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EXHIBIT 10.24
LOAN AGREEMENT
June 11, 1997
Vertex Communications Corporation
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▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This Loan Agreement (the "Loan Agreement") will serve to set forth the terms
of a certain financing transaction by and between VERTEX COMMUNICATIONS
CORPORATION ("Borrower") and BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Bank"):
1. CREDIT FACILITY. Subject to the terms and conditions set forth in this Loan
Agreement and the other agreements, instruments and documents evidencing,
securing, governing, guaranteeing and/or pertaining to the Loans, as
hereinafter defined (collectively, together with the Loan Agreement,
referred to hereinafter as the "Loan Documents"), Bank hereby agrees to
provide to Borrower the credit facility hereinbelow (the "Credit
Facility"):
a. Revolving Line of Credit. Subject to the terms and conditions set
forth herein, Bank agrees to lend to Borrower, on a revolving basis
from time to time during the period commencing on the date hereof and
continuing through and including 11:00 a.m. (Central Time) on June 11,
1999 ( the "Termination Date"), such amounts as Borrower may request
hereunder; provided, however, the total principal amount outstanding
at any time shall not exceed $15,000,000.00 less the amount of the
outstanding Letter of Credit Liabilities (hereinafter defined) (the
"Revolving Line of Credit"). Subject to the terms and conditions
hereof, Borrower may borrow, repay and reborrow hereunder. The sums
advanced under the Revolving Line of Credit shall be used for working
capital.
b. Letters of Credit. Subject to the terms and conditions set forth
herein, Bank agrees to issue one or more documentary or stand-by
letters of credit (collectively, the "Letters of Credit") for the
account of Borrower from time to time from the date hereof to and
including the Termination Date; provided, however, that the Bank's
outstanding commitments under all outstanding Letters of Credit (the
"Letter of Credit Liabilities") shall not at any time exceed
$5,000,000.00. All Letters of Credit shall have an expiration date no
more than two (2) years from date of issuance, must support a
transaction that is entered into in the ordinary course of business,
must otherwise be satisfactory in form and substance to Bank, and
shall be issued pursuant to such documents and instruments, including,
without limitation, Bank's standard application and agreement for
issuance of documentary and stand-by letters of credit, as then in
effect as Bank may require. No Letter of Credit shall require any
payment by Bank to the beneficiary thereunder pursuant to a drawing
prior to the third business day following presentment of a draft and
any related documents to Bank. Each Letter of Credit shall be issued
on at least three (3) business days prior notice from Borrower to Bank.
Each payment by Bank pursuant to a drawing under a Letter of Credit
must be repaid to Bank immediately by Borrower in accordance with the
terms of the subject Letter of Credit Application. Borrower shall pay
to Bank a letter of credit fee payable on the date each Letter of
Credit is issued in an amount equal to one percent (1%) per annum of
the stated amount of such Letter of Credit, for the stated term of
such Letter of Credit, based on a 360 day year and the actual number
of days elapsed.
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All advances under the Credit Facility and obligations of Borrower to Bank under
the Letters of Credit shall be collectively called the "Loan". Bank reserves the
right to require Borrower to give Bank not less than one (1) business day prior
notice of each requested advance under the Credit Facility, specifying (i) the
aggregate amount of such requested advance, (ii) the requested date of such
advance, and (iii) the purpose for such advance, with such advances to be
requested in a form satisfactory to Bank.
2. PROMISSORY NOTE. The Loan shall be evidenced by one or more promissory
notes (together with any renewals, extensions and increases thereof, the
"Note") duly executed by Borrower and payable to the order of Bank, in form
and substance acceptable to Bank. Interest on the Note shall accrue at the
rate set forth therein. The principal of and interest on the Note shall be
due and payable in accordance with the terms and conditions set forth in
the Note and in this Loan Agreement.
3. COLLATERAL. The Loan shall be unsecured.
4. GUARANTORS. As a condition precedent to the Bank's obligation to make the
Loan to Borrower, Borrower agrees to cause Gamma-f Corp., TIW Systems,
Inc., and Maxtech, Inc. (whether one or more, the "Guarantors") to each
execute and deliver to Bank contemporaneously herewith a guaranty
agreement, in form and substance satisfactory to Bank.
5. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants,
and upon each request for an advance under the Credit Facility further
represents and warrants, to Bank as follows:
a. Existence. Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas and all other
states where it is doing business, and has all requisite power and
authority to execute and deliver the Loan Documents.
b. Binding Obligations. The execution, delivery, and performance of this
Loan Agreement and all of the other Loan Documents by Borrower have
been duly authorized by all necessary action by Borrower, and
constitute legal, valid and binding obligations of Borrower,
enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and except
to the extent specific remedies may generally be limited by equitable
principles.
c. No Consent. The execution, delivery and performance of this Loan
Agreement and the other Loan Documents, and the consummation of the
transactions contemplated hereby and thereby, do not (i) conflict with,
result in a violation of, or constitute a default under (A) any
provision of its articles or certificate of incorporation or bylaws, or
any agreement or other instrument binding upon Borrower, or (B) any
law, governmental regulation, court decree or order applicable to
Borrower, or (ii) require the consent, approval or authorization of any
third party.
d. Financial Condition. Each financial statement of Borrower supplied to
the Bank truly discloses and fairly presents Borrower's financial
condition as of the date of each such statement. There has been no
material adverse change in such financial condition or results of
operations of Borrower subsequent to the date of the most recent
financial statement supplied to the Bank.
e. Litigation. There are no actions, suits or proceedings, pending or,
to the knowledge of Borrower, threatened against or affecting Borrower
or the properties of Borrower, before any court or
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governmental department, commission or board, which, if determined
adversely to Borrower, would have a material adverse effect on the
financial condition, properties, or operations of Borrower.
f. Taxes; Governmental Charges. Borrower has filed all federal, state and
local tax reports and returns required by any law or regulation to be
filed by it and has either duly paid all taxes, duties and charges
indicated due on the basis of such returns and reports, or made
adequate provision for the payment thereof, and the assessment of any
material amount of additional taxes in excess of those paid and
reported is not reasonably expected.
