<PAGE>
Exhibit 10.7
For Bank Use Only
Reviewed by
Due DECEMBER 15,
2009
Customer# 1105510939 Loan #
182
-----------------
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REVOLVING CREDIT NOTE
$ 5,000,000.00
JANUARY 29, 2008
FOR VALUE RECEIVED,
the undersigned borrower (the "Borrower"),
promises to pay to the order of U. S. BANK N. A. (the "Bank'), the
principal sum of FIVE
MILLION AND NO/100
Dollars
($5,000,000.00),
payable DECEMBER 15, 2009 (the "Maturity Date").
Interest.
The unpaid principal balance will bear interest at an annual
rate described in the Interest Rate Rider attached to this
Note.
Payment Schedule.
Interest is payable beginning FEBRUARY 1, 2008, and on the same
date of each consecutive month thereafter (except that if a
given
month does not have such a date, the last day of such month), plus
a
final interest payment with the final payment of principal.
Interest will be computed for the actual number of days
principal is unpaid, using a daily factor obtained by dividing
the
stated interest rate by 360.
Notwithstanding any provision of this Note to the contrary,
upon any default or at any time during the continuation thereof
(including failure to pay upon maturity), the Bank may, at its
option and subject to applicable law, increase the interest rate
on
this Note to a rate of 5% per annum plus the interest rate
otherwise
payable hereunder. Notwithstanding the foregoing and subject to
applicable law, upon the occurrence of a default by the Borrower
or
any
guarantor involving bankruptcy, insolvency, receivership
proceedings or an assignment for the benefit of creditors, the
interest rate on this Note shall automatically increase to a rate
of
5% per annum plus the rate otherwise payable hereunder.
In no event will the interest rate hereunder exceed that
permitted by applicable law. If any interest or other charge is
finally determined by a court of competent jurisdiction to
exceed
the maximum amount permitted by law, the interest or charge shall
be
reduced to the maximum permitted by law, and the Bank may credit
any
excess amount previously collected against the balance due or
refund
the amount to the Borrower.
<PAGE>
Subject to applicable law, if any payment is not made on or
before its due date, the Bank may collect a delinquency charge
of
5.00% of the unpaid amount. Collection of the late payment fee
shall
not be deemed to be a waiver of the Bank's right to declare a
default hereunder.
Without affecting the liability of any Borrower, endorser,
surety or guarantor, the Bank may, without notice, renew or
extend
the time for payment, accept partial payments, release or impair
any
collateral security for the payment of this Note, or agree not
to
sue any party liable on it.
This Revolving Credit Note constitutes the Note issued under a
Revolving Credit Agreement dated as of the date hereof between
the
Borrower and the Bank, to which Agreement reference is hereby
made
for a statement of the terms and conditions under which loans
evidenced hereby were or may be made and a description of the
terms
and conditions upon which the maturity of this Note may be
accelerated, and for a description of the collateral securing
this
Note.
This Note is a "transferable record" as defined in applicable
law relating to electronic transactions. Therefore, the holder
of
this Note may, on behalf of Borrower, create a microfilm or
optical
disk or other electronic image of this Note that is an
authoritative
copy as defined in such law. The holder of this Note may store
the
authoritative copy of such Note in its electronic form and then
destroy the paper original as part of the holder's normal
business
practices. The holder, on its own behalf, may control and
transfer
such authoritative copy as permitted by such law.
All documents attached hereto, including any appendices,
schedules, riders, and exhibits to this Revolving Credit Note,
are
hereby expressly incorporated by reference.
The Borrower hereby acknowledges the receipt of a copy of this
Note.
(Individual Borrower)
Hi-Shear Technology Corporation
-------------------------------
Borrower Name Organization
a Delaware Corporation
Borrower Name
N/A
By /s/ George W.
Trahan
Name and Title George W. Trahan
President and CEO
By /s/ Jan
L. Hauhe
Borrower Name
N/A
Name and Title Jan L. Hauhe CFO
<PAGE>
INTEREST RATE RIDER
This Rider is made part of the Revolving Credit Note (the "Note")
in
the original amount of
$5,000,000.00 by the
undersigned
borrower
(the "Borrower") in favor of U.S. BANK N. A., (the "Bank") as of
the
date identified below.
The following
interest rate
description is
hereby added to the Note:
Interest Rate Options. Interest on each advance hereunder shall
accrue at one of the following per annum rates selected by the
Borrower ("n/a" indicates rate option is not available, but
Prime
Rate Loan option must always be selected) (i) upon notice to
the
Bank, -0.250 % plus the prime rate announced by the Bank from
time
to time, as and when such rate changes (a "Prime Rate Loan");
(ii)
upon a minimum of two New York Banking Days prior notice, 2.000
%
plus the 1, 2, 3, 6 or 12 month LIBOR rate quoted by the Bank
from
Reuters Screen LIBOR01 Page or any successor thereto (which shall
be
the LIBOR rate in effect two New York Banking Days prior to
commencement of the advance), adjusted for any reserve
requirement
and any subsequent costs arising from a change in government
regulation (a "LIBOR Rate Loan"); or (iii) upon notice to the
Bank,
n/a % plus the rate, determined solely by the Bank, at which
the
Bank would be able to borrow funds of comparable amounts in the
Money Markets for a 1, 2, 3, 6 or 12 month period, adjusted for
any
reserve requirement and any subsequent costs arising from a
change
in government regulation (a "Money Market Rate Loan"). The term
"New
York Banking Day" means any day (other than a Saturday or Sunday)
on
which commercial banks are open for business in New York, New
York.
