EXHIBIT 23.1
REPLACEMENT LINE OF CREDIT NOTE
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Borrower Name
EMCON
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Borrower Address Office Loan Number
400 South El Camino Real, Suite 1200 70061
San Mateo, California 94402-1708
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Maturity Date Amount
April 30, 1999 $5,000,000.00
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$5,000,000.00 Effective as of March 19, 1999
FOR VALUE RECEIVED, on April 30, 1999 ("Maturity Date"), the undersigned
("Borrower") promises to pay to the order of UNION BANK OF CALIFORNIA, N.A.
("Bank"), as indicated below, the principal sum of FIVE MILLION AND NO/100
DOLLARS ($5,000,000.00), or so much thereof as is disbursed, together with
interest on the balance of such principal from time to time outstanding, at the
per annum rate or rates and at the times set forth below. At any time prior to
the maturity of this Note, subject to the provisions of paragraph 4, below, of
this Note, Borrower may borrow, repay and reborrow hereon so long as the total
outstanding at any one time does not exceed the principal amount of this Note.
All computations of interest under this Note shall be made on the basis of a
year of 360 days, for actual days elapsed.
1. INTEREST PAYMENTS. Borrower shall pay interest on the 19TH day of each month
commencing the first such date to occur after the first advance under this Note.
Should interest not be paid when due, it shall become part of the principal and
bear interest as herein provided. On the Maturity Date, all principal and
interest then unpaid shall be due and payable.
(a) BASE INTEREST RATE. At Borrower's options, amounts outstanding
hereunder in increments of at least $100,000.00 shall bear interest at
a rate, based on an index selected by Borrower, which is 1-3/4% per
annum in excess of Bank's LIBOR Rate for the Interest Period selected
by Borrower, in each case acceptable to Bank.
No Base Interest Rate may be changed, altered or otherwise modified
until the expiration of the Interest Period selected by Borrower. The
exercise of interest rate options by Borrower shall be as recorded in
Bank's records, which records shall be prima facile evidence of the
amount borrowed under either interest option and the interest rate;
provided, however, that failure of Bank to make any such notation in
its records shall not discharge Borrower from its obligations to repay
in full with interest all amounts borrowed. In no event shall any
Interest Period extend beyond the maturity date of this Note.
To exercise this option, Borrower may, from time to time with respect
to principal outstanding on which a Base Interest Rate is not accruing,
and on the expiration of any Interest period with respect to principal
outstanding on which a Base Interest Rate has been accruing, select an
index offered by Bank for a Base Interest Rate Loan and an Interest
Period by telephoning an authorized lending officer of Bank located at
the banking office identified below prior to 10:00 a.m., Pacific time,
on any Business Day and advising that officer of the selected Index,
the Interest Period and the Origination Date selected (which
Origination Date, for a Base Interest Rate Loan based on the LIBOR
Rate, shall follow the date of such selection by no more than two (2)
Business Days).
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Bank will mail a written confirmation of the terms of the selection to
Borrower promptly after the election is made. Failure to send such
confirmation shall not affect Bank's rights to collect interest at the
rate selected. If, on the date of the selection, the index selected is
unavailable for any reason, the selection shall be void. Bank reserves
the right to fund the principal from any source of funds
notwithstanding any Base Interest Rate selected by Borrower.
(b) VARIABLE INTEREST RATE. All principal outstanding hereunder which
is not bearing interest at a Base Interest Rate shall bear interest at
a rate per annum equal to the Reference Rate, which rate shall vary as
and when the Reference Rate changes.
Borrower shall pay all amounts due under this Note in lawful money of
the United States at Bank's Northern California Commercial Banking
Office, or such other office as may be designated by Bank, from time to
time.
2. LATE PAYMENTS. If any payment required by the terms of this Note
shall remain unpaid ten days after same is due, at the option of Bank,
Borrower shall pay a fee of $100 to Bank.
3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the
option of Bank, and, to the extent permitted by law, interest shall be
payable on the outstanding principal under this Note at a per annum
rate equal to five percent (5%) in excess of the Reference Rate,
calculated from the date of default until all amounts payable under
this Note are paid in full.
4. PREPAYMENT.
(a) Amounts outstanding under this Note bearing interest at a
rate based on the Reference Rate may be prepaid in whole or in
part at any time, without penalty or premium. Borrower may
prepay amounts outstanding under this Note bearing interest at
a Base Interest Rate in whole or in part provided Borrower has
given Bank not less than five (5) Business Days prior written
notice of Borrower's intention to make such prepayment and
pays to Bank the liquidated damages due as a result.
