WELLS FARGO HSBC TRADE BANK REVOLVING CREDIT LOANS NOTE - 1
Exhibit
99.1
|
▇▇▇▇▇
FARGO HSBC TRADE BANK |
REVOLVING
CREDIT LOANS NOTE - 1 |
|
$3,000,000 |
San
Francisco, California |
|
___________________________,
2005 |
FOR VALUE
RECEIVED, the undersigned SOUTHWALL TECHNOLOGIES INC., a Delaware corporation
("Borrower") promises to pay to the order of ▇▇▇▇▇ FARGO HSBC TRADE BANK,
NATIONAL ASSOCIATION ("Trade Bank") at its office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, 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 Three Million Dollars ($3,000,000), 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 (computed on the
basis of a 360 day year, actual days elapsed) either (i) at a fluctuating rate
per annum one and three-quarters percent (1.75%) below the Prime Rate in effect
from time to time, or (ii) at a fixed rate per annum determined by ▇▇▇▇▇ FARGO
BANK, NATIONAL ASSOCIATION ("Bank") to be one percent (1%) above Bank's LIBOR in
effect on the first day of the applicable Fixed Rate Term. When interest is
determined in relation to the Prime Rate, each change in the rate of interest
hereunder shall become effective on the date each Prime Rate change is announced
within Bank. With respect to each LIBOR option selected hereunder, Trade Bank is
hereby authorized to note the date, principal amount, interest rate and Fixed
Rate Term applicable thereto and any payments made thereon on Trade Bank's books
and records (either manually or by electronic entry) and/or on any schedule
attached to this Note, which notations shall be prima facie evidence of the
accuracy of the information noted.
|
1. |
DEFINITIONS:
As used herein, the following terms shall have the meanings set forth
after each: |
|
1.1 |
"Business
Day"
means any day except a Saturday, Sunday or any other day designated as a
holiday under Federal or California statute or
regulation. |
|
1.2 |
"Fixed
Rate Term"
means a period commencing on a Business Day and continuing for
thirty
(30), sixty (60) or ninety (90) days, as designated by Borrower, during
which all or a portion of the outstanding principal balance of this Note
bears interest determined in relation to Bank's LIBOR; provided however,
that no Fixed Rate Term may be selected for a principal amount less than
One
Hundred Thousand
Dollars ($100,000);
and provided further, that no Fixed Rate Term shall extend beyond the
scheduled maturity date hereof. If any Fixed Rate Term would end on a day
which is not a Business Day, then such Fixed Rate Term shall be extended
to the next succeeding Business Day. |
|
1.3 |
"LIBOR"
means the rate per annum (rounded upward, if necessary, to the nearest
whole 1/8 of 1%) and determined pursuant to the following
formula: |
|
LIBOR |
= |
Base
LIBOR |
|
100%
- LIBOR Reserve Percentage |
|
(a) |
"Base
LIBOR"
means the rate per annum for United States dollar deposits quoted by Bank
as the Inter-Bank Market Offered Rate, with the understanding that such
rate is quoted by Bank for the purpose of calculating effective rates of
interest for loans making reference thereto, on the first day of a Fixed
Rate Term for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term and in
an amount approximately equal to the principal amount to which such Fixed
Rate Term applies. Borrower understands and agrees that Bank may base its
quotation of the Inter-Bank Market Offered Rate upon such offers or other
market indicators of the Inter-Bank Market as Bank in its discretion deems
appropriate including, but not limited to, the rate offered for U.S.
dollar deposits on the London Inter-Bank
Market. |
|
(b) |
"LIBOR
Reserve Percentage"
means the reserve percentage prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for "Eurocurrency Liabilities"
(as defined in Regulation D of the Federal Reserve Board, as amended),
adjusted by Bank for expected changes in such reserve percentage during
the applicable Fixed Rate Term. |
|
1.4 |
"Prime
Rate"
means at any time the rate of interest most recently announced within Bank
at its principal office in San Francisco as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves
as the basis upon which effective rates of interest are calculated for
those loans making reference thereto, and is evidenced by the recording
thereof after its announcement in such internal publication or
publications as Bank may designate. |
|
2. |
INTEREST: |
|
2.1 |
Payment
of Interest.