The term "Money Markets" refers to one or more wholesale
funding
markets available to the Bank, including negotiable certificates
of
deposit, commercial paper, eurodollar deposits, bank notes,
federal
funds, interest rate swaps or others. No LIBOR Rate Loan or
Money
Market Rate Loan may extend beyond the maturity of this Note. In
any
event, if the Loan Period for a LIBOR Rate Loan or Money Market
Rate
Loan should happen to extend beyond the maturity of this Note,
such
loan must be prepaid at the time this Note matures. If a LIBOR
Rate
Loan or Money Market Rate Loan is prepaid prior to the end of
the
Loan Period for such loan, whether voluntarily or because
prepayment
is required due to the Note maturing or due to acceleration of
this
Note upon default or otherwise, the Borrower agrees to pay all
of
the Bank's costs, expenses and Interest Differential (as
determined
by the Bank) incurred as a result of such prepayment. The term
"Loan
Period" means the period commencing on the advance date of the
applicable LIBOR Rate Loan or Money Market Rate Loan and ending
on
the numerically corresponding day 1, 2, 3, 6 or 12 months
thereafter
matching the interest rate term selected by the Borrower;
provided,
however, (a) if any Loan Period would otherwise end on a day
which
is not a New York Banking Day, then the Loan Period shall end on
the
next succeeding New York Banking Day unless the next succeeding
New
York Banking Day falls in another calendar month, in which case
the
Loan Period shall end on the immediately preceding New York
Banking
Day; or (b) if any Loan Period begins on the last New York
Banking
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end
of
the Loan Period), then the Loan Period shall end on the last
New
York Banking Day of the calendar month at the end of such Loan
Period. The term "Interest Differential" shall mean that sum
equal
to the greater of zero or the financial loss incurred by the
Bank
resulting from prepayment, calculated as the difference between
the
amount of interest the Bank would have earned (from like
investments
in the Money Markets as of the first day of the LIBOR Rate Loan
or
Money Market Rate Loan) had prepayment not occurred and the
interest
the Bank will actually earn (from like investments in the Money
Markets as of the date of prepayment) as a result of the
redeployment of funds from the prepayment. Because of the
short-term
nature of this facility, the Borrower agrees that the Interest
Differential shall not be discounted to its present value. Any
prepayment of a LIBOR Rate Loan or Money Market Rate Loan shall
be
in an amount equal to the remaining entire principal balance of
such
loan.
In the event the Borrower does not timely select another
interest
rate option at least two New York Banking Days before the end of
the
Loan Period for a LIBOR Rate Loan or Money Market Rate Loan,
the
Bank may at any time after the end of the Loan Period convert
the
LIBOR Rate Loan or Money Market Rate Loan to a Prime Rate Loan,
but
until such conversion, the funds advanced under the LIBOR Rate
Loan
or Money Market Rate Loan shall continue to accrue interest at
the
same rate as the interest rate in effect for such LIBOR Rate Loan
or
Money Market Rate Loan prior to the end of the Loan Period.
The Bank's internal records of applicable interest rates shall
be
determinative in the absence of manifest error. Each LIBOR Rate
Loan
and each Money Market Rate Loan shall be in a minimum principal
amount of $100,000.
<PAGE>
Dated as of: January
29, 2008
(Individual Borrower)
Hi-Shear Technology Corporation
-------------------------------
Borrower Name Organization
a Delaware Corporation
Borrower Name
N/A
By /s/ George W.
Trahan
Name and Title George W. Trahan
President and CEO
By /s/ Jan
L. Hauhe
Borrower Name
N/A
Name and Title Jan L. Hauhe CFO
<PAGE>
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement (the "Agreement") is made and
entered into by
and between the undersigned borrower (the "Borrower") and the
undersigned bank
(the "Bank") as of the date set forth on the last page of this
Agreement.
ARTICLE I. LOANS
1.1 REVOLVING CREDIT LOANS. From time to time prior to December 15,
2009 (the
"Maturity Date") or the earlier termination hereof, the Borrower
may borrow from
the Bank for working capital purposes up to the aggregate principal
amount
outstanding at any one time of the lesser of (i) $5,000,000.00 (the
"Loan
Amount"), less letters of credit issued by the Bank, or (ii) if
applicable, the
Borrowing Base (defined below). All revolving loans hereunder will
be evidenced
by a single promissory note of the Borrower payable to the order of
the Bank in
the principal amount of the Loan Amount (the "Note"). Although the
Note will be
expressed to be payable in the full Loan Amount, the Borrower will
be obligated
to pay only the amounts actually disbursed hereunder, together with
accrued
interest on the outstanding balance at the rates and on the dates
specified
therein and such other charges provided for herein. In the event
that the
principal amount outstanding under the Note exceeds the Borrowing
Base at any
time, the Borrower will immediately, without request, prepay an
amount
sufficient to eliminate such excess.