6. CONDITIONS PRECEDENT TO ADVANCES. Bank's obligation to make any advance
under this Loan Agreement and the other Loan Documents shall be subject to
the conditions precedent that, as of the date of such advance and after
giving effect thereto (i) all representations and warranties made to Bank
in this Loan Agreement and the other Loan Documents shall be true and
correct, as of and as if made on such date, (ii) no material adverse
change in the financial condition of Borrower since the effective date of
the most recent financial statements furnished to Bank by Borrower shall
have occurred and be continuing, (iii) no event has occurred and is
continuing, or would result from the requested advance, which with notice
or lapse of time, or both, would constitute an Event of Default (as
hereinafter defined), and (iv) Bank has received all Loan Documents
appropriately executed by Borrower and all other proper parties.
7. AFFIRMATIVE COVENANTS. Until (i) the Note and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Bank has no further
commitment to lend hereunder, Borrower agrees and covenants that it will,
unless Bank shall otherwise consent in writing:
a. Accounts and Records. Maintain its books and records in accordance
with generally accepted accounting principles.
b. Right of Inspection. Permit Bank to visit its properties and
installations and to examine, audit and make and take away copies or
reproductions of Borrower's books and records, at all reasonable times.
c. Right to Additional Information. Furnish Bank with such additional
information and statements, lists of assets and liabilities, tax
returns, and other reports with respect to Borrower's financial
condition and business operations as Bank may request from time to
time.
d. Compliance with Laws. Conduct its business in an orderly and efficient
manner consistent with good business practices, and perform and comply
with all statutes, rules, regulations and/or ordinances imposed by any
governmental unit upon Borrower its businesses, operations and
properties (including without limitation, all applicable environmental
statutes, rules, regulations and ordinances).
e. Taxes. Pay and discharge when due all of its indebtedness and
obligations, including without limitation, all assessments, taxes,
governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to
the date on which penalties would attach, and all lawful claims that,
if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profits; provided, however, Borrower will not
be required to pay and discharge any such assessment, tax, charge,
▇▇▇▇, ▇▇▇▇ or claim so long as (i) the legality of the same shall be
contested in good faith by appropriate judicial, administrative or
other legal proceedings, and (ii) Borrower shall have established on
its books adequate reserves with respect to
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such contested assessment, tax, charge, ▇▇▇▇, ▇▇▇▇ or claim in
accordance with generally accepted accounting principles, consistently
applied.
f. Insurance. Maintain insurance, including but not limited to, fire
insurance, comprehensive property damage, public liability, worker's
compensation, business interruption and other insurance deemed
necessary or otherwise required by Bank.
g. Notice of Indebtedness. Promptly inform Bank of the creation,
incurrence or assumption by Borrower of any actual or contingent
liabilities not permitted under this Loan Agreement.
h. Notice of Litigation. Promptly after the commencement thereof, notify
Bank of all actions, suits and proceedings before any court or any
governmental department, commission or board affecting Borrower or any
of its properties.
i. Notice of Material Adverse Change. Promptly inform Bank of (i) any and
all material adverse changes in Borrower's financial condition, and
(ii) all claims made against Borrower which could materially affect the
financial condition of Borrower.
j. Additional Documentation. Execute and deliver, or cause to be executed
and delivered, any and all other agreements, instruments or documents
which Bank may reasonably request in order to give effect to the
transactions contemplated under this Loan Agreement and the other Loan
Documents.
k. Unused Fee. Pay to Bank a fee, for the period commencing on the date of
this Agreement and ending on and including the maturity date of the
Note evidencing the Revolving Line of Credit, computed at a rate equal
to one-fourth of one percent (.25%) per annum, calculated on the daily
average unused portion of the Revolving Line of Credit, such fee being
payable quarterly in arrears on the last calendar day of each calendar
quarter, and on the maturity date of the Note evidencing the Revolving
Line of Credit.
8. NEGATIVE COVENANTS. Until (i) the Note and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Bank has no further
commitment to lend hereunder, Borrower will not, without the prior written
consent of Bank:
a. Nature of Business. Make any material change in the nature of its
business as carried on as of the date hereof.
b. Liquidations, Mergers, Consolidations. Liquidate, merge or
consolidate with or into any other entity.
c. Sale of Assets. Sell, transfer or otherwise dispose of any of its
assets or properties, other than in the ordinary course of business.
d. Liens. Create or incur any lien or encumbrance on any of its assets,
other than (i) liens and security interests securing indebtedness owing
to Bank, (ii) liens for taxes, assessments or similar charges either
(1) not yet due or (2) being contested in good faith by appropriate
proceedings and for which Borrower has established adequate reserves,
(iii) liens and security interest existing as of the date hereof which
have been disclosed to and approved by the Bank in writing, and (iv)
purchase money liens as permitted in (iii) of subparagraph (e) below.
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e. Indebtedness. Create, incur or assume any indebtedness for borrowed
money or issue or assume any other note, debenture, bond or other
evidences of indebtedness, or guarantee any such indebtedness or such
evidences of indebtedness of others, other than (i) borrowings from
Bank, (ii) borrowings outstanding on the date hereof and disclosed in
writing to Bank, and (iii) purchase money indebtedness not to exceed in
principal balance at any time in excess of $500,000.00.
f. Transfer of Ownership. Permit the sale, pledge or other transfer of
any of the ownership interest in Borrower.
g. Loans. Make any loans to any person or entity.
h. Transactions with Affiliates. Enter into any transaction, including,
without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate (as hereinafter defined)
of Borrower, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business and upon fair and
reasonable terms no less favorable to Borrower than would be obtained
in a comparable arm's-length transaction with a person or entity not an
Affiliate of Borrower. As used herein, the term "Affiliate" means any
individual or entity directly or indirectly controlling, controlled by,
or under common control with, another individual or entity.