Interest accrued on this Note shall be payable on the first
day of each month,
commencing May
1, 2005. |
Page 1 of
6
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2.2 |
Selection
of Interest Rate Options.
At any time any portion of this Note bears interest determined in relation
to Bank's LIBOR, it may be continued by Borrower at the end of the Fixed
Rate Term applicable thereto so that all or a portion thereof bears
interest determined in relation to the Prime Rate or in relation to Bank's
LIBOR for a new Fixed Rate Term designated by Borrower. At any time any
portion of this Note bears interest determined in relation to the Prime
Rate, Borrower may convert all or a portion thereof so that it bears
interest determined in relation to Bank's LIBOR for a Fixed Rate Term
designated by Borrower. At the time each advance is requested hereunder or
Borrower wishes to select the LIBOR option for all or a portion of the
outstanding principal balance hereof, and at the end of each Fixed Rate
Term, Borrower shall give Trade Bank notice specifying (a) the interest
rate option selected by Borrower, (b) the principal amount subject
thereto, and (c) if the LIBOR option is selected, the length of the
applicable Fixed Rate Term. Any such notice may be given by telephone so
long as, with respect to each LIBOR selection, (i) Trade Bank receives
written confirmation from Borrower not later than three (3) Business Days
after such telephone notice is given, and (ii) such notice is given to
Trade Bank prior to 10:00 a.m., California time, on the first day of the
Fixed Rate Term. For each LIBOR option requested hereunder, Trade Bank
will quote the applicable fixed rate to Borrower at approximately 10:00
a.m., California time, on the first day of the Fixed Rate Term. If
Borrower does not immediately accept the rate quoted by Trade Bank, any
subsequent acceptance by Borrower shall be subject to a redetermination by
Trade Bank of the applicable fixed rate; provided however, that if
Borrower fails to accept any such rate by 11:00 a.m., California time, on
the Business Day such quotation is given, then the quoted rate shall
expire and Trade Bank shall have no obligation to permit a LIBOR option to
be selected on such day. If no specific designation of interest is made at
the time any advance is requested hereunder or at the end of any Fixed
Rate Term, Borrower shall be deemed to have made a Prime Rate interest
selection for such advance or the principal amount to which such Fixed
Rate Term applied. |
|
3. |
ADDITIONAL
LIBOR PROVISIONS. |
|
3.1 |
If
Trade Bank at any time shall determine that for any reason adequate and
reasonable means do not exist for ascertaining Bank's LIBOR, then Trade
Bank shall promptly give notice thereof to Borrower. If such notice is
given and until such notice has been withdrawn by Trade Bank, than (i) no
new LIBOR option may be selected by Borrower, and (ii) any portion of the
outstanding principal balance hereof which bears interest determined in
relation to Bank's LIBOR, subsequent to the end of the Fixed Rate Term
applicable thereto, shall bear interest determined in relation to the
Prime Rate. |
|
3.2 |
If
any law, treaty, rule, regulation or determination of a court or
governmental authority or any change therein or in the interpretation or
application thereof (each, a "Change in Law") shall make it unlawful for
Trade Bank (i) to make LIBOR options available hereunder, or (ii) to
maintain interest rates based on Bank's LIBOR, then in the former event,
any obligation of Trade Bank to make available such unlawful LIBOR options
shall immediately be canceled, and in the latter event, any such unlawful
LIBOR-based interest rates then outstanding shall be converted, at Trade
Bank's option, so that interest on the portion of the outstanding
principal balance subject thereto is determined in relation to the Prime
Rate; provided however, that if any such Change in Law shall permit any
LIBOR-based interest rates to remain in effect until the expiration of the
Fixed Rate Term applicable thereto, then such permitted LIBOR-based
interest rates shall continue in effect until the expiration of such Fixed
Rate Term. Upon the occurrence of any of the foregoing events, Borrower
shall pay to Trade Bank immediately upon demand such amounts as may be
necessary to compensate Trade Bank for any fines, fees, charges, penalties
or other costs incurred or payable by Trade Bank as a result thereof and
which are attributable to any LIBOR options made available to Borrower
hereunder, and any reasonable allocation made by Trade Bank among its
operations shall be conclusive and binding upon
Borrower. |
|
3.3 |
If
any Change in Law or compliance by Trade Bank with any request or
directive (whether or not having the force of law) from any central bank
or other governmental authority shall: |
|
(a) |
subject
Trade Bank to any tax, duty or other charge with respect to any LIBOR
options, or change the basis of taxation of payments to Trade Bank of