1.2 BORROWING
BASE. The Borrowing Base, if any, will be as set forth in
an
addendum to this Agreement.
1.3. ADVANCES AFTER MATURITY OR IN EXCESS OF MAXIMUM LOAN AMOUNT.
The Bank shall
have no obligation whatsoever, and the Bank has no present
intention, to make
any advance after the Maturity Date or which would cause the
principal amount
outstanding under this Agreement to exceed the maximum loan amount
or any other
limitations on advances stated in this Agreement. Notwithstanding
the foregoing,
the Bank may from time to time, in its sole and absolute
discretion, agree to
make an advance after the Maturity Date or which would cause the
principal
amount of advances outstanding under this Agreement to exceed the
maximum loan
amount or any of the other limitations on advances. The Borrower is
and shall be
and remain unconditionally liable to the Bank for the amount of all
advances
including, without limitation, advances in excess of the maximum
loan amount or
any other limitation on advances and advances made after the
Maturity Date.
Immediately upon the Bank's demand, the Borrower shall pay to the
Bank the
amount of any advances made after the maturity date or in excess of
the maximum
loan amount or any other limitation on advances contained in this
Agreement,
together with interest on the principal amount of such excess
advances, for so
long as such advances are outstanding, at the highest interest rate
from time to
time in effect for such advances. Any such advances shall not be
deemed an
extension of this Agreement nor an increase in the maximum loan
amount available
for borrowing under this Agreement.
1.4 ADVANCES AND PAYING PROCEDURE. The Bank is authorized and
directed to credit
any of the Borrower's accounts with the Bank (or to the account the
Borrower
designates in writing) for all loans made hereunder, and the Bank
is authorized
to debit such account or any other account of the Borrower with the
Bank for the
amount of any principal, interest or expenses due under the Note or
other amount
due hereunder on the due date with respect thereto. If, upon any
request by the
Borrower to the Bank to issue a wire transfer, there is an
inconsistency between
the name of the recipient of the wire and its identification number
as specified
by the Borrower, the Bank may, without liability, transmit the
payment via wire
based solely upon the identification number.
1.5 CLOSING FEE. The Borrower will pay the Bank a one-time closing
fee of $ n/a
contemporaneously with execution of this Agreement. This fee is in
addition to
all other fees, expenses and other amounts due hereunder.
1.6 LOAN FACILITY FEE.
The Borrower will pay
a loan facility fee equal to:
____ $ n/a per annum,
payable annual in advance; (or)
____ n/a % per annum of the Loan Amount, payable annually or in
advance; (or)
____ n/a % per annum of the difference between the Loan Amount and
the
actual daily unpaid principal amount of the Note outstanding from
time
to time, payable quarterly, in arrears, on the last business day
of
each third calendar month, and at maturity; (or)
____ n/a % per annum of the actual daily unpaid principal amount
of
the Note outstanding from time to time, payable quarterly, in
arrears, on the last business day of each third calendar month,
and
at maturity.
The loan facility fee is payable for the entire period that this
Agreement is in
effect, regardless of whether any amounts are outstanding hereunder
at any given
time.
Page 1 of 7
<PAGE>
1.7 EXPENSES AND ATTORNEYS' FEES. Upon demand, the Borrower will
immediately
reimburse the Bank and any participant in the Obligations (defined
below)
("Participant") for all attorneys' fees and all other costs, fees
and
out-of-pocket disbursements incurred by the Bank or any Participant
in
connection with the preparation, execution, delivery,
administration, defense
and enforcement of this Agreement or any of the other Loan
Documents (defined
below), including attorneys' fees and all other costs and fees (a)
incurred
before or after commencement of litigation or at trial, on appeal
or in any
other proceeding, (b) incurred in any bankruptcy proceeding and (c)
related to
any waivers or amendments with respect thereto (examples of costs
and fees
include but are not limited to fees and costs for: filing,
perfecting or
confirming the priority of the Bank's lien, title searches or
insurance,
appraisals, environmental audits and other reviews related to the
Borrower, any
collateral or the loans, if requested by the Bank). The Borrower
will also
reimburse the Bank and any Participant for all costs of collection,
including
all attorneys' fees, before and after judgment, and the costs of
preservation
and/or liquidation of any collateral.
1.8. COMPENSATING BALANCES. The Borrower will maintain on deposit
with the Bank
in non-interest bearing accounts average daily collected balances,
in excess of
that required to support account activity and other credit
facilities extended
to the Borrower by the Bank, an amount at least equal to the sum of
(i) $ n/a
and (ii) n/a % of the Loan Amount as computed on a monthly basis.