9. FINANCIAL COVENANTS. Until (i) the Note and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Bank has no further
commitment to lend hereunder, Borrower will maintain the following
financial covenants:
a. Current Ratio. Borrower will maintain, as of the last day of each
fiscal quarter, a ratio of (a) current assets (excluding prepaid
expenses), to (b) current liabilities including the unpaid balance of
the Revolving Line of Credit, of not less than 1.5 to 1.0.
b. Tangible Net Worth. Borrower will maintain, as of the last day of each
fiscal quarter, its Tangible Net Worth at not less than ninety percent
(90%) of its actual total net worth on the date Borrower acquires TIW
Systems, Inc.; provided however, that effective with the first quarter
of each fiscal year after the date of this Agreement, the required
minimum Tangible Net Worth shall be equal to the required Tangible Net
Worth as of the end of the preceding fiscal year plus 50% of Borrower's
reported net income for the preceding fiscal year plus 100% of the
amount of any equity issuance during the preceding fiscal year .
c. Debt/Cash Flow. Borrower will maintain, as of the last day of each
fiscal quarter, a ratio of (a) senior funded debt plus outstanding
standby Letters of Credit for the 12 month period ending with such
fiscal quarter, to (b) earnings before interest, depreciation, and
amortization, for such 12 month period, of not less than 3.0 to 1.0.
d. Fixed Charge Ratio. Borrower will maintain, as of the end of each
fiscal quarter, a ratio of (a) earnings before interest, depreciation,
and amortization, less internally funded capital expenditures, for the
12 month period ending with such fiscal quarter, to (b) interest
expense and current maturities of long-term debt, for such 12 month
period, of not less than 1.5 to 1.0.
As used herein, the term "Tangible Net Worth" means, as of any date, Borrower's
total assets excluding all intangible assets, less capitalized development costs
and total liabilities excluding any Subordinated Debt. As used herein, the term
"Subordinated Debt" means any indebtedness owing by Borrower which has been
subordinated by written agreement to all indebtedness now or hereafter owing by
Borrower to Lender, such
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agreement to be in form and substance acceptable to Lender. Unless otherwise
specified, all accounting and financial terms and covenants set forth above are
to be determined according to generally accepted accounting principles,
consistently applied.
10. REPORTING REQUIREMENTS. Until (i) the Note and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Bank has no further
commitment to lend hereunder, Borrower will, unless Bank shall otherwise
consent in writing, furnish to Bank:
a. Interim Financial Statements. As soon as available, and in any event
within forty-five (45) days after the end of each quarter of each
fiscal year of Borrower, a balance sheet and income statement of
Borrower as of the end of such fiscal quarter, all in form and
substance and in reasonable detail satisfactory to Bank and duly
certified (subject to year-end review adjustments) by the President
and/or Chief Financial Officer of Borrower (i) as being true and
correct in all material aspects to the best of his or her knowledge and
(ii) as having been prepared in accordance with generally accepted
accounting principles, consistently applied.
b. Annual Financial Statements. As soon as available and in any event
within ninety (90) days after the end of each fiscal year of Borrower,
a balance sheet and income statement of Borrower as of the end of such
fiscal year, in each case audited by independent public accountants of
recognized standing acceptable to Bank.
c. Compliance Certificate/Jobs Status Report. Within forty-five (45) days
after the end of each quarter of each fiscal year, (i) a certificate
signed by President or Chief Financial Officer of Borrower stating that
Borrower is in full compliance with all of its obligations under this
Loan Agreement and all other Loan Documents and is not in default of
any term or provisions hereof or thereof, and demonstrating compliance
with all financial ratios and covenants set forth in this Loan
Agreement, and (ii) a jobs status report as of the end of such fiscal
quarter.
11. EVENTS OF DEFAULT. Each of the following shall constitute an "Event of
Default" under this Loan Agreement:
a. The failure of Borrower to pay when due any part of the principal of,
or interest on, the Note or any other indebtedness or obligations owing
to Bank by Borrower from time to time, and the continuation of such
condition for a period of five (5) days after written notice thereof by
Bank to Borrower.
b. The failure of Borrower or any Obligated Party (as defined below) to
timely and properly observe, keep or perform any covenant, agreement,
warranty or condition required herein or in any of the other Loan
Documents, and the continuation of such failure for a period of thirty
(30) days after written notice thereof by Bank to Borrower.
c. The occurrence of an event of default under any of the other Loan
Documents or under any other agreement now existing or hereafter
arising between Bank and Borrower.
d. Any representation contained herein or in any of the other Loan
Documents made by Borrower or any Obligated Party is false or
misleading in any material respect.
e. The occurrence of any event which permits the acceleration of the
maturity of any indebtedness owing by Borrower to any third party under
any agreement or understanding.
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f. If Borrower or any Obligated Party: (i) becomes insolvent, or makes a
transfer in fraud of creditors, or makes an assignment for the benefit
of creditors, or admits in writing its inability to pay its debts as
they become due; (ii) generally is not paying its debts as such debts
become due; (iii) has a receiver, trustee or custodian appointed for,
or take possession of, all or substantially all of the assets of such
party, either in a proceeding brought by such party or in a proceeding
brought against such party and such appointment is not discharged or
such possession is not terminated within sixty (60) days after the
effective date thereof or such party consents to or acquiesces in
such appointment or possession; (iv) files a petition for relief
under the United States Bankruptcy Code or any other present or
future federal or state insolvency, bankruptcy or similar laws (all
of the foregoing hereinafter collectively called "Applicable
Bankruptcy Law") or an involuntary petition for relief is filed
against such party under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within sixty (60) days after the
filing thereof, or an order for relief naming such party is entered
under any Applicable Bankruptcy Law, or any composition,
rearrangement, extension, reorganization or other relief of debtors
now or hereafter existing is requested or consented to by such party;
(v) fails to have discharged within a period of thirty (30) days any
attachment, sequestration or similar writ levied upon any property of
such party; or (vi) fails to pay within thirty (30) days any final
money judgment against such party.