principal, interest, fees or any other amount payable hereunder (except
for changes in the rate of tax on the overall net income of Trade Bank);
or |
|
(b) |
impose,
modify or hold applicable any reserve, special deposit, compulsory loan or
similar requirement against assets held by, deposits or other liabilities
in or for the account of, advances or loans by, or any other acquisition
of funds by any office of Trade Bank; or |
|
(c) |
impose
on Trade Bank any other condition; |
and the
result of any of the foregoing is to increase the cost to Trade Bank of making,
renewing or maintaining any LIBOR options hereunder and/or to reduce any amount
receivable by Trade Bank in connection therewith, then in any such case,
Borrower shall pay to Trade Bank immediately upon demand such amounts as may be
necessary to compensate Trade Bank for any additional costs incurred by Trade
Bank and/or reductions in amounts received by Trade Bank which are attributable
to such LIBOR options. In determining which costs incurred by Trade Bank and/or
reductions in amounts received by Trade Bank are attributable to any LIBOR
options made available to Borrower hereunder, any reasonable allocation made by
Trade Bank among its operations shall be conclusive and binding upon
Borrower.
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4. |
BORROWING
AND REPAYMENT: |
|
4.1 |
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 governing this Note;
provided however, that the total outstanding borrowings under this Note
shall not at any time exceed the principal amount stated above. 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
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 May 31,
2006. |
|
4.2 |
Advances.
Advances hereunder, to the total amount of the principal sum stated above,
may be made by the holder at the oral or written request of ▇▇▇▇▇▇
▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, 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 (b) any person, with respect to advances deposited to
the credit of 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. |
Page 2 of
6
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4.3 |
Application
of Payments.
Each payment made on this Note shall be credited first, to any interest
then due and second, to the outstanding principal balance hereof. All
payments credited to principal shall be applied first, to the outstanding
principal balance of this Note which bears interest determined in relation
to the Prime Rate, if any, and second, to the outstanding principal
balance of this Note which bears interest determined in relation to Bank's
LIBOR, with such payments applied to the oldest Fixed Rate Term
first. |
|
4.4 |
Prepayment. |
|
(a) |
Prime
Rate.
Borrower may prepay principal on any portion of this Note which bears
interest determined in relation to the Prime Rate at any time, in any
amount and without penalty. |
|
(b) |
LIBOR.
Borrower may prepay principal on any portion of this Note which bears
interest determined in relation to Bank's LIBOR at any time and in the
minimum amount of One
Hundred Thousand
Dollars ($100,000);
provided however, that if the outstanding principal balance of such
portion of this Note is less than said amount, the minimum prepayment
amount shall be the entire outstanding principal balance thereof. In
consideration of Trade Bank providing this prepayment option to Borrower,
or if any such portion of this Note shall become due and payable at any
time prior to the last day of the Fixed Rate Term applicable thereto by
acceleration or otherwise, Borrower shall pay to Trade Bank immediately
upon demand a fee which is the sum of the discounted monthly differences
for each month from the month of prepayment through the month in which
such Fixed Rate Term matures, calculated as follows for each such
month: |
|
(1) |
Determine
the amount of interest which would have accrued each month on the amount
prepaid at the interest rate applicable to such amount had it remained
outstanding until the last day of the Fixed Rate Term applicable
thereto. |
|
(2) |
Subtract
from the amount determined in (1) above the amount of interest which would
have accrued for the same month on the amount prepaid for the remaining
term of such Fixed Rate Term at Bank's LIBOR in effect on the date of
prepayment for new loans made for such term and in a principal amount
equal to the amount prepaid. |
|
(3) |
If
the result obtained in (2) for any month is greater than zero, discount
that difference by Bank's LIBOR used in (2)
above. |
Each
Borrower acknowledges that prepayment of such amount may result in Trade Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Each Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Trade Bank. If Borrower
fails to pay any prepayment fee when due, the amount of such prepayment fee
shall thereafter bear interest until paid at a rate per annum five percent
(5%) above
the Prime Rate in effect from time to time (computed on the basis of a
360-day
year, actual days elapsed).