If the
Borrower fails to keep and maintain such balances, it will pay a
deficiency fee,
payable within five days after receipt of a statement therefor
calculated on the
amount by which the Borrower's average daily balances are less than
the
requirements set forth above, computed at a rate equal to the rate
set forth in
the Note.
1.9 CONDITIONS TO BORROWING. The Bank will not be obligated to make
(or continue
to make) advances hereunder unless (i) the Bank has received
executed originals
of the Note and all other documents or agreements applicable to the
loans
described herein, including but not limited to the documents
specified in
Article III (collectively with this Agreement the "Loan
Documents"), in form and
content satisfactory to the Bank; (ii) if the loan is secured, the
Bank has
received confirmation satisfactory to it that the Bank has a
properly perfected
security interest, mortgage or lien, with the proper priority,
(iii) the Bank
has received certified copies of the Borrower's governance
documents and
certification of entity status satisfactory to the Bank and all
other relevant
documents; (iv) the Bank has received a certified copy of a
resolution or
authorization in form and content satisfactory to the Bank
authorizing the loan
and all acts contemplated by this Agreement and all related
documents, and
confirmation of proper authorization of all guaranties and other
acts of third
parties contemplated hereunder; (v) if required by the Bank, the
Bank has been
provided with Opinion of the Borrower's counsel in form and content
satisfactory
to the Bank confirming the matters outlined in Section 2.2 and such
other
matters as the Bank requests; (vi) no default exists under this
Agreement or
under any other Loan Documents, or under any other agreements by
and between the
Borrower and the Bank; and (vii) all proceedings taken in
connection with the
transactions contemplated by this Agreement (including any
required
environmental assessments), and all instruments, authorizations and
other
documents applicable thereto, are satisfactory to the Bank and its
counsel.
ARTICLE II. WARRANTIES AND COVENANTS
While any part of the credit granted to the Borrower under this
Agreement or the
other Loan Documents is available or any obligations under any of
the Loan
Documents are unpaid or outstanding, the Borrower continuously
warrants and
agrees as follows:
2.1 ACCURACY OF INFORMATION. All information, certificates or
statements given
to the Bank pursuant to this Agreement and the other Loan Documents
will be true
and complete when given.
2.2 ORGANIZATION AND AUTHORITY; LITIGATION. This Agreement and the
other Loan
Documents are the legal, valid and binding obligations of the
Borrower,
enforceable against the Borrower in accordance with their terms.
The execution,
delivery and performance of this Agreement and all other Loan
Documents to which
the Borrower is a party (i) are within the borrower's power; (ii)
have been duly
authorized by all appropriate entity action; (iii) do not require
the approval
of any governmental agency; and, (iv) will not violate any law,
agreement or
restriction by which the Borrower is bound. If the Borrower is not
an
individual, the Borrower is validly existing and in good standing
under the laws
of its state of organization, has all requisite power and authority
and
possesses all licenses necessary to conduct its business and own
its properties.
There is no litigation or administrative proceeding threatened or
pending
against the Borrower which would, if adversely determined, have a
material
adverse effect on the Borrowers financial condition or its
property.
2.3 EXISTENCE; BUSINESS ACTIVITIES; ASSETS; CHANGE OF CONTROL. The
Borrower will
(i) preserve its existence, rights and franchises; (ii) not make
any material
change in the nature or manner of its business activities; (iii)
not liquidate,
dissolve, acquire another entity or merge or consolidate with or
into another
entity or change its form of organization; (iv) not amend its
organizational
documents in any manner that may conflict with any term or
condition of the Loan
Documents; and (v) not sell, lease, transfer or otherwise dispose
of all or
substantially all of its assets. Other than the transfer to a trust
beneficially
controlled by the transferor, no event shall occur which causes or
results in a
transfer of majority ownership of the Borrower while any
Obligations are
outstanding or while the Bank has any obligation to provide funding
to the
Borrower.
Page 2 of 7
<PAGE>
2.4 USE OF PROCEEDS; MARGIN STOCK; SPECULATION. Advances by the
Bank hereunder
will be used exclusively by the Borrower for working capital and
other regular
and valid purposes. The Borrower will not, without the prior
written consent of
the Bank, redeem, purchase, or retire any of the capital stock or
declare or pay
any dividends, or make any other payments or distributions of a
similar type or
nature including withdrawal distributions. The Borrower will not
use any of the
loan proceeds to purchase or carry "margin" stock (as defined in
Regulation U of
the Board of Governors of the Federal Reserve System). No part of
any of the
proceeds will be used for speculative investment purposes,
including, without
limitation, speculating or hedging in the commodities and/or
futures market.
