XXXXX FARGO BANK REVOLVING LINE OF CREDIT NOTE
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$1,000,000.00 San Jose, California
June 28, 1997
FOR VALUE RECEIVED, the undersigned FIBERSTARS, INC. ("Borrower") promises
to pay to the order of XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its
office at Santa Xxxxx Valley RCBO, 000 Xxxx Xxxxxx Xxxxx 0xx Xxx, Xxx Xxxx, XX
00000, or at such other place as the holder hereof may designate, in lawful
money of the United States of America and in immediately available funds, the
principal sum of $1,000,000.00, or so much thereof as may be advanced and be
outstanding, with interest thereon, to be computed on each advance from the date
of its disbursement as set forth herein.
INTEREST/FEES:
(a) Interest. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) at a
rate per annum .12500% above the Prime Rate in effect from time to time. The
"Prime Rate" is a base rate that Bank from time to time establishes and which
serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto. Each change in the rate of interest
hereunder shall become effective on the date each Prime Rate change is announced
within Bank.
(b) Payment of Interest. Interest accrued on this Note shall be payable on
the 28th day of each month, commencing July 28, 1997.
(c) Default Interest. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to 4% above the rate of
interest from time to time applicable to this Note.
(d) Commitment Fee. Prior to the initial extension of credit under this
Note, Borrower shall pay to Bank a non-refundable commitment fee of $2,500.00.
(e) Collection of Payments. Borrower authorizes Bank to collect all
interest and fees due hereunder by charging Xxxxxxxx's demand deposit account
number 4124-053885 with Bank, or any other demand deposit account maintained by
any Borrower with Bank, for the full amount thereof. Should there be
insufficient funds in any such demand deposit account to pay all such sums when
due, the full amount of such deficiency shall be immediately due and payable by
Borrower.
SIGHT AND USANCE COMMERCIAL LETTER OF CREDIT SUBFEATURE:
(a) Letter of Credit Subfeature. As a subfeature under this Note, Bank
agrees from time to time during the term hereof to issue sight commercial and
usance commercial letters of credit for the account of Borrower to finance
Borrower's inventory purchases (each, a "Letter of Credit" and collectively,
"Letters of Credit"); provided however, that the form and substance of each
Letter of Credit shall be subject to approval by Bank, in its sole discretion;
and provided further, that the aggregate undrawn amount of all outstanding
Letters of Credit shall not at any time exceed $250,000.00. Each Letter of
Credit shall be issued for a term not to exceed 180 days, as designated by
Xxxxxxxx; provided however, that no Letter of Credit shall have an expiration
date more than 90 days beyond the maturity date of this Note. The undrawn amount
of all Letters of Credit shall be reserved under this Note and shall not be
available for borrowings hereunder. Each Letter of Credit shall be subject to
the additional terms and conditions of the Letter of Credit Agreement and
related documents, if any, required by Bank in connection with the issuance
thereof. Each draft paid by Bank under a Letter of Credit shall be deemed an
advance under this Note and shall be repaid by Borrower in accordance with the
terms and conditions of this Note; provided however, that if advances hereunder
are not available, for any reason, at the time any draft is paid by Bank, then
Borrower shall immediately pay to Bank the full amount of such draft, together
with interest thereon from the date such amount is paid by Bank to the date such
amount is fully repaid by Borrower, at the rate of interest applicable to
advances hereunder. In such event Xxxxxxxx agrees that Bank, in its sole
discretion, may debit any demand deposit account maintained by Borrower with
Bank for the amount of any such draft. Notwithstanding the foregoing, usance
commercial Letters of Credit shall be issued only to finance Borrower's
importation of goods into the United States, and shall contain such provisions
and be issued in such manner as to satisfy Bank that any bankers' acceptance
created by Bank's acceptance of a draft thereunder shall be eligible for
discount by a Federal Reserve Bank, will not result in a liability of Bank
subject to reserve requirements under any law, regulation or administrative
order, and will not cause Bank to violate any lending limit imposed upon Bank by
any law, regulation or administrative order. Usance commercial Letters of Credit
shall provide for drafts thereunder with terms which do not exceed the lesser of
180 days or such other period of time as may be necessary for the acceptance
created thereunder to be eligible for discount and otherwise comply with the
terms and conditions of this Note; provided however, that no usance commercial
Letter of Credit shall provide for drafts with terms that extend more than 90
days beyond the maturity date of this Note. The amount of each draft accepted by
Bank under a usance commercial Letter of Credit shall be paid by Borrower in
accordance with the terms and conditions of this Note applicable to Acceptances.
(b) Letter of Credit Fees. Borrower shall pay to Bank fees upon the
issuance of each Letter of Credit, upon
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the payment or negotiation by Bank of each draft under any Letter of Credit and
upon the occurrence of any other activity with respect to any Letter of Credit
(including without limitation, the transfer, amendment or cancellation of any
Letter of Credit) determined in accordance with Bank's standard fees and charges
then in effect for such activity.