|
5. |
EVENTS
OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions
of that certain Credit Agreement between Borrower and Trade Bank dated as
of ___________________________, 2005, as amended from time to time
("Credit Agreement"). Any default in the payment or performance of any
obligation under this Note, or any defined event of default under the
Credit Agreement, shall constitute an "Event of Default" under this
Note. |
|
6. |
MISCELLANEOUS: |
|
6.1 |
Remedies.
Upon the
occurrence of any Event of Default, the holder of this Note, at the
holder's option, may declare all sums of principal and interest
outstanding hereunder to be immediately due and payable without
presentment, demand, 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), 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, and including any of the foregoing incurred in connection with any
bankruptcy proceeding relating to any
Borrower. |
|
6.2 |
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. |
Page 3 of
6
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6.3 |
Governing
Law.
This Note shall be governed by and construed in accordance with the laws
of the State of California, except to the extent Trade Bank has greater
rights or remedies under Federal law, whether as a national bank or
otherwise, in which case such choice of California law shall not be deemed
to deprive Bank of any such rights and remedies as may be available under
Federal law. |
“BORROWER”
SOUTHWALL
TECHNOLOGIES INC.
By:
___________________________
Title:
__________________________
Borrower’s
Address:
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
Palo
Alto, CA 94303
Page 4 of
6
ADDENDUM
TO PROMISSORY NOTE
THIS
ADDENDUM is attached to and made a part of that certain promissory note executed
by SOUTHWALL TECHNOLOGIES INC., a Delaware corporation ("Borrower") and payable
to ▇▇▇▇▇ FARGO HSBC TRADE BANK, NATIONAL ASSOCIATION, or order, dated as of
___________________________, 2005, in the principal amount of Three Million
Dollars ($3,000,000) (the "Note").
The
following arbitration provision is hereby incorporated into the
Note:
ARBITRATION:
1. Arbitration. The
parties hereto agree, upon demand by any party, to submit to binding arbitration
all claims, disputes and controversies between or among them (and their
respective employees, officers, directors, attorneys, and other agents), whether
in tort, contract or otherwise arising out of or relating to in any way (i) the
loan and related loan and security documents which are the subject of this Note
and its negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional
credit.
2. Governing
Rules. Any
arbitration proceeding will (i) proceed in a location in California selected by
the American Arbitration Association (“AAA”); (ii) be governed by the Federal
Arbitration Act (Title 9 of the United States Code), notwithstanding any
conflicting choice of law provision in any of the documents between the parties;
and (iii) be conducted by the AAA, or such other administrator as the parties
shall mutually agree upon, in accordance with the AAA’s commercial dispute
resolution procedures, unless the claim or counterclaim is at least
$1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which
case the arbitration shall be conducted in accordance with the AAA’s optional
procedures for large, complex commercial disputes (the commercial dispute
resolution procedures or the optional procedures for large, complex commercial
disputes to be referred to, as applicable, as the “Rules”). If there is any
inconsistency between the terms hereof and the Rules, the terms and procedures
set forth herein shall control. Any party who fails or refuses to submit to
arbitration following a demand by any other party shall bear all costs and
expenses incurred by such other party in compelling arbitration of any dispute.