2.5 ENVIRONMENTAL MATTERS. Except as disclosed in a written
schedule attached to
this Agreement (if no schedule is attached, there are no
exceptions), there
exists no uncorrected violation by the Borrower of any federal,
state or local
laws (including statutes, regulations, ordinances or other
governmental
restrictions and requirements) relating to the discharge of air
pollutants,
water pollutants or process waste water or otherwise relating to
the environment
or Hazardous Substances as hereinafter defined, whether such laws
currently
exist or are enacted in the future (collectively "Environmental
Laws"). The term
"HAZARDOUS SUBSTANCES" will mean any hazardous or toxic wastes,
chemicals or
other substances, the generation, possession or existence of which
is prohibited
or governed by any Environmental Laws. The Borrower is not subject
to any
judgment, decree, order or citation, or a party to (or threatened
with) any
litigation or administrative proceeding, which asserts that the
Borrower (i) has
violated any Environmental Laws; (ii) is required to clean up,
remove or take
remedial or other action with respect to any Hazardous Substances
(collectively
"Remedial Action"); or (iii) is required to pay all or a portion of
the cost of
any Remedial Action, as a potentially responsible party. Except as
disclosed on
the Borrower's environmental questionnaire provided to the Bank,
there are not
now, nor to the Borrower's knowledge after reasonable investigation
have there
ever been, any Hazardous Substances (or tanks or other facilities
for the
storage of Hazardous Substances) stored, deposited, recycled or
disposed of on,
under or at any real estate owned or occupied by the Borrower
during the periods
that the Borrower owned or occupied such real estate, which if
present on the
real estate or in soils or ground water, could require Remedial
Action. To the
Borrower's knowledge, there are no proposed or pending changes in
Environmental
Laws which would adversely affect the Borrower or its business, and
there are no
conditions existing currently or likely to exist while the Loan
Documents are in
effect which would subject the Borrower to Remedial Action or other
liability.
The Borrower currently complies with and will continue to timely
comply with all
applicable Environmental Laws; and will provide the Bank,
immediately upon
receipt, copies of any correspondence, notice, complaint, order or
other
document from any source asserting or alleging any circumstance or
condition
which requires or may require a financial contribution by the
Borrower or
Remedial Action or other response by or on the part of the Borrower
under
Environmental Laws, or which seeks damages or civil, criminal or
punitive
penalties from the Borrower for an alleged violation of
Environmental Laws.
2.6 COMPLIANCE WITH LAWS. The Borrower has complied with all laws
applicable to
its business and its properties, and has all permits, licenses and
approvals
required by such laws, copies of which have been provided to the
Bank.
2.7 RESTRICTION ON INDEBTEDNESS. The Borrower will not create,
incur, assume or
have outstanding any indebtedness for borrowed money (including
capitalized
leases) except (i) any indebtedness owing to the Bank and its
affiliates, and
(ii) any other indebtedness outstanding on the date hereof, and
shown on the
Borrower's financial statements delivered to the Bank prior to the
date hereof,
provided that such other indebtedness will not be increased.
2.8 RESTRICTION ON LIENS. The Borrower will not create, incur,
assume or permit
to exist any mortgage, pledge, encumbrance or other lien or levy
upon or
security interest in any of the Borrower's property now owned or
hereafter
acquired, except (i) taxes and assessments which are either not
delinquent or
which are being contested in good faith with adequate reserves
provided; (ii)
easements, restrictions and minor title irregularities which do
not, as a
practical matter, have an adverse effect upon the ownership and use
of the
affected property; (iii) liens in favor of the Bank and its
affiliates; and (iv)
other liens disclosed in writing to the Bank prior to the date
hereof.
2.9 RESTRICTION ON CONTINGENT LIABILITIES. The Borrower will not
guarantee or
become a surety or, otherwise contingently liable for any
obligations of others,
except pursuant to the deposit and collection of checks and similar
matters in
the ordinary course of business.
2.10 INSURANCE. The Borrower will maintain insurance to such
extent, covering
such risks and with such insurers as is usual and customary for
businesses
operating similar properties, and as is satisfactory to the Bank,
including
insurance for fire and other risks insured against by extended
coverage, public
liability insurance and workers' compensation insurance; and will
designate the
Bank as loss payee with a "Lender's Loss Payable" endorsement on
any casualty
policies and take such other action as the Bank may reasonably
request to ensure
that the Bank will receive (subject to no other interests) the
insurance
proceeds on the Bank's collateral.
Page 3 of 7
<PAGE>
2.11 TAXES AND OTHER LIABILITIES. The Borrower will pay and
discharge, when due,
all of its taxes, assessments and other liabilities, except when
the payment
thereof is being contested in good faith by appropriate procedures
which will
avoid foreclosure of liens securing such items, and with adequate
reserves
provided therefor.
2.12 FINANCIAL STATEMENTS AND REPORTING. The financial statements
and other
information previously provided to the Bank or provided to the Bank
in the
future are or will be complete and accurate and prepared in
accordance with
generally accepted accounting principles. There has been no
material adverse
change in the Borrower's financial condition since such information
was provided
to the Bank. The Borrower will (i) maintain accounting records in
accordance
with generally recognized and accepted principles of accounting
consistently
applied throughout the accounting periods involved; (ii) provide
the Bank with
such information concerning its business affairs and financial
condition
(including insurance coverage) as the Bank may request; and (iii)
without
request, provide the Bank with such specific financial
statements,
certifications and/or information as may be set forth in an
addendum to this
Agreement.