Nothing contained in this Loan Agreement shall be construed to limit the events
of default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative. The term "Obligated Party", as used herein, shall
mean any party other than Borrower who secures, guarantees and/or is otherwise
obligated to pay all or any portion of the indebtedness evidenced by the Notes.
12. REMEDIES. Upon the occurrence of any one or more of the foregoing Events
of Default, (a) the entire unpaid balance of principal of the Note,
together with all accrued but unpaid interest thereon, and all other
indebtedness owing to Bank by Borrower at such time shall, at the option
of Bank, become immediately due and payable without further notice,
demand, presentation, notice of dishonor, notice of intent to accelerate,
notice of acceleration, protest or notice of protest at any kind, all of
which are expressly waived by Borrower. All rights and remedies of Bank
set forth in this Loan Agreement and in any of the other Loan Doicuments
may also be exercised by Bank, at its option to be exercised in its sole
discretion, upon the occurrence of an Event of Default.
13. RIGHTS CUMULATIVE. All rights of Bank under the terms of this Loan
Agreement shall be cumulative of, and in addition to, the rights of Bank
under any and all other agreements between Borrower and Bank (including,
but not limited to, the other Loan Documents), and not in substitution or
diminution of any rights now or hereafter held by Bank under the terms of
any other agreement.
14. WAIVER AND AGREEMENT. Neither the failure nor any delay on the part of Bank
to exercise any right, power or privilege herein or under any of the other
Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. No waiver of any provision in this Loan Agreement or in any of
the other Loan Documents and no departure by Borrower therefrom shall be
effective unless the same shall be in writing and signed by Bank, and then
shall be effective only in
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the specific instance and for the purpose for which given and to the extent
specified in such writing. No modification or amendment to this Loan
Agreement or to any of the other Loan Documents shall be valid or effective
unless the same is signed by the party against whom it is sought to be
enforced.
15. BENEFITS. This Loan Agreement shall be binding upon and inure to the
benefit of Bank and Borrower, and their respective successors and assigns,
provided, however, that Borrower may not, without the prior written consent
of Bank, assign any rights, powers, duties or obligations under this Loan
Agreement or any of the other Loan Documents.
16. NOTICES. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be
in writing and given by (i) personal delivery, (ii) expedited
delivery service with proof of delivery, or (iii) United States mail,
postage prepaid, registered or certified mail, return receipt
requested, sent to the intended addressee at the address set forth on
the signature page hereof and shall be deemed to have been received
either, in the case of personal delivery, as of the time of personal
delivery, in the case of expedited delivery service, as of the date
of first attempted delivery at the address and in the manner provided
herein, or in the case of mail, upon deposit in a depository
receptacle under the care and custody of the United States Postal
Service. Either party shall have the right to change its address for
notice hereunder to any other location within the continental United
States by notice to the other party of such new address at least
thirty (30) days prior to the effective date of such new address.
17. CONSTRUCTION. This Loan Agreement and the other Loan Documents have been
executed and delivered in the State of Texas, shall be governed by and
construed in accordance with the laws of the State of Texas, and shall be
performable by the parties hereto in the county in Texas where the Bank's
address set forth on the signature page hereof is located.
18. INVALID PROVISIONS. If any provision of this Loan Agreement or any of the
other Loan Documents is held to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable and the
remaining provisions of this Loan Agreement or any of the other Loan
Documents shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance.
19. EXPENSES. Borrower shall pay all costs and expenses (including, without
limitation, reasonable attorneys' fees) in connection with (i) any action
required in the course of administration of the indebtedness and
obligations evidenced by the Loan Documents, and (ii) any action in the
enforcement of Bank's rights upon the occurrence of Event of Default.
20. PARTICIPATION OF THE LOANS. Borrower agrees that Bank may, at its option,
sell interests in the Loans and its rights under this Loan Agreement to a
financial institution or institutions and, in connection with each such
sale, Bank may disclose any financial and other information available to
Bank concerning Borrower to each perspective purchaser.
21. ENTIRE AGREEMENT. This Loan Agreement (together with the other Loan
Documents) contains the entire agreement among the parties regarding the
subject matter hereof and supersedes all prior written and oral agreements
and understandings among the parties hereto regarding same.
22. CONFLICTS. The notice and cure provisions set forth in Subparagraphs 11
(a), (b), and (c) above shall be applicable to corresponding Events of
Default or Defaults under all other Loan Documents, and to the extent the
terms and provisions of any of such other Loan Documents are in conflict or
are inconsistent
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therewith, Subparagraphs 11 (a), (b), and (c) and this Paragraph 22 shall
control. In the event any term or provision hereof is inconsistent with or
conflicts with any provision of the other Loan Documents, the terms and
provisions contained in this Loan Agreement shall be controlling.
23. COUNTERPARTS. This Loan Agreement may be separately executed in any number
of counterparts, each of which shall be an original, but all of which,
taken together, shall be deemed to constitute one and the same instrument.
If the foregoing correctly sets forth our mutual agreement, please so
acknowledge by signing and returning this Loan Agreement to the undersigned.
Very truly yours,
BANK ONE, TEXAS, NATIONAL ASSOCIATION
By:
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Name:
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Title:
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Bank's Address:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇▇▇
ACCEPTED as of the date first written above.
BORROWER:
VERTEX COMMUNICATIONS CORPORATION
By:
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Name:
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Title:
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Borrower's Address:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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PROMISSORY NOTE
$15,000,000.00 June 11, 1997
FOR VALUE RECEIVED, on or before June 11, 1999 ("Maturity Date"), VERTEX
COMMUNICATONS CORPORATION ("Borrower") does hereby unconditionally promise to
pay to the order of BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Bank"), at its
offices in Dallas County, Texas at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, the
principal amount of FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) ("Total
Principal Amount"), or such amount less than the Total Principal Amount which is
outstanding from time to time if the total amount outstanding under this
Promissory Note ("Note") is less than the Total Principal Amount, in lawful
money of the United States of America, together with interest on such portion of
the Total Principal Amount which has been drawn until paid at the rates per
annum provided below.