Liquidated Damages shall also be paid, if Bank, for any other
reason, including acceleration or foreclosure, receives all or
any portion of principal bearing interest at a Base Interest
Rate prior to its scheduled payment date. Liquidated Damages
shall be an amount equal to the present value of the product
of: (i) the difference (but not less than zero) between (a)
the Base Interest Rate applicable to the principal amount
which is being prepaid, and (b) the return which Bank could
obtain if it used the amount of such prepayment of principal
to purchase at bid price regularly quoted securities issued by
the United States having a maturity date most closely
coinciding with the relevant Base Rate Maturity Date and such
securities were held by Bank until the relevant Base Rate
Maturity Date ("Yield Rate"); (ii) a fraction, the numerator
of which is the number of days in the period between the date
of prepayment and the relevant Base Rate Maturity Date and the
denominator of which is 360; and (iii) the amount of the
principal so prepaid (except in the event that principal
payments are required and have been made as scheduled under
the terms of the Base Interest Rate Loan being prepaid, then
an amount equal to the lesser of (A) the amount prepaid or (B)
50% of the sum of (1) the amount prepaid and (2) the amount of
principal scheduled under the terms of the Base Interest Rate
Loan being prepaid to be outstanding at the relevant Base Rate
Maturity Date). Present value under this Note is determined by
discounting the above product to present value using the Yield
Rate as the annual discount factor.
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(b) In no event shall Bank be obligated to make any payment or
refund to Borrower, nor shall Borrower be entitled to any
setoff or other claim against Bank, should the return which
Bank could obtain under this prepayment formula exceed the
interest that Bank would have received if not prepayment had
occurred. All prepayments shall include payment of accrued
interest on the principal amount so prepaid and shall be
applied to payment of interest before application to
principal. A determination by Bank as to the prepayment fee
amount, if any, shall be conclusive.
(c) Bank shall provide Borrower a statement of the amount
payable on account of prepayment. Borrower acknowledges that
(1) Bank establishes a Base Interest Rate upon the
understanding that it apply to the Base Interest Rate Loan for
the entire Interest Period, and (ii) any prepayment may result
in Bank incurring additional costs, expenses or liabilities;
and Borrower agrees to pay these liquidated damages as a
reasonable estimate of the costs, expenses and liabilities of
Bank associated with such prepayment.
5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include,
but not be limited to, any of the following: (a) the failure of
Borrower to make any payment required under this Note when due; (b) any
breach, misrepresentation or other default by Borrower, any guarantor,
co-maker, endorser, or any person or entity other than Borrower
providing security for this Note (hereinafter individually and
collectively referred to as the "Obligor") under any security, guaranty
or other agreement between Bank and any Obligor; (c) the insolvency of
any Obligor or the failure of any Obligor generally to pay such
Obligor's debts as such debts become due; (d) the commencement as to
any Obligor of any voluntary or involuntary proceeding under any laws
relating to bankruptcy, insolvency, reorganization, arrangement, debt
adjustment or debtor relief; (e) the assignment by any Obligor for the
benefit of such Obligor's creditors; (f) the appointment, or
commencement of any proceeding for the appointment of a receiver,
trustee, custodian or similar official for all or substantially all of
any Obligor's property; (g) the commencement of any proceeding for the
dissolution or liquidation of any Obligor; (h) the termination of
existence or death of any Obligor; (i) the revocation of any guaranty
or subordination agreement given in connection with this Note; (j) the
failure of any Obligor to comply with any order, judgment, injunction,
decree, writ or demand of any court or other public authority; (k) the
filing or recording against any Obligor, or the property of any
Obligor, of any notice of levy, notice to withhold, or other legal
process for taxes other than property taxes; (l) the default by any
Obligor personally liable for amounts owed hereunder on any obligation
concerning the borrowing of money; (m) the issuance against any
Obligor, or the property of any Obligor, of any writ of attachment,
execution, or other judicial lien; or (n) the deterioration of the
financial condition of any Obligor which results in Bank deeming
itself, in good faith, insecure. Upon the occurrence of any such
default, Bank, in its discretion, may cease to advance funds hereunder
and may declare all obligations under this Note immediately due and
payable; however, upon the occurrence of an event of default under d,
e, f, or g, all principal and interest shall automatically become
immediately due and payable.