2.13 INSPECTION OF PROPERTIES AND RECORDS; FISCAL YEAR. The
Borrower will permit
representatives of the Bank to visit and inspect any of the
properties and
examine any of the books and records of the Borrower at any
reasonable time and
as often as the Bank may reasonably desire. The Borrower will not
change its
fiscal year.
2.14 FINANCIAL STATUS. Financial Covenants, if any, will be as set
forth in an
addendum to this Agreement.
2.15 PAID-IN-FULL. ___ If checked here, all revolving loans under
this Agreement
and the Note must be paid in full for a period of at least n/a
consecutive days
during each fiscal year.
ARTICLE III. COLLATERAL AND GUARANTIES
3.1 COLLATERAL. This Agreement and the Note are secured by any and
all security
interests, pledges, mortgages/deeds of trust or (except any
mortgage/deed of
trust expressly limited by its terms to a specific obligation of
Borrower to
Bank) or liens now or hereafter in existence granted to the Bank to
secure
indebtedness of the Borrower to the Bank, including without
limitation as
described in the following documents:
[ ] Real Estate Mortgage(s)/Deed(s) of Trust dated covering real
estate located
at
[x] Security Agreement(s) dated 12/31/01
[ ] Collateral Pledge Agreement(s) dated
[ ] Other
3.2 GUARANTIES. This Agreement and the Note are guarantied by each
and every
guaranty now or hereafter inexistence guarantying the indebtedness
of the
Borrower to the Bank (except for any guaranty expressly limited by
its terms to
a specific separate obligation of Borrower to the Bank) including,
without
limitation, the following:
3.3 CREDIT BALANCES; SETOFF. As additional security for the payment
of the
obligations described in the Loan Documents and any other
obligations of the
Borrower to the Bank of any nature whatsoever (collectively the
"Obligations"),
the Borrower hereby grants to the Bank a security interest in, a
lien on and an
express contractual right to set off against all depository account
balances,
cash and any other property of the Borrower now or hereafter in the
possession
of the Bank and the right to refuse to allow withdrawals from any
account
(collectively "Setoff"). The Bank may, at any time upon the
occurrence of a
default hereunder (notwithstanding any notice requirements or
grace/cure periods
under this or other agreements between the Borrower, and the Bank)
Setoff
against the Obligations whether or not the Obligations (including
future
installments) are then due or have been accelerated, all without
any advance or
contemporaneous notice or demand of any kind to the Borrower, such
notice and
demand being expressly waived.
The omission of any reference to an agreement in Sections 3.1 and
3.2 will not
affect the validity or enforceability thereof. The rights and
remedies of the
Bank outlined in this Agreement and the documents identified above
are intended
to be cumulative.
ARTICLE IV. DEFAULTS
4.1 DEFAULTS. Notwithstanding any cure periods described below, the
Borrower
will immediately notify the Bank in writing when the Borrower
obtains knowledge
of the occurrence of any default specified below. Regardless of
whether the
Borrower has given the required notice, the occurrence of one or
more of the
following will constitute a default:
(a) NONPAYMENT. The
Borrower shall fail to pay (i) any interest due on the Note
or
any fees, charges, costs or expenses under the Loan Documents by 5
days
after the same becomes due; or (ii) any principal amount of the
Note when
due.
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<PAGE>
(b)NONPERFORMANCE. The
Borrower or any guarantor of Borrowers Obligations to
the
Bank ("Guarantor") shall fail to perform or observe any
agreement,
term, provision, condition, or covenant (other than a default
occurring
under (a), (c), (d), (e), (f) or (g) of this Section 4.1) required
to be
performed or observed by the Borrower or any Guarantor hereunder or
under
any
other Loan Document or other agreement with or in favor of the
Bank.
(c)MISREPRESENTATION.
Any financial information, statement, certificate,
representation or warranty given to the Bank by the Borrower or
any
Guarantor (or any of their representatives) in connection with
entering
into
this Agreement or the other Loan Documents and/or any borrowing
thereunder, or required to be furnished under the terms thereof,
shall
prove untrue or misleading in any material respect (as determined
by the
Bank
in the exercise of its judgment) as of the time when given.
(d)DEFAULT ON OTHER
OBLIGATIONS. The Borrower or any Guarantor shall be in
default under the terms of any loan agreement, promissory note,
lease,
conditional sale contract or other agreement, document or
instrument
evidencing, governing or securing any indebtedness owing by the
Borrower or
any
Guarantor to the Bank or any indebtedness in excess of $10,000
owing by
the
Borrower to any third party, and the period of grace, if any, to
cure
said
default shall have passed.
