EXHIBIT 10.3
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT between DICON FIBEROPTICS, INC., a California
Corporation ("Borrower"), and CATHAY BANK ("Lender") is made and executed on
November 20, 2001, with respect to the following:
Recitals.
A. Borrower desires to borrow from Lender and Lender desires to lend to
Borrower for the purpose of providing 3-year term financing of
Borrower's premises located at 0000 Xxxxxxx Xxxx., Xxxxxxxx, XX 00000
following the completion of construction of the premises, the costs of
which were financed by Lender.
B. In granting this Loan, Lender is relying upon Borrower's
representations, warranties and agreements as set forth in this
Agreement.
C. Borrower and Lender agree as follows.
1. DEFINITIONS.
The following words shall have the following meanings when used in this
Agreement.
"Agreement" means this Term Loan Agreement, as amended or modified from
time to time, together with all exhibits and schedules attached to this
Agreement from time to time.
"Deed of Trust" means the deed of trust dated August 24, 2000, as
modified contemporaneously with this Agreement, securing this Agreement and the
Note as the Deed of Trust may be modified or amended from time to time.
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"Event of Default" means any of the Events of Default set forth in
Article 6 of the Note.
"Loan" means the loan evidenced by the Note.
"Note" means the promissory note evidencing the Loan in the amount of
$27,000,000 from Borrower to Lender, together with any renewals, extensions,
modifications, refinancings, consolidations, and substitutions for the
promissory note.
"Property" means the property from time to time described in the Deed of
Trust securing the Loan.
"Related Documents" means and includes this Agreement, the Note, the
Deed of Trust and any modifications or amendments to any of them, which
documents are incorporated into this Agreement by reference.
2. LOAN.
The Loan is a 3-year term loan in principal amount of $27,000,000.00,
bearing the interest rate and repayable as scheduled in the Note. The purpose of
the Loan is to provide "mini-perm" financing of the land acquisition and
premises construction costs financed by the Bank pursuant to a promissory note
and Construction Loan Agreement dated August 24, 2000. BORROWER UNDERSTANDS AND
AGREES THAT LENDER HAS MADE NO COMMITMENT AND HAS NO OBLIGATION TO REFINANCE THE
BALLOON PAYMENT OR EXTEND THE TERM OF THE NOTE BEYOND THE FINAL PAYMENT DATE AND
LENDER IS ENTITLED TO PAYMENT IN FULL AT THAT TIME.
3. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Lender as of the date of this
Agreement:
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3.1 ORGANIZATION. Borrower is a corporation which is duly organized,
validly existing, and in good standing under the laws of the state of
California. Borrower has the full power and authority to own its properties and
to transact the businesses in which it is presently engaged or presently
proposes to engage.
3.2 AUTHORIZATION. The execution, delivery, and performance of this
Agreement and the Related Documents by Borrower, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all necessary
action by Borrower; do not require the consent or approval of any other person,
regulatory authority or governmental body; and do not conflict with, result in a
violation of, or constitute a default under (a) any provision of its articles of
incorporation, by-laws, or any other agreement or other instrument binding upon
Borrower, or (b) any law, governmental regulation, court decree, or order
applicable to Borrower.
3.3 FINANCIAL INFORMATION. Any financial statement of Borrower supplied
to Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender which will more likely than not result in
Borrower not being able to repay the Loan in accordance with its amortization
schedule. Borrower has no material contingent obligations except as disclosed in
such financial statements.
3.4 LITIGATION AND CLAIMS. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid taxes)
against Borrower is pending or threatened, and no other event has occurred,
which will more
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likely than not result in the Borrower not being able to repay Loan in
accordance with its amortization schedule other than litigation, claims, or
other events, if any, that have been disclosed to Lender in writing.
3.5 TITLE TO PROPERTY. Borrower has good and marketable title to the
Property free and clear of all defects, liens, and encumbrances, excepting only
liens for taxes, assessments, or governmental charges or levies not yet
delinquent or payable without penalty or interest, and such liens and
encumbrances as may be approved in writing by the Lender or permitted under
paragraph 5.10.