Nothing contained herein shall be deemed to be a waiver by any party that is a
bank of the protections afforded to it under 12 U.S.C. §91 or any similar
applicable state law.
3. No
Waiver; Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this
paragraph.
4. Arbitrator
Qualifications and Powers. Any
arbitration proceeding in which the amount in controversy is $5,000,000.00 or
less will be decided by a single arbitrator selected according to the Rules, and
who shall not render an award of greater than $5,000,000.00. Any dispute in
which the amount in controversy exceeds $5,000,000.00 shall be decided by
majority vote of a panel of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and deliberations. The
arbitrator will be a neutral attorney licensed in the State of California or a
neutral retired judge of the state or federal judiciary of California, in either
case with a minimum of ten years experience in the substantive law applicable to
the subject matter of the dispute to be arbitrated. The arbitrator will
determine whether or not an issue is arbitratable and will give effect to the
statutes of limitation in determining any claim. In any arbitration proceeding
the arbitrator will decide (by documents only or with a hearing at the
arbitrator's discretion) any pre-hearing motions which are similar to motions to
dismiss for failure to state a claim or motions for summary adjudication. The
arbitrator shall resolve all disputes in accordance with the substantive law of
California and may grant any remedy or relief that a court of such state could
order or grant within the scope hereof and such ancillary relief as is necessary
to make effective any award. The arbitrator shall also have the power to award
recovery of all costs and fees, to impose sanctions and to take such other
action as the arbitrator deems necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil
Procedure or other applicable law. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. 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.
5. Discovery. In any
arbitration proceeding discovery will be permitted in accordance with the Rules.
All discovery shall be expressly limited to matters directly relevant to the
dispute being arbitrated and must be completed no later than 20 days before the
hearing date and within 180 days of the filing of the dispute with the AAA. Any
requests for an extension of the discovery periods, or any discovery disputes,
will be subject to final determination by the arbitrator upon a showing that the
request for discovery is essential for the party's presentation and that no
alternative means for obtaining information is
available.
6. Class
Proceedings and Consolidations. The
resolution of any dispute arising pursuant to the terms of this Note shall be
determined by a separate arbitration proceeding and such dispute shall not be
consolidated with other disputes or included in any class
proceeding.
7. Payment
Of Arbitration Costs And Fees. The
arbitrator shall award all costs and expenses of the arbitration
proceeding.
8. Real
Property Collateral; Judicial Reference.
Notwithstanding anything herein to the contrary, no dispute shall be submitted
to arbitration if the dispute concerns indebtedness secured directly or
indirectly, in whole or in part, by any real property unless (i) the holder of
the mortgage, lien or security interest specifically elects in writing to
proceed with the arbitration, or (ii) all parties to the arbitration waive any
rights or benefits that might accrue to them by virtue of the single action rule
statute of California, thereby agreeing that all indebtedness and obligations of
the parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such dispute is not submitted to arbitration, the dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA’s selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and
645.
Page 5 of
6
9. Miscellaneous. To the
maximum extent practicable, the AAA, the arbitrators and the parties shall take
all action required to conclude any arbitration proceeding within 180 days of
the filing of the dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results thereof,
except for disclosures of information by a party required in the ordinary course
of its business or by applicable law or regulation. If more than one agreement
for arbitration by or between the parties potentially applies to a dispute, the
arbitration provision most directly related to the documents between the parties
or the subject matter of the dispute shall control. This Note may be amended or
modified only in writing signed by each party hereto. If any provision of this
Note shall be held to be prohibited by or invalid under applicable law such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or any
remaining provisions of this Note. This arbitration provision shall survive
termination, amendment or expiration of any of the documents or any relationship
between the parties.
IN
WITNESS WHEREOF, this ▇▇▇▇▇▇▇▇ has been executed as of the same date as the
Note.
“BORROWER”
SOUTHWALL
TECHNOLOGIES INC.
By:
___________________________
Title:
__________________________
Page 6 of
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