(e)JUDGMENTS. Any
judgment shall be obtained against the Borrower or any
Guarantor which, together with all other outstanding unsatisfied
judgments
against the Borrower (or such Guarantor), shall exceed the sum of
$10,000
and
shall remain unvacated, unbonded or unstayed for a period of 30
days
following the date of entry thereof.
(f)INABILITY TO
PERFORM; BANKRUPTCY/INSOLVENCY. (i) The Borrower or any
Guarantor shall die or cease to exist; or (ii) any Guarantor shall
attempt
to
revoke any guaranty of the Obligations described herein, or any
guaranty
becomes unenforceable in whole or in part for any reason; or (iii)
any
bankruptcy, insolvency or receivership proceedings, or an
assignment for
the
benefit of creditors, shall be commenced under any Federal or state
law
by
or against the Borrower or any Guarantor; or (iv) the Borrower or
any
Guarantor shall become the subject of any out-of-court settlement
with its
creditors; or (v) the Borrower or any Guarantor is unable or admits
in
writing its inability to pay its debts as they mature; or (vi) if
the
Borrower is a limited liability company, any member thereof shall
withdraw
or
otherwise become disassociated from the Borrower.
(g) ADVERSE CHANGE;
INSECURITY. (i) There is a material adverse change in the
business, properties, financial condition or affairs of the
Borrower or any
Guarantor, or in any collateral securing the Obligations; or (ii)
the Bank
in
good faith deems itself insecure.
4.2 TERMINATION OF LOANS; ADDITIONAL BANK RIGHTS. Upon the Maturity
Date or the
occurrence of any of the events identified in Section 4.1, the Bank
may at any
time (notwithstanding any notice requirements or grace/cure periods
under this
or other agreements between the Borrower and the Bank) (i)
immediately terminate
its obligation, if any, to make additional loans to the Borrower;
(ii) Setoff;
and/or (iii) take such other steps to protect or preserve the
Bank's interest in
any collateral, including without limitation, notifying account
debtors to make
payments directly to the Bank, advancing funds to protect any
collateral and
insuring collateral at the Borrower's expense; all without demand
or notice of
any kind, all of which are hereby waived.
4.3 ACCELERATION OF OBLIGATIONS. Upon the occurrence of any of the
events
identified in Sections 4.1 (a) through 4.1 (e) and 4.1 (g), and the
passage of
any applicable cure periods, the Bank may at any time thereafter,
by written
notice to the Borrower, declare the unpaid principal balance of any
Obligations,
together with the interest accrued thereon and other amounts
accrued hereunder
and under the other Loan Documents, to be immediately due and
payable; and the
unpaid balance will thereupon be due and payable, all without
presentation,
demand, protest or further notice of any kind, all of which are
hereby waived,
and notwithstanding anything to the contrary contained herein or in
any of the
other Loan Documents. Upon the occurrence of any event under
Section 4.1(f), the
unpaid principal balance of any Obligations, together with all
interest accrued
thereon and other amounts accrued hereunder and under the other
Loan Documents,
will thereupon be immediately due and payable, all without
presentation, demand,
protest or notice of any kind, all of which are hereby waived,
and
notwithstanding anything to the contrary contained herein or in any
of the other
Loan Documents. Nothing contained in Section 4.1, Section 4.2 or
this section
will limit the Bank's right to Setoff as provided in Section 3.3 or
otherwise in
this Agreement.
4.4 OTHER REMEDIES. Nothing in this Article IV is intended to
restrict the
Bank's rights under any of the Loan Documents or at law, and the
Bank may
exercise all such rights and remedies as and when they are
available.
ARTICLE V. OTHER TERMS
5.1 ADDITIONAL TERMS; ADDENDUM/SUPPLEMENTS. The warranties,
covenants,
conditions and other terms described in this Section and/or in the
Addendum
and/or other attached document(s) referenced in this Section are
incorporated
into this Agreement:
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<PAGE>
ARTICLE VI. MISCELLANEOUS
6.1 DELAY; CUMULATIVE REMEDIES. No delay on the part of the Bank in
exercising
any right, power or privilege hereunder or under any of the other
Loan Documents
will operate as a waiver thereof, nor will any single or partial
exercise of any
right, power or privilege hereunder preclude other or further
exercise thereof
or the exercise of any other right, power or privilege. The rights
and remedies
herein specified are cumulative and are not exclusive of any rights
or remedies
which the Bank would otherwise have.
6.2 RELATIONSHIP TO OTHER DOCUMENTS. The warranties, covenants and
other
obligations of the Borrower (and the rights and remedies of the
Bank) that are
outlined in this Agreement and the other Loan Documents are
intended to
supplement each other. In the event of any inconsistencies in any
of the terms
in the Loan Documents, all terms will be cumulative so as to give
the Bank the
most favorable rights set forth in the conflicting documents,
except that if
there is a direct conflict between any preprinted terms and
specifically
negotiated terms (whether included in an addendum or otherwise),
the
specifically negotiated terms will control.