3.6 HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapter 6.5
through 7.7 of Division 20 of the California Health and Safety Code, Section
25100, et seq., or other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing. Except as disclosed to and
acknowledged by Lender in writing, Borrower represents and warrants that: (a)
During the period of Borrower's ownership of the Property, there has been no
use, generation, manufacture, storage, treatment, disposal, release or
threatened release of any hazardous waste or substance by any person on, under,
about or from any of the Property, except in compliance with all applicable
federal, state, and local laws, regulations, and ordinances, including without
limitation those laws, regulations and
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ordinances described above, and (b) Neither Borrower nor any tenant, contractor,
agent or other authorized user of any of the Property shall use, generate,
manufacture, store, treat, dispose of, or release any hazardous waste or
substance on, under, about or from any of the Property, except in compliance
with all applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances described
above. Borrower authorizes Lender and its agents at any reasonable time and upon
reasonable notice to Borrower to enter upon the Property to make such
inspections and tests as Lender may deem appropriate to determine compliance of
the Property with this Paragraph 3.6. Any inspections or tests made by Lender
shall be at Borrower's expense and for Lender's purposes only and shall not be
construed to create any responsibility or liability on the part of Lender to
Borrower or to any other person. The representations and warranties contained
herein are based on Borrower's due diligence in investigating the Property for
hazardous waste and hazardous substances. Borrower hereby releases and waives
any future claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws. So long
as Borrower owns the Property, Borrower agrees to indemnify and hold Lender
harmless against any and all claims, losses, liabilities, damages, penalties,
and expenses which Lender may sustain or suffer resulting from a breach of this
Paragraph 3.6, but only to the extent such claims, losses, liabilities, damages,
penalties, and expenses are not caused by the negligent acts of Lender. This
indemnity shall survive termination of this Agreement and repayment of the Loan.
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3.7 UTILITY SERVICES. All utility services appropriate to the use of the
Project after completion of construction are available at the boundaries of the
Property.
3.8 ACCESS. The Property is contiguous to publicly dedicated streets,
roads, or highways providing access to the Property.
3.9 COMPLIANCE WITH GOVERNING AUTHORITIES. Borrower has examined and is
familiar with all the easements, covenants, conditions, restrictions,
reservations, building laws, regulations, zoning ordinances, and federal, state,
and local requirements affecting the Property. The Property will at all times
and in all respects conform to and comply with the requirements of such
easements, covenants, conditions, restrictions, reservations, building laws,
regulations, zoning ordinances, and federal, state, and local requirements.
3.10 LEGAL EFFECT. This Agreement constitutes, and any other Related
Document required hereunder to be given by Borrower when delivered will
constitute, legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
3.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands
and agrees that Lender, without independent investigation, is relying upon the
above representations and warranties in making this Loan to Borrower. Borrower
further agrees that the foregoing representations and warranties shall be
continuing in nature and shall remain in full force and effect until such time
as this Loan is paid in full.
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4. CONDITIONS PRECEDENT.
Lender's obligation to fund the Loan shall be subject to the fulfillment
to Lender's satisfaction of all of the following conditions:
4.1 LOAN DOCUMENTS. Borrower shall provide to Lender in form
satisfactory to Lender the following documents for the Loan: (a) the
Note, (b) the modification of the existing Deed of Trust, (c) evidence
of insurance coverages required by Lender, and (d) such evidences of
corporate authority or other documents required under this Agreement or
by Lender.
4.2 TITLE INSURANCE. Borrower shall have provided to Lender an
ALTA Lender's extended coverage policy of title insurance with such
endorsements as Lender may require, issued by a title insurance company
acceptable to Lender and in a form, amount, and content satisfactory to
Lender, insuring or agreeing to insure that the Deed of Trust is or will
be upon recordation a valid first lien on the Property free and clear of
all defects, liens, encumbrances, and exceptions except those
specifically accepted by Lender in writing.
4.3 PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to
Lender all fees, charges, and other expenses which are then due and
payable as specified in this Agreement or the Related Documents
including but not limited to a Loan fee in the amount of one-quarter of
one percent of the principal Loan amount ($67,500.00).
4.4 NO EVENT OF DEFAULT. There shall not exist at the time of
closing any condition which would constitute an Event of Default under
this Agreement, the Note or in any existing loan or indebtedness of
Borrower to Lender.
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5. COVENANTS.