1. Definitions. For purposes of this Note, unless the context otherwise
requires, the following terms shall have the definitions assigned to such terms
as follows:
"Adjusted Base Rate" shall mean a rate per annum equal to the Base Rate.
"Adjusted LIBOR Rate" shall mean with respect to each Interest Period, on
any day thereof an amount equal to the sum of (i) one and one-half percent
(1.5%), plus, (ii) the quotient of (a) the LIBOR Rate with respect to such
Interest Period, divided by (b) the remainder of 1.0 less the Reserve
Requirement in effect on such day. Each determination by Bank of the Adjusted
LIBOR Rate shall, in the absence of manifest error, be conclusive and binding.
"Base Rate" shall mean the rate established from time to time by Bank as
its Base Rate of interest (which may not be the lowest, best or most favorable
rate of interest which Bank may charge on loans to its customers).
"Base Rate Balance" shall mean that portion of the principal balance of
this Note bearing interest at a rate based upon the Adjusted Base Rate.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which national banking associations are authorized to be closed.
"Consequential Loss" shall mean, with respect to Borrower's payment of all
or any portion of the then-outstanding principal amount of any LIBOR Balance on
a day other than the last day of the Interest Period related thereto, any loss,
cost or expense incurred by Bank in redepositing such principal amount,
including the sum of (i) the interest which, but for such payment, Bank would
have earned in respect of such principal amount so paid, for the remainder of
the Interest Period applicable to such sum, reduced, if Bank is able to
redeposit
11
such principal amount so paid for the balance of such Interest Period, by the
interest earned by Bank as a result of so redepositing such principal amount
plus (ii) any expense or penalty incurred by Bank on redepositing such principal
amount.
"Contract Rate" shall mean a rate of interest based upon the Adjusted LIBOR
Rate or Adjusted Base Rate in effect at any time pursuant to an Interest Notice.
"Dollars" shall mean lawful currency of the United States of America.
"Event of Default" shall mean the (a) failure of Borrower to pay any
installment of principal of or interest on this Note to Bank when due, (b) the
occurrence of an event of default specified in any of the other Loan Documents,
or (c) the bankruptcy or insolvency of, the assignment for the benefit of
creditors by, or the appointment of a receiver for any of the property of, or
the liquidation, termination, dissolution or death or legal incapacity of, any
part liable for the payment of this Note, whether as maker, endorser, guarantor,
surety or otherwise.
"Excess Interest Amount" shall mean, on any date, the amount by which (i)
the amount of all interest which would have accrued prior to such date on the
principal of this Note, had the applicable Contract Rate at all times been in
effect without limitation by the Maximum Rate, exceeds (ii) the aggregate amount
of interest accrued on this Note on or prior to such date.
"Interest Notice" shall mean the notice given by Borrower to Bank of the
Interest Options selected hereunder. Each Interest Notice shall specify the
Interest Option selected, the amount of the unpaid principal balance of this
Note to bear interest at the rate selected and, if the Adjusted LIBOR Rate is
specified, the length of the applicable Interest Period. An Interest Notice may
be written or oral (if promptly confirmed thereafter in writing) and Bank is
hereby authorized and directed to honor all telephonic Interest Notices from any
person authorized to request advances hereunder.
"Interest Option" shall have the meaning assigned to such term in paragraph
6 hereof.
"Interest Payment Date" shall mean (i) in the case of the Base Rate
Balance, the first day of each month during the term of the Note and on the
Maturity Date, and (ii) in the case of any LIBOR Balance, the last day of the
corresponding Interest Period with respect to such LIBOR Balance and the
Maturity Date; provided, however, such interest shall also be due and payable,
on any LIBOR Balance whose corresponding Interest Period is 180 days, on the
91st day of such Interest Period.
"Interest Period" shall mean, with respect to any LIBOR Balance, a period
commencing: (i) on any date which, pursuant to an Interest Notice, the principal
amount of such LIBOR Balance begins to accrue interest at the Adjusted LIBOR
Rate, or (ii) the Business Day
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following the last day of the immediately preceding Interest Period in the case
of a rollover to a successive Interest Period and ending 30, 60, 90 or 180 days
thereafter as Borrower shall elect in accordance with the provisions hereof;
provided, that: (A) any Interest Period which would otherwise end on a day which
is not a LIBOR Business Day shall be extended to the succeeding LIBOR Business
Day and (B) any Interest Period which would otherwise end after the Maturity
Date shall end on the Maturity Date.
"LIBOR Balance" shall mean any principal balance of this Note which,
pursuant to an Interest Notice, bears interest at a rate based upon the Adjusted
LIBOR Rate for the Interest Period specified in such Interest Notice.
"LIBOR Business Day" shall mean a day on which dealings in Dollars are
carried out in the London interbank eurodollar market.
"LIBOR Rate" shall mean, with respect to each Interest Period, the rate of
interest per annum at which deposits in Dollars are offered by the major London
clearing banks, as reported by ▇▇▇▇▇▇-▇▇▇▇▇▇ news service (or such other similar
news reporting service as Bank may subscribe to at the time such LIBOR Rate is
determined), in the London interbank Eurodollar market for a period of time
equal or comparable to such Interest Period and in an amount equal to or
comparable to the principal amount of the LIBOR Balance to which such Interest
Period relates. The LIBOR Rate for such Interest Period to which it relates
shall (i) be determined as of 11:00 a.m. (London, England time) two (2) LIBOR
Business Days prior to the first day of such Interest Period, or at such earlier
time as determined by Bank, and (ii) shall be rounded upward, if necessary, to
the nearest one-one hundredth of one.
"Loan Agreement" shall mean that certain Loan Agreement of even date
herewith by and between Bank and Borrower, as amended from time to time.
"Loan Documents" shall mean this Note, the Loan Agreement and all other
documents evidencing, securing, governing, guaranteeing and/or pertaining to
this Note.