6.3 SUCCESSORS. The rights, options, powers and remedies granted in
this
Agreement and the other Loan Documents shall be binding upon the
Borrower and
the Bank and their respective successors and assigns, and shall
inure to the
benefit of Borrower and the Bank and the successors and assigns to
the Bank,
including without limitation any purchaser or any or all of the
rights and
obligations of the Bank under the Note and the other Loan
Documents. The
Borrower may not assign its rights or obligations under this
Agreement or any
other Loan Documents without the prior written consent of the
Bank.
6.4 DISCLOSURE. The Bank may, in connection with any sale or
potential sale of
all or any interest in the Note and other Loan Documents, disclose
any financial
information the Bank may have concerning the Borrower to any
purchaser or
potential purchaser. From time to time, the Bank may, in its
discretion and
without obligation to the Borrower, any Guarantor or any other
third party,
disclose information about the Borrower and this loan to any
Guarantor, surety
or other accommodation party. This provision does not obligate the
Bank to
supply any information or release the Borrower from its obligation
to provide
such information, and the Borrower agrees to keep all Guarantors,
sureties or
other accommodation parties advised of its financial condition and
other matters
which may be relevant to their obligations to the Bank.
6.5 INDEMNIFICATION. Except for harm arising from the Bank's
willful misconduct,
the Borrower hereby indemnifies and agrees to defend and hold the
Bank harmless
from any and all losses, costs, damages, claims and expenses of any
kind
suffered by or asserted against the Bank relating to claims by
third parties
arising out of the financing provided under the Loan Documents or
related to any
collateral (including, without limitation, the Borrower's failure
to perform its
obligations relating to Environmental Matters described in Section
2.5 above).
This indemnification and hold harmless provision will survive the
termination of
the Loan Documents and the satisfaction of the Obligations due the
Bank.
6.6 NOTICE OF CLAIMS AGAINST BANK; LIMITATION OF CERTAIN DAMAGES.
In order to
allow the Bank to mitigate any damages to the Borrower from the
Bank's alleged
breach of its duties under the Loan Documents or any other duty, if
any, to the
Borrower, the Borrower agrees to give the Bank immediate written
notice of any
claim or defense it has against the Bank, whether in tort or
contract, relating
to any action or inaction by the Bank under the Loan Documents, or
the
transactions related thereto, or of any defense to payment of the
Obligations
for any reason. The requirement of providing timely notice to the
Bank
represents the parties' agreed-to standard of performance regarding
claims
against the Bank. Notwithstanding any claim that the Borrower may
have against
the Bank, and regardless of any notice the Borrower may have given
the Bank, the
Bank will not be liable to the Borrower for consequential and/or
special damages
arising therefrom, except those damages arising from the Bank's
willful
misconduct.
6.7 NOTICES. Notice of any record shall be deemed delivered when
the record has
been (a) deposited in the United States Mail, postage pre-paid, (b)
received by
overnight delivery service, (c) received by telex, (d) received by
telecopy, (e)
received through the internet, or (f) when personally
delivered.
6.8 PAYMENTS. Payments due under the Note and other Loan Documents
will be made
in lawful money of the United States. All payments may be applied
by the Bank to
principal, interest and other amounts due under the Loan Documents
in any order
which the Bank elects.
6.9 APPLICABLE LAW AND JURISDICTION; INTERPRETATION; JOINT
LIABILITY;
SEVERABILITY. This Agreement and all other Loan Documents will be
governed by
and interpreted in accordance with the internal laws of the State
of CALIFORNIA
except to the extent superseded by Federal law. THE BORROWER HEREBY
CONSENTS TO
THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED
IN THE COUNTY
OR FEDERAL JURISDICTION OF THE BANK'S BRANCH WHERE THE LOAN WAS
ORIGINATED, AND
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS , WITH REGARD TO
ANY ACTIONS,
Page 6 of 7
<PAGE>
CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT. THE
NOTE, THE
COLLATERAL, ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING
THEREFROM, OR
ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING. Nothing
herein will
affect the Bank's rights to serve process in any manner permitted
by law, or
limit the Bank's right to bring proceedings against the Borrower in
the
competent courts of any other jurisdiction or jurisdictions. This
Agreement, the
other Loan Documents and any amendments hereto (regardless of when
executed)
will be deemed effective and accepted only at the Bank's receipt of
the executed
originals thereof. If there is more than one Borrower, the
liability of the
Borrowers will be joint and several, and the reference to
"Borrower" will be
deemed to refer to all Borrowers. Invalidity of any provision of
this Agreement
shall not affect the validity of any other provision.
6.10 COPIES; ENTIRE AGREEMENT; MODIFICATION. The Borrower hereby
acknowledges
the receipt of a copy of this Agreement and all other Loan
Documents. This
Agreement is a "transferable record" as defined in applicable law
relating to
electronic transactions. Therefore, the holder of this Agreement
may, on behalf
of Borrower, create a microfilm or optical disk or other electronic
image of
this Agreement that is an authoritative copy as defined in such
law. The holder
of this Agreement may store th