Borrower covenants and agrees with Lender that until the full and final
payment of all obligations of Borrower under the Related Documents, Borrower
will:
5.1 NOTICES. Promptly inform Lender in writing of (a) all material
adverse changes in Borrower's financial condition which will more likely than
not result in Borrower not being able to repay the Loan in accordance with its
amortization schedule, (b) all existing and all threatened litigation, claims,
investigations, administrative proceedings or similar actions known to Borrower
affecting Borrower which will more likely than not result in Borrower not being
able to repay the Loan in accordance with its amortization schedule, and (c) any
condition or event which constitutes an Event of Default.
5.2 COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all governmental
authorities applicable to the use or acceptance of the Property, including
without limitation, the Americans With Disabilities Act. Borrower may contest in
good faith any such law, ordinance, or regulation and withhold compliance during
any proceeding, including appropriate appeals, so long as Borrower has notified
Lender in writing prior to doing so.
5.3 PAYMENT OF CLAIMS AND REMOVAL OF LIENS. Take all reasonable steps
necessary to remove any and all claims of liens against the Property or any part
of the Property, or any rights or interests appurtenant to the Property. At
option of Lender, Lender may require Borrower to provide bond against any liens
claimed against the Property which are not promptly removed.
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5.4 TAXES AND CLAIMS. Pay and discharge when due all of Borrower's
indebtedness, obligations, and claims that, if unpaid, might become a lien or
charge upon the Property; provided, however, that Borrower shall not be required
to pay and discharge any such indebtedness, obligation, or claim so long as (a)
its legality shall be contested in good faith by appropriate proceedings, (b)
the indebtedness, obligation, or claim does not become a lien or charge upon the
Property, or (c) Borrower shall have established on its books adequate reserves
with respect to the amount contested in accordance with general accepted
accounting practices. If the indebtedness, obligation, or claim does become a
lien or charge upon the Property, Borrower shall remove the lien or charge as
provided in the preceding paragraph.
5.5 FINANCIAL STATEMENTS, COMPLIANCE CERTIFICATE. Furnish Lender
within thirty (30) days after such reports are available, Borrower's annual
financial statement and income and expense statements for the period ended,
audited by a certified public accountant satisfactory to Lender. All financial
reports required to be provided under this Agreement shall be prepared in
accordance with generally accepted accounting principles, applied on a
consistent basis and certified as being true and correct by Borrower's chief
financial officer or Director of Finance. Provide Lender at least annually with
a certificate executed by Borrower's chief financial officer, or Director of
Finance, certifying that the representations and warranties of this Agreement
are true and correct as of the date of the certificate and further certifying
that, as of the certificate date, no Event of Default exists under this
Agreement or the Note.
5.6 INSURANCE. Maintain fire and other risk insurance, public
liability insurance, and such other insurance as Lender may require with respect
to the Property, as provided in the Deed of Trust.
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5.7 OPERATIONS. Maintain executive and management personnel with
substantially the same qualifications and experience as the present executive
and management personnel and provide written notice to Lender of any change in
executive or management personnel. Conduct its business affairs in a reasonable
and prudent manner and in compliance with all applicable federal, state and
local laws, ordinances, rules and regulations respecting its properties,
charters, businesses and operations, including without limitation, compliance
with the Americans With Disabilities Act and all minimum funding standards and
other requirements of ERISA and other laws applicable to Borrower's employee
benefit plans.
5.8 INSPECTION. Permit employees or agents of Lender at any
reasonable time to enter upon and inspect the Property and to examine or audit
Borrower's books and records and to make copies of such books and records.
5.9 ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower (a) shall comply
in all respects with all federal, state and local environmental laws, ordinances
and regulations; (b) not cause or permit to exist, as a result of an intentional
or unintentional action or omission on its part or on the part of any third
party, on the Property, any activity where damage may result to the environment,
unless such activity is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state or local authority; (c) shall
furnish to Lender promptly and in any event within ten (10) days after the
receipt thereof a copy of any notice, summons, lien, citation, directive, letter
or other communication from any governmental agency or instrumentality
concerning any event, occurrence or intentional or unintentional action or
omission on Borrower's part in connection with any environmental activity
whether or not there is damage to the environment.
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5.10 SECURITY INTEREST. Without the consent of Lender, which shall
not be unreasonably withheld, Borrower will not grant any further security
interest in the Property; provided, however, that this Paragraph 5.10 or the due
on sale clause in the Deed of Trust shall not prohibit further security
interests in the Property or permit the exercise of the due on sale option if
the further security interests in the Property are subject to the Deed of Trust
and secure obligations not exceeding $15,000,000 in the aggregate amount
outstanding at any time.