"Maximum Rate" shall mean, with respect to the holder hereof, the maximum
nonusurious interest rate, if any, that at any time, or from time to time, may
be contracted for, taken, reserved, charged, or received on the indebtedness
evidenced by this Note under the laws which are presently in effect in the
United States and the State of Texas applicable to such holder and such
indebtedness or, to the extent permitted by law, under such applicable laws of
the United States and the State of Texas which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws now
allow. To the extent that TEX. REV. CIV. STAT. ▇▇▇. art. 5069-1.04, as amended
(the "Act"), is relevant to any holder of this Note for the purposes of
determining the Maximum Rate, each such holder elects to determine such
applicable legal rate under the Act pursuant to the "indicated rate ceiling,"
from time to time in effect, as referred to and defined in article 1.04(a)(1) of
the Act;
13
subject, however, to the limitations on such applicable ceiling referred to and
defined in article 1.04(b)(2) of the Act, and further subject to any right such
holder may have subsequently, under applicable law, to change the method of
determining the Maximum Rate. If no Maximum Rate is established by applicable
law, then the Maximum Rate shall be equal to eighteen percent (18%).
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"Reserve Requirement" shall, on any day, mean that percentage (expressed as
a decimal fraction) which is in effect on such day, as provided by the Board of
Governors of the Federal Reserve System (or any successor governmental body) for
determining the reserve requirements (including without limitation, basic,
supplemental, marginal and emergency reserves) under Regulation D with respect
to "Eurocurrency liabilities" as currently defined in Regulation D, or under any
similar or successor regulation. For purposes of this definition, any LIBOR
Balances hereunder shall be deemed "Eurocurrency liabilities" under Regulation D
without benefit of or credit for prorations, exemptions or offsets under
Regulation D Bank's determination of the Reserve Requirement shall be
conclusive.
2. Payments of Interest and Principal. Interest on the unpaid principal
balance of this Note shall be due and payable on each Interest Payment Date as
it accrues and the entire unpaid principal balance of this Note, and all accrued
but unpaid interest thereon, shall be due and payable on the Maturity Date.
3. Rates of Interest. The unpaid principal of the Base Rate Balance shall
bear interest at a rate per annum which shall from day to day be equal to the
lesser of (i) the Adjusted Base Rate in effect from day to day, or (ii) the
Maximum Rate. The unpaid principal of each LIBOR Balance shall bear interest at
a rate per annum which shall from day to day be equal to the lesser of (i) the
Adjusted LIBOR Rate for the Interest Period in effect with respect to such LIBOR
Balance, or (ii) the Maximum Rate. Each change in the interest rate applicable
to a Base Rate Balance shall become effective without prior notice to Borrower
automatically as of the opening of business on the date of such change in the
Adjusted Base Rate. Interest on this Note shall be calculated on the basis of
the actual days elapsed in a year consisting of 360 days.
4. Interest Recapture. If on each Interest Payment Date or any other date
on which interest payments are required hereunder, Bank does not receive
interest on this Note computed at the Contract Rate because such Contract Rate
exceeds or has exceeded the Maximum Rate, then Borrower shall, upon the written
demand of Bank, pay to Bank in addition to the interest otherwise required to be
paid hereunder, on each Interest Payment Date thereafter, the Excess Interest
Amount (calculated as of such later Interest Payment Date);
14
provided that in no event shall Borrower be required to pay, for any Interest
Period, interest at a rate exceeding the Maximum Rate effective during such
period.
5. Interest on Past Due Amounts. To the extent any interest is not paid on
or before the fifth day after it becomes due and payable, Bank may, at its
option, add such accrued but unpaid interest to the principal of this Note.
Notwithstanding anything herein to the contrary, upon an Event of Default or at
maturity, whether by acceleration or otherwise, all principal of this Note
shall, at the option of Bank, bear interest at the Maximum Rate until paid.
6. Interest Option. Subject to the provisions hereof, Borrower shall have
the option (an "Interest Option") of having designated portions of the unpaid
principal balance of this Note bear interest at a rate based upon the Adjusted
LIBOR Rate or Adjusted Base Rate as provided in paragraph 3 hereof; provided,
however, that the selection of the Adjusted LIBOR Rate for a particular Interest
Period shall not be for less than $100,000.00 of unpaid principal or an integral
multiple thereof. The Interest Option shall be exercised in the manner provided
below:
(i) At Time of Borrowing. Contemporaneously with each request for an
advance by Borrower under Paragraph 9 herein, Borrower shall give Bank an
Interest Notice indicating the initial Interest Option selected with
respect to the principal balance of such advance.
(ii) At Expiration of Interest Periods. Unless otherwise agreed to by
Bank, at least two (2) Business Days prior to the termination of any
Interest Period, Borrower shall give Bank an Interest Notice indicating the
Interest Option to be applicable to the corresponding LIBOR Balance upon
the expiration of such Interest Period. If the required Interest Notice
shall not have been timely received by Bank prior to the expiration of the
then-relevant Interest Period, Borrower shall be deemed to have selected a
rate based upon the Adjusted Base Rate to be applicable to such LIBOR
Balance upon the expiration of such Interest Period and to have given Bank
notice of such selection.
(iii) Conversion From Adjusted Base Rate. During any period in which
any portion of the principal hereof bears interest at a rate based upon the
Adjusted Base Rate, Borrower shall have the right, on any Business Day (the
"Conversion Date"), to convert all or a portion of such principal amount
from the Base Rate Balance to a LIBOR Balance by giving Bank an Interest
Notice of such selection at least two (2) Business Days prior to such
Conversion Date, or as otherwise agreed to by Bank.
An Interest Notice may be written or oral and Bank is hereby authorized and
directed to honor all telephonic Interest Notices hereunder. Borrower agrees to
indemnify and hold Bank harmless from any loss or liability incurred by Bank in
connection with honoring any
15
telephonic or other oral Interest Notices. All written Interest Notices are
effective only upon receipt by Bank. Each Interest Notice shall be irrevocable
and binding upon Borrower.