6. ADDITIONAL AGREEMENTS OF BORROWER. If any amounts owing under this
note are not paid when due, borrower promises to pay all costs and
expenses, including reasonable attorneys' fees, incurred by bank in the
collection or enforcement of this note. Borrower and any endorser of
this Note, for the maximum period of time and the full extent permitted
by law, (a) waive diligence, presentment, demand, notice of nonpayment,
protest, notice of protest, and notice of every kind; (b) waive the
right to assert the defense of any statute of limitations to any debt
or obligation hereunder; and (c) consent to renewals and extensions of
time for the payment of any amount due under this Note. If this Note is
signed by more than one party, the term "Borrower"
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includes each of the undersigned and any successors in interest
thereof; all of whose liability shall be joint and several. Any married
person who signs this Note agrees that recourse may be had against the
separate property of that person for any obligations hereunder. The
receipt of any check or other item of payment by Bank, at its option,
shall not be considered a payment on account until such check or other
item of payment is honored when presented for payment at the drawee
bank. Bank may delay the credit of such payment based upon Bank's
schedule of funds availability, and interest under this Note shall
accrue until the funds are deemed collected. In any action brought
under or arising out of this Note, Borrower and any Obligor, including
their successors and assigns, hereby consent to the jurisdiction of any
competent court within the State of California, as provided in any
alternative dispute resolution agreement executed between Borrower and
Bank, and consent to service of process by any means authorized by said
state's law. The term "Bank" includes, without limitation, any holder
of this Note. This Note shall be construed in accordance with and
governed by the laws of the State of California. This Note hereby
incorporates any alternative dispute resolution agreement previously,
concurrently or hereafter executed between Borrower and Bank.
7. DEFINITIONS. As used herein, the following terms shall have the
meanings respectively set forth below. "Base Interest Rate" means a
rate of interest based on the LIBOR Rate. "Base Interest Rate Loan"
means amounts outstanding under this Note that bear interest at a Base
Interest Rate. "Base Rate Maturity Date" means the last day of the
Interest Period with respect to principal outstanding under a Base
Interest Rate Loan. "Business Day" means a day on which Bank is open
for business for the funding of corporate loans, and, with respect to
the rate of interest based on the LIBOR Rate, on which dealings in U.S.
dollar deposits outside of the United States may be carried on by Bank.
"Interest Period" means with respect to funds bearing interest at a
rate based on the LIBOR Rate, any calendar period of one, two, or three
months. In determining an Interest Period, a month means a period that
starts on one Business Day in a month and ends on and includes the day
preceding the numerically corresponding day in the next month. For any
month in which there is no such numerically corresponding day, then as
to that month, such day shall be deemed to the last calendar day of
such month. Any Interest Period which would otherwise end on a
non-Business Day shall end on the next succeeding Business Day unless
that is the first day of a month, in which event such Interest Period
shall end on the next preceding Business Day. "LIBOR Rate" means a per
annum rate of Interest (rounded upward, if necessary, to the nearest
1/100 of 1%) at which dollar deposits, in immediately available funds
and in lawful money of the United States would be offered to Bank,
outside of the United States, for a term coinciding with the Interest
Period selected by Borrower and for an amount equal to the amount of
principal covered by Borrower's interest rate selection, plus Bank's
costs, including the cost, if any, of reserve requirements.
"Origination Date" means the first day of the Interest Period.
"Reference Rate" means the rate announced by Bank from time to time at
its corporate headquarters as its "Reference Rate." The Reference Rate
is an index rate determined by Bank from time to time as a means of
pricing certain extensions of credit and is neither directly tied to
any external rate of interest or index nor necessarily the lowest rate
of interest charged by Bank at any given time.
This Note is the Replacement Line of Credit Note defined in that
certain Extension and Modification Agreement dated as of March 19, 1999
between Bank and Borrower (as amended, supplemented, extended,
restated, or renewed from time to time, "Agreement"), and is governed
by the terms thereof, and supersedes and replaces that certain Line of
Credit Note dated January 27, 1999, as amended from time to time,
executed by Borrower in favor of Bank (the "Previous Note"). As of the
effective date of the Agreement, all unpaid principal, interest and
other amounts accrued and outstanding under the Previous Note shall for
all purposes be and constitute unpaid
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amounts outstanding under, and evidenced by this Note. Each capitalized
term not otherwise defined in this Note shall have the meaning set
forth in the Agreement.
EMCON, a California corporation
By: \s\ Eugene M. Herson
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Title: President and CEO
By: \s\ R. Michael Momboisse
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Title: CFO and VP Legal
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