6. MISCELLANEOUS PROVISIONS.
6.1. AGENCY. Nothing in the Related Documents shall be construed to
constitute the creation of a partnership or joint venture between Lender and
Borrower and Lender is not an agent or representative of Borrower.
6.2 ENTIRE AGREEMENT; AMENDMENTS. The Related Documents constitute
the entire understanding and agreement of the parties as to the matters set
forth in the Related Documents. No alteration of or amendment to the Related
Documents shall be effective unless given in writing and signed by the party
sought to be charged or bound by the alteration or amendment.
6.3 APPLICABLE LAW. The Related Documents have been delivered to
Lender and accepted by Lender in the State of California. If there is a lawsuit,
Borrower and Lender each agree to submit to the exclusive jurisdiction of the
courts of Contra Costa County, State of California. The Related Documents shall
be governed by and construed in accordance with the laws of the State of
California.
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6.4 CAPTION HEADINGS. Caption headings in the Related Documents are
for convenience purposes only and are not to be used to interpret or define the
provisions of the Related Documents.
6.5 CONSENT TO LOAN PARTICIPATION. With notice to Borrower, Lender
may sell or transfer, whether now or later, one or more participation interests
in the Loan to one or more purchasers, whether related or unrelated to Lender.
Borrower agrees that each sale or transfer of its obligations under the Related
Documents will give rise to a direct obligation of Borrower to the participant
and the participant shall have the same rights and benefits under the Related
Documents as it would have if it were party to the Related Documents. Lender
shall remain liable for the performance of all of its obligations under the
Related Documents notwithstanding any sale or transfer by Lender of Borrower's
obligations under the Related Documents. Borrower authorizes Lender to disclose
to any participant any and all confidential information in Lender's possession
concerning Borrower and the Related Documents, subject to such participant
executing a confidentiality agreement in form and substance reasonably
satisfactory to Borrower.
6.6 COSTS AND EXPENSES. If any lawsuit is commenced to enforce the
Related Documents, the prevailing party shall have the right to recover its
reasonable attorneys' fees and costs of suit from the other party.
6.7 NOTICES. All notices required to be given under the Related
Documents shall be given in writing, may be sent by telefacsimile (unless
otherwise required by law), and shall be effective when actually delivered or
when deposited with a nationally recognized overnight courier or deposited in
the United States mail, first class, postage prepaid, addressed to the party to
whom the notice is to be given at
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the address shown below. Any party may change its address for notices under this
Agreement by giving formal written notice to the other party, specifying that
the purpose of the notice is to change the party's address.
6.8 SUCCESSORS AND ASSIGNS. The Related Documents shall bind and
inure to the benefit of the parties hereto and their respective successors and
assigns. Borrower shall not, however, have the right to assign its rights under
the Related Documents or any interest therein, without the prior written consent
of Lender.
6.9 SEVERABILITY. If a court of competent jurisdiction finds any
provision of the Related Documents to be invalid or unenforceable as to any
person or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons of circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of the Related Documents
in all other respects shall remain valid and enforceable.
6.10 TIME IS OF THE ESSENCE. Time is of the essence in the
performance of the Related Documents.
6.11 WAIVER. Lender shall not be deemed to have waived any rights
under the Related Documents unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of a
provision of the Related Documents shall not prejudice or constitute a waiver of
Lender's right otherwise to demand compliance with any other provision of the
Related Documents. No prior waiver by Lender, nor any course of dealing between
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Lender and Borrower, shall constitute a waiver of any of Lender's rights or of
any obligations of Borrower as to any future transactions. Whenever the consent
of Lender is required under the Related Documents, the granting of such consent
by Lender in any instance shall not constitute continuing consent in subsequent
instances where such consent is required.
