED MARCH 31,
1995.
COLLATERAL. THIS PROMISSORY NOTE IS SECURED BY A COMMERCIAL SECURITY AGREEMENT
DATED MARCH 31, 1995.
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02-06-1996 PROMISSORY NOTE PAGE 3
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GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Xxxxxx's right to
declare payment of this Note on its demand. Lender may delay or forgo
enforcing any of its rights or remedies under this Note without losing them.
Borrower and any other person who signs, guarantees or endorses this Note, to
the extent allowed by law, waive presentment, demand for payment, protest and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Xxxxxx's security
interest in the collateral; and take any other action deemed necessary by
Lender without the consent of or notice to anyone. All such parties also agree
that Xxxxxx may modify this loan without the consent of or notice to anyone
other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, XXXXXXXX READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. XXXXXXXX AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
NATIONAL APPLIED COMPUTER TECHNOLOGIES
By: /s/ Xxxx X. Xxxx By: /s/ Xxxxxxx Xxxxxxx
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XXXX X. XXXX, C.F.O. XXXXXXX XXXXXXX, PRESIDENT
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DISBURSEMENT REQUEST AND AUTHORIZATION