7. Special Provisions For LIBOR Pricing.
a. Inadequacy of LIBOR Loan Pricing. If Bank determines that, by reason
of circumstances affecting the interbank eurodollar market generally, deposits
in Dollars (in the applicable amounts) are not being offered to United States
financial institutions in the interbank eurodollar market for such Interest
Period, or that the rate at which such Dollar deposits are being offered will
not adequately and fairly reflect the cost to Bank of making or maintaining a
LIBOR Balance for the applicable Interest Period, Bank shall forthwith give
notice thereof to Borrower, whereupon until Bank notifies Borrower that the
circumstances giving rise to such suspension no longer exist, (i) the right of
Borrower to select an Interest Option based upon the LIBOR Rate shall be
suspended, and (ii) Borrower shall be deemed to have converted each LIBOR
Balance to the Base Rate Balance in accordance with the provisions hereof on the
last day of the then-current Interest Period applicable to such LIBOR Balance.
b. Illegality. If the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Bank with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for Bank to make or maintain a LIBOR Balance, Bank shall so notify
Borrower. Upon receipt of such notice, Borrower shall be deemed to have
converted any LIBOR Balance to the Base Rate Balance, on either (i) the last day
of the then-current Interest Period applicable to such LIBOR Balance if Bank may
lawfully continue to maintain and fund such LIBOR Balance to such day, or (ii)
immediately, if Bank may not lawfully continue to maintain such LIBOR Balance to
such day.
8. Extension, Place and Application of Payments. Should the principal of,
or any interest on, this Note become due and payable on any day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and interest shall be payable with respect to such extension. All
payments of principal of, and interest on, this Note shall be made in lawful
money of the United States of America in immediately available funds. Payments
made to Bank by Borrower hereunder shall be applied first to accrued but unpaid
interest and then to outstanding principal.
9. Advances. Subject to the terms of this Note and the Loan Agreement,
Borrower may request advances ("Advances") hereunder and make payments from time
to time during the term of this Note, provided that it is understood and agreed
that the aggregate principal amount outstanding from time to time hereunder
shall not exceed the sum of the Total
16
Principal Amount. The unpaid balance of this Note shall increase and decrease
with each new Advance or payment hereunder as the case may be. This Note shall
not be deemed terminated or cancelled prior to the Maturity Date, although the
entire principal balance hereof may from time to time be paid in full. Subject
to the provisions of this Note and the Loan Agreement, Borrower may borrow,
repay and reborrow hereunder from the date hereof until the Maturity Date.
Subject to the provisions of Paragraph 6 herein, each Advance hereunder shall be
in an amount not less than $100,000.00 or an integral multiple thereof. If any
Advance request is received by Bank on or prior to 12:00 p.m. (Dallas, Texas
time) on funds designated to accrue interest at the Adjusted Base Rate, Bank
shall make available at Bank's office in Dallas, Texas not later than 2:00 p.m.
(Dallas, Texas time) on the day of such Advance request (or the date specified
in such request), the amount of such request in immediately available funds. If
any Advance request is received by Bank after 12:00 p.m. (Dallas, Texas time) on
funds designated to accrue interest at the Adjusted Base Rate, Bank shall make
available at Bank's office in Dallas, Texas not later than 2:00 p.m. (Dallas,
Texas time) on the Business Day after the day of such request (or a later date
if specified in such request), the amount of such request in immediately
available funds. Each request for an Advance on funds designated to accrue
interest at the Adjusted LIBOR Rate must be received by Bank not less than three
(3) Business Days prior to the date upon which the Advance requested is desired
by Borrower. Each request for an Advance hereunder must be accompanied by an
Interest Notice for the funds to be advanced thereunder; provided, however, if
an Interest Notice does not accompany an Advance request, Borrower shall be
deemed to have designated the Adjusted Base Rate. Each request for an Advance by
Borrower hereunder shall be irrevocable and binding on Borrower. An Advance
request may be written or oral and Bank is authorized and directed to honor all
telephonic requests for Advances from any person authorized to request Advances
hereunder. Borrower agrees to indemnify and hold Bank harmless from any loss or
liability incurred by Bank in connection with honoring any such telephonic or
other oral requests for Advances. All written Advance requests are effective
only upon receipt by Bank.
10. Loan Agreement. This Note is subject to the terms and provisions of the
Loan Agreement, which is incorporated herein by reference for all purposes. The
holder of this Note is entitled to the benefits provided in the Loan Agreement.
11. Prepayments; Consequential Loss. Any prepayment made hereunder shall be
made together with all interest accrued but unpaid on this Note through the date
of such prepayment. Contemporaneously with each prepayment of principal,
Borrower shall give Bank written or oral notice indicating whether such
prepayment is to be applied to the Base Rate Balance or a particular LIBOR
Balance. If such notice is not timely received by Bank, Borrower shall be deemed
to have selected to prepay the Base Rate Balance and, if any sums remain after
satisfying all of the Base Rate Balance, the remaining sums shall be applied to
any LIBOR Balance(s) that Bank determines in its sole discretion. Borrower
agrees to indemnify and hold Bank harmless from any loss or liability incurred
by Bank in connection with honoring telephonic or other oral notices indicating
how a prepayment is to be applied. If Borrower
17
makes any payment of principal with respect to any LIBOR Balance on any day
prior to the last day of the Interest Period applicable to such LIBOR Balance,
Borrower shall reimburse Bank on demand the Consequential Loss incurred by Bank
as a result of the timing of such payment. A certificate of Bank setting forth
the basis for the determination of a Consequential Loss shall be delivered to
Borrower and shall, in the absence of manifest error, be conclusive and binding
as to such determination and amount.