CLEAN AND DOCUMENTARY ACCEPTANCE SUBFEATURE:
(a) Acceptance Subfeature. As a subfeature under this Note, Bank agrees
from time to time during the term hereof to create bankers' acceptances (each,
an "Acceptance" and collectively, "Acceptances") for the account of Xxxxxxxx (i)
by accepting drafts drawn on Bank by Borrower for the purpose of financing
Xxxxxxxx's importation of goods into the United States and (ii) by accepting
time drafts presented under usance commercial Letters of Credit issued by Bank
for the account of Borrower under this Note; provided however, that the form and
substance of each Acceptance shall be subject to approval by Bank, in its sole
discretion; and provided further, that the aggregate amount of all outstanding
Acceptances shall not at any time exceed $250,000.00. Each Acceptance created by
Bank's acceptance of a draft drawn on Bank by Borrower shall be in the minimum
amount of $5,000.00. Each Acceptance shall be subject to the additional terms
and conditions of an Acceptance Agreement in form and substance satisfactory to
Bank. Each Acceptance shall be created for a term not to exceed the lesser of
180 days, as designated by Borrower, or such period of time as may be necessary
to comply with the terms of the Acceptance Agreement; provided however, that no
Acceptance shall mature more than 90 days beyond the maturity date of this Note.
The outstanding amount of all Acceptances shall be reserved under this Note and
shall not be available for borrowings hereunder. The amount of each Acceptance
which matures shall be deemed an advance under this Note and shall be repaid by
Borrower in accordance with the terms and conditions of this Note; provided
however, that if advances hereunder are not available, for any reason, at the
time any Acceptance matures, then Borrower shall immediately pay to Bank the
full amount of such matured Acceptance, together with interest thereon from the
date such Acceptance matures to the date such amount is fully repaid by
Borrower, at the rate of interest applicable to advances hereunder. In such
event Xxxxxxxx agrees that Bank, in its sole discretion, may debit any demand
deposit account maintained by Borrower with Bank for the amount of any such
Acceptance. All Acceptances created by Xxxx's acceptance of drafts drawn on Bank
by Borrower shall be discounted with Bank. Bank shall not be obligated to
discount Acceptances created by Bank's acceptance of time drafts presented under
usance commercial Letters of Credit.
(b) Acceptance Fees. For each Acceptance created hereunder, Xxxxxxxx shall
pay to Bank on the date such Acceptance is created an acceptance fee determined
in accordance with Bank's standard fees and charges then in effect for the
creation of Acceptances.
BORROWING AND REPAYMENT:
(a) Use of Proceeds. Advances under this Note shall be available solely to
finance working capital requirements.
(b) Borrowing and Repayment. Borrower may from time to time during the term
of this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note
and of any document executed in connection with, or at any time as a supplement
to, this Note; provided however, that the total outstanding borrowings under
this Note shall not at any time exceed the principal amount stated above; and
provided further, that Borrower shall maintain a zero balance on advances under
this Note for a period of at least 30 consecutive days during each fiscal year.
The unpaid principal balance of this obligation at any time shall be the total
amounts advanced hereunder by the holder hereof less the amount of any principal
payments made hereon by or for any Borrower, which balance may be endorsed
hereon from time to time by the holder. The outstanding principal balance of
this Note shall be due and payable in full on June 28, 1998; except with respect
to any draft paid by Bank under a commercial Letter of Credit and any Acceptance
which matures subsequent to said date, the full amount of which shall be due and
payable by Borrower immediately upon payment by Bank or at such maturity as
applicable.
(c) Advances. Advances hereunder, to the total amount of the principal sum
available hereunder, may be made by the holder at the oral or written request of
(i) XXXXX X. XXXXXXX or XXXXXXX X. XXXXXXXX, any one acting alone, who are
authorized to request advances and direct the disposition of any advances until
written notice of the revocation of such authority is received by the holder at
the office designated above, or (ii) any person, with respect to advances
deposited to the credit ot any account of any Borrower with the holder, which
advances, when so deposited, shall be conclusively presumed to have been made to
or for the benefit of each Borrower regardless of the fact that persons other
than those authorized to request advances may have authority to draw against
such account. The holder shall have no obligation to determine whether any
person requesting an advance is or has been authorized by any Borrower.
EVENTS OF DEFAULT:
Any default in the payment or performance of any obligation under this
Note, or any defined event of default under any loan agreement now or at any
time hereafter in effect between Borrower and Bank (whether executed prior to,
concurrently with or at any time after this Note), shall constitute an "Event of
Default" under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the holder of
this Note, at the holder's option,
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may declare all sums of principal, interest, fees and charges outstanding
hereunder to be immediately due and payable without presentment, demand, notice
of nonperformance, notice of protest, protest or notice of dishonor, all of
which are expressly waived by each Borrower, and the obligation, if any, of the
holder to extend any further credit hereunder shall immediately cease and
terminate. Each Borrower shall pay to the holder immediately upon demand the
full amount of all payments, advances, charges, costs and expenses, including
reasonable attorneys' fees (to include outside counsel fees and all allocated
costs of the holder's in-house counsel), expended or incurred by the holder in
connection with the enforcement of the holder's rights and/or the collection of
any amounts which become due to the holder under this Note, and the prosecution
or defense of any action in any way related to this Note, including without
limitation, any action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any of
the foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to any Borrower or any other person or
entity.
(b) Obligations Joint and Several. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.
(c) Governing Law. This Note shall be governed by and construed in
accordance with the laws of the state of California.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
FIBERSTARS, INC.
By: /s/ XXXXXXX X. XXXXXXXX
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Title: CFO
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