DICON FIBEROPTICS, INC. CATHAY BANK
By: /s/ HO-XXXXX XXX By: /s/ XXXXXXX XXXX
------------------------------ ----------------------------
Ho-Xxxxx Xxx, Xxxxxxx Xxxx,
President Assistant Branch Manager
By: /s/ XXXX X. XXXXXX
----------------------------
Xxxx X. Xxxxxx
1st Vice President and Manager
Address for Notices: Address for Notices:
0000 Xxxxxxx Xxxx. Xxxxxxxxxxxx Xxxx Xxxxxxxxxx
Xxxxxxxx, XX 00000 000 Xxxxx Xxxxxxxx
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
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PROMISSORY NOTE
Borrower: DICON FIBEROPTICS, INC. Loan Number:
0000 Xxxxxxx Xxxx., Xxxxxxxx XX 00000
Lender: CATHAY BANK
-----------------------------------------
000 Xxxxx Xxxxxxxx, Xxx Xxxxxxx, XX 00000
Principal Amount: $27,000,000 Initial Rate: 5.00% Date: November 20, 2001
--------------------------------------------------------------------------------
1. PROMISE TO PAY. DICON FIBEROPTICS, INC., a California corporation, #C1191627
("Borrower"), promises to pay to CATHAY BANK, a California Banking Corporation
("Lender"), or order, in lawful money of the United States of America, the
principal amount of Twenty Seven Million Dollars ($27,000,000.00), together with
interest at the rate set forth below on the unpaid principal balance from
November 20, 2001, until paid in full.
2. PAYMENT SCHEDULE. Subject to any payment changes resulting from changes in
the Index, Borrower will pay this Loan in accordance with the following payment
schedule:
THIRTY-FIVE (35) monthly payments, initially in the MINIMUM amount of
$159,989.00 each, and ONE final payment of all outstanding principal and accrued
interest on NOVEMBER 20, 2004 ("Final Payment Date"). Borrower's first payment
is due on DECEMBER 20, 2001, and each subsequent payment is due on the same day
of each month thereafter, until the Final Payment Date. The initial monthly
payment was calculated as if the Loan was for a fully amortized term of 300
months (the "Initial Amortization Period") at the annual interest rate in effect
as of the date of this Note. The amount of the minimum monthly payment is
subject to change every six months during the term of the Loan ("Payment Change
Date") beginning on the due date of the 7th scheduled monthly payment based on
the interest rate in effect the month preceding the Payment Change Date and the
remaining principal balance as hereinafter provided. On each Payment Change Date
and beginning with that payment, the required minimum payment amount due on that
date and on the due date of the monthly payment thereafter until the next
Payment Change Date (subject to additional amounts to cover any shortfall in
required interest payments as hereinafter provided), will be that amount which
would be sufficient to repay the outstanding principal balance of the Note as of
the Payment Change Date, plus interest accruing thereon at the annual rate then
in effect, in equal monthly payments as if the Loan term was the remainder of
the Initial Amortization Period; provided that the full amount of unpaid
principal and unpaid accrued interest will be due and payable on the Final
Payment Date. Borrower understands and agrees that the interest rate on this
Note may change monthly and that in the event the interest rate increases at any
time during the term of this Note, there is a possibility that such minimum
monthly payments may not be sufficient to pay in full all monthly accrued
interest; in which event, Borrower agrees to pay to Lender, upon demand, such
additional sums which, together with and in addition to the minimum monthly
payment then in effect, will be sufficient to pay in full all such accrued
unpaid interest on the due date of
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each monthly payment hereunder. In the event of such increases in interest rate
between Payment Change Dates, Borrower understands that unpaid principal due on
the Note may not be reduced by Borrower's monthly payments and that the amount
of the final payment due on the Note may be greater than any prior estimate. For
purposes of computing the amount of interest accruing during the month preceding
each payment due date, the annual interest rate computed as set forth below
shall be based on the Index (hereinafter defined) in effect on the 10th day of
the month preceding the date each payment is due. The annual interest rate for
this Note is computed on a 365/360 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 Lender'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.
BORROWER UNDERSTANDS AND AGREES THAT LENDER HAS MADE NO COMMITMENT AND HAS NO
OBLIGATION TO REFINANCE THE BALLOON PAYMENT OR EXTEND THE TERM OF THIS NOTE
BEYOND THE FINAL PAYMENT DATE AND LENDER IS ENTITLED TO PAYMENT IN FULL AT THAT
TIME.
3. PAYMENTS APPLICATION. Notwithstanding anything contained in this Note to the
contrary, interest payable on the outstanding principal balance shall be
calculated, and each payment shall be applied by Lender, as if received on the
specified due date for such payment. Borrower acknowledges and agrees that
Lender will not make any adjustments to the allocation of any payments made
hereunder, even if such payments are not actually received on the applicable
payment due date.