12. Additional Costs. Borrower agrees to pay to Bank all Additional Costs
within ten (10) days of receipt by Borrower from Bank of a statement setting
forth the amount or amounts due and the basis for the determination from time to
time of such amount or amounts, which statement shall be conclusive and binding
upon Borrower absent manifest error. Failure on the part of Bank to demand
compensation for any Additional Costs in any Interest Period shall not
constitute a waiver of Bank's right to demand compensation for any Additional
Costs incurred during any such Interest Period or in any other subsequent or
prior Interest Period. The term "Additional Costs" shall mean such additional
amount or amounts as Bank shall reasonably determine will compensate Bank for
actual costs incurred by Bank in maintaining LIBOR Rates on the LIBOR Balances
or any portion thereof as a result of any change, after the date of this Note,
in applicable law, rule or regulation or in the interpretation or administration
thereof by, or the compliance by Bank with any request or directive from, any
domestic or foreign governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) or by any
domestic or foreign court changing the basis of taxation of payments to Bank of
the LIBOR Balances or interest on the LIBOR Balances or any portion thereof at
an Adjusted LIBOR Rate or any other fees or amounts payable under this Note or
the Loan Agreement (other than taxes imposed on all or any portion of the
overall net income of Bank by the State of Texas or the Federal government), or
imposing, modifying or applying any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, credit
extended by, or any other acquisition of funds for loans by Bank, or imposing on
Bank, as the case may be, or on the London interbank market any other condition
affecting this Note, the Loan Agreement or the LIBOR Balances so as to increase
the cost of Bank making or maintaining Adjustable LIBOR Rates with respect to
the LIBOR Balances or any portion thereof or to reduce the amount of any sum
received or receivable by Bank under this Note or the Loan Agreement (whether of
principal, interest or otherwise), by an amount deemed by Bank in good faith to
be material, but without duplication for Reserve Requirement.
13. Notices. Except as otherwise specified herein, all notices and requests
required or permitted hereunder shall be in writing and shall be deemed to have
been given when personally delivered or, if mailed, two Business Days after
deposited in a regularly maintained receptacle for the United States Postal
Service, postage prepaid, registered or certified, return receipt requested,
addressed to Borrower or Bank at the addresses as provided in the Loan
Agreement.
18
14. Legal Fees. If this Note is placed in the hands of any attorney for
collection, or if it is collected through any legal proceeding at law or in
equity or in bankruptcy, receivership or other court proceedings, Borrower
agrees to pay all costs of collection including, but not limited to, court costs
and reasonable attorneys' fees.
15. Waivers. Borrower and each surety, endorser, guarantor and any other
party ever liable for payment of any sums of money payable on this Note, jointly
and severally waive presentment and demand for payment, protest, notice of
protest, intention to accelerate, acceleration and non-payment, or other notice
of default, and agree that their liability under this Note shall not be affected
by any renewal or extension in the time of payment hereof, or in any
indulgences, or by any release or change in any security for the payment of this
Note, and hereby consent to any and all renewals, extensions, indulgences,
releases or changes, regardless of the number of such renewals, extensions,
indulgences, releases or changes; provided, however, this Note may not be
amended or modified except by a written instrument signed by the Borrower and
the holder hereof. No waiver by Bank of any of its rights or remedies hereunder
or under any other document evidencing or securing this Note or otherwise shall
be considered a waiver of any other subsequent right or remedy of Bank; no delay
or omission in the exercise or enforcement by Bank of any rights or remedies
shall ever be construed as a waiver of any right or remedy of Bank; and no
exercise or enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Bank.
16. Remedies. Upon the occurrence of any Event of Default, the holder
hereof may, at its option, (i) declare the entire unpaid balance of principal
and accrued but unpaid interest on this Note to be immediately due and payable,
(ii) refuse to advance any additional amounts under this Note, (iii) foreclose
all liens securing payment hereof, (iv) pursue any and all other rights,
remedies and recourses available to the holder hereof, including but not limited
to, any such rights, remedies or recourses under the Loan Documents, at law or
in equity, or (v) pursue any combination of the foregoing.
17. Spreading. Any provision herein, or in any document securing this Note,
or any other document executed or delivered in connection herewith, or in any
other agreement or commitment, whether written or oral, expressed or implied, to
the contrary notwithstanding, neither Bank nor any holder hereof shall in any
event be entitled to receive or collect, nor shall or may amounts received
hereunder be credited, so that Bank or any holder hereof shall be paid, as
interest, a sum greater than the maximum amount permitted by applicable law to
be charged to the person, partnership, firm or corporation primarily obligated
to pay this Note at the time in question. If any construction of this Note or
any document securing this Note, or any and all other papers, agreements or
commitments, indicate a different right given to Bank or any holder hereof to
ask for, demand or receive any larger sum as interest, such is a mistake in
calculation or wording which this clause shall override and control, it being
the intention of the parties that this Note, and all other instruments securing
the payment of this Note or executed or delivered in connection herewith shall
in all things comply with the
19
applicable law and proper adjustments shall automatically be made accordingly.
In the event that Bank or any holder hereof ever receives, collects or applies
as interest, any sum in excess of the Maximum Rate, if any, such excess amount
shall be applied to the reduction of the unpaid principal balance of this Note,
and if this Note is paid in full, any remaining excess shall be paid to
Borrower. In determining whether or not the interest paid or payable, under any
specific contingency, exceeds the Maximum Rate, if any, Borrower and Bank or any
holder hereof shall, to the maximum extent permitted under applicable law: (a)
characterize any nonprincipal payment as an expense or fee rather than as
interest, (b) exclude voluntary prepayments and the effects thereof, (c)
"spread" the total amount of interest throughout the entire term of this Note;
provided that if this Note is paid and performed in full prior to the end of the
full contemplated term hereof, and if the interest received for the actual
period of existence thereof exceeds the Maximum Rate, if any, Bank or any holder
hereof shall refund to Borrower the amount of such excess, or credit the amount
of such excess against the aggregate unpaid principal balance of all advances
made by the Bank or any holder hereof under this Note at the time in question.
18. Choice of Law. This Note is being executed and delivered, and is
intended to be performed in the State of Texas. Except to the extent that the
laws of the United States may apply to the terms hereof, the substantive laws of
the State of Texas shall govern the validity, construction, enforcement and
interpretation of this Note. In the event of a dispute involving this Note or
any other instruments executed in connection herewith, the undersigned
irrevocably agrees that venue for such dispute shall lie in any court of
competent jurisdiction in Dallas County, Texas.
VERTEX COMMUNICATIONS CORPORATION
By:
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Name:
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Title:
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