PROMISSORY NOTE
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PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
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$1,000,▇▇▇ ▇▇-▇▇-▇▇ 06-01-97 20 310
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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: NEW HORIZONS EDUCATION CORPORATION LENDER: MARINE NATIONAL BANK
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Principal Amount: $1,00,000.00 Initial Rate: 8.250%
Date of Note: January 14, 1997
PROMISE TO PAY. NEW HORIZONS EDUCATION CORPORATION ("Borrower") promises to pay
to MARINE NATIONAL BANK ("Lender"), or order, in lawful money of the United
States of America, the principal amount of One Million and 00/100 Dollars
($1,000,000.00) 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 June 1,
1997. In addition, ▇▇▇▇▇▇▇▇ will pay regular monthly payments of accrued unpaid
interest beginning February 1, 1997, and all subsequent interest payments are
due on the same day of each month 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 ▇▇▇▇▇▇'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 accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the Prime rate as
published by the Wall Street Journal (the "Index"). The Index is not necessarily
the lowest rate charged by Lender on its loans. If the Index becomes unavailable
during the term of this loan, Lender may designate a substitute Index after
notice to Borrower. Lender will tell Borrower the current Index rate upon
▇▇▇▇▇▇▇▇'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 equal to
the Index, resulting in an initial rate of 8.250% per annum. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law.
PREPAYMENT; MINIMUM INTEREST CHARGE. ▇▇▇▇▇▇▇▇ 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. In any event, even upon
full prepayment of this Note, ▇▇▇▇▇▇▇▇ understands that Lender is entitled to a
minimum interest charge of $100.00. Other than ▇▇▇▇▇▇▇▇'s obligation to pay any
minimum interest charge, 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 ▇▇▇▇▇▇ in writing, relieve Borrower of ▇▇▇▇▇▇▇▇'s obligation to
continue to make payments of accrued unpaid interest. Rather, they will reduce
the principal balance due.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $5.00, whichever is greater.
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) Any representation or statement made or furnished to Lender
by Borrower or on ▇▇▇▇▇▇▇▇'s behalf is false or misleading in any material
respect either now or at the time made or furnished. (▇) ▇▇▇▇▇▇▇▇ becomes
insolvent, a receiver is appointed for any part of ▇▇▇▇▇▇▇▇'s property, ▇▇▇▇▇▇▇▇
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.
(e) Any creditor tries to take any of ▇▇▇▇▇▇▇▇'s property on or in which ▇▇▇▇▇▇
has a lien or security interest. This includes a garnishment of any of
▇▇▇▇▇▇▇▇'s accounts with ▇▇▇▇▇▇. (f) Any guarantor dies or any of the other
events described in this default section occurs with respect to any guarantor of
this Note. (g) A material adverse change occurs in Borrower's financial
condition, or ▇▇▇▇▇▇ believes the prospect of payment or performance of the
indebtedness is impaired. (h) Lender in good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure.
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 ▇▇▇▇▇▇▇▇, 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 Lender'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, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇'s failure to pay
all amounts declared due pursuant to this section, 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 5.000 percentage points
over the Index. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. ▇▇▇▇▇▇▇▇ also will pay Lender that amount. This includes,
subject to any limits under applicable law, ▇▇▇▇▇▇'s attorneys' fees and
▇▇▇▇▇▇'s legal expenses whether or not there is a lawsuit, including 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. ▇▇▇▇▇▇▇▇ 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 Lender in the State of California. If there is a lawsuit,
▇▇▇▇▇▇▇▇ agrees upon ▇▇▇▇▇▇'s request to submit to the jurisdiction of the
courts of ORANGE County, the State of California. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ hereby
waive the right to any jury trial in any action, proceeding, or counterclaim
brought by either ▇▇▇▇▇▇ or Borrower against the other. This Note shall be
governed by and construed in accordance with the laws of the State of
California.
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, ▇▇▇▇▇▇▇▇'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 and ▇▇▇▇▇ accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes ▇▇▇▇▇▇, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
COLLATERAL. This Note is secured by SIX COMMERCIAL SECURITY AGREEMENTS DATED
JANUARY 14, 1997, EXECUTED BY ▇▇▇▇▇▇▇▇ OR PLEDGOR IN CONNECTION WITH THIS NOTE.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing 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 ▇▇▇▇▇▇'s office shown
above. The following party or parties are authorized to request advances under
the line of credit until ▇▇▇▇▇▇ receives from Borrower at ▇▇▇▇▇▇'s address shown
above written notice of revocation of their authority: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, CHIEF
FINANCIAL OFFICER; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, PRESIDENT AND COO; and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
CHAIRMAN OF THE BOARD & CEO. ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇'s accounts with ▇▇▇▇▇▇. The unpaid principal balance
owing on this Note at any time may be evidenced by endorsements on this Note or
by ▇▇▇▇▇▇'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; (d) Borrower has applied funds provided pursuant to
this Note for purposes other than those authorized by Lender; or (e) Lender in
good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure under this Note or any other agreement between
Lender and Borrower.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude ▇▇▇▇▇▇'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 extend
allowed by law, waive any applicable statute of limitations, 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 ▇▇▇▇▇▇'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 ▇▇▇▇▇▇ may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made.
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PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. ▇▇▇▇▇▇▇▇ AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
NEW HORIZONS EDUCATION CORPORATION
By: _______________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, CHIEF FINANCIAL OFFICER