4. VARIABLE INTEREST RATE. The interest rate on this Note is variable and
subject to change from time to time based on changes in the Prime Rate as
published each day in 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 the Borrower the current Index
rate upon Borrower's request. Borrower understands that Lender may make loans on
other rates as well. The interest rate changes will not occur more often than
each month as of the 20th day of the month using the Index rate in effect on the
10th day of the month. The interest rate to be applied to the unpaid principal
balance of this Note will be the Index which is currently 5.000% per annum.
5. PREPAYMENT. Borrower agrees that all loan fees and other charges are fully
earned 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 for the foregoing,
Borrower may pay without penalty all or a portion of the amount owed earlier
than it is due. Prepayments will reduce the principal balance due and will not
relieve Borrower of the obligation to make the monthly installment payments when
due.
6. EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Note:
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6.1 Default on Indebtedness. Failure of Borrower to make any payment
when due under this Note, and such failure is not cured within 15 days after
written notice thereof is given by Lender to Borrower.
6.2 Other Defaults. Failure of Borrower to comply with or to perform
when due any other term, obligation, covenant or condition on its part to be
complied with or performed contained in the Related Documents as defined in the
Term Loan Agreement, and such failure is not cured within 45 days after written
notice thereof is given by Lender to Borrower.
6.3 False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower under the Related Documents is
false or misleading in any material respect at the time made or furnished.
6.4 Defective Collateralization. Any of the Related Documents ceases to
be in full force and effect (including failure of the Deed of Trust to create a
valid and perfected security interest or lien) at any time and for any reason.
6.5 Dissolution or Insolvency. The dissolution or any other termination
of Borrower's existence as a going business or the insolvency of Borrower, or
the appointment of a receiver for all of Borrower's property, or any assignment
for the benefit of creditors or the commencement of any proceeding under any
bankruptcy or insolvency law with respect to Borrower.
6.6 Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help, repossession
or any other method, by any creditor of Borrower against the Property.
6.7 Condemnation. All or any material portion of the Property is
condemned, seized, or appropriated without compensation, and Borrower does not
within 45 days after such condemnation, seizure, or appropriation, initiate and
diligently prosecute appropriate action to contest in good faith the validity of
such condemnation, seizure, or appropriation.
7. FACT OF AN EVENT OF DEFAULT; REMEDIES. Upon the occurrence and during the
continuance of any Event of Default, Lender may, at its option, but without any
obligation to do so, and in addition to any other right Lender may have, do any
one or more of the following upon notice to Borrower: (a) accelerate maturity of
this Note and demand payment of all sums due under this Note; (b) bring an
action on this Note; (c) foreclose the Deed of Trust on the Property in any
manner available under law; and (d) exercise any other right or remedy which it
has under the Related Documents, or which is otherwise available at law or in
equity.
8. LENDER'S RIGHTS. Upon Borrower's failure to pay all amounts declared due
pursuant to this Note, including failure to pay upon final maturity, Lender, at
its option, may also (a) increase the variable interest rate on this Note to
2.000 percentage points over the Index rate then in effect and (b) add any
unpaid accrued interest to principal and such sum will bear interest therefrom
until paid at the same rate as principal. Lender may hire or pay someone else to
help collect this Note if Borrower does not pay and Borrower agrees to pay
Lender the amount of such costs. This includes any accounting or appraisal fees
incurred and Lender's attorneys' fees and legal expenses. If any lawsuit is
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commenced to enforce the Related Documents, the prevailing party shall have the
right to recover its reasonable attorneys' fees and costs of suit from the other
party.
9. COLLATERAL. Borrower acknowledges that this Note is secured by a Deed of
Trust dated August 24, 2000, as modified on November 20, 2001, on real property
located in Contra Costa County, California.
10. GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. The Related Documents have been
delivered to Lender and accepted by Lender in the State of California. If there
is a lawsuit, Borrower and Lender each agree to submit to the exclusive
jurisdiction of the courts of Contra Costa County, State of California. The
Related Documents shall be governed by and construed in accordance with the laws
of the State of California. No change in terms of this Note shall be effective
unless evidenced by a writing signed by Borrower and Lender.
BORROWER: DICON FIBEROPTICS, INC., a California corporation
By: /s/ HO-XXXXX XXX
------------------------------------
Ho-Xxxxx Xxx, President
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