EXHIBIT 10.56
PROMISSORY NOTE
$7,000,000 June 27, 2002
ANAHEIM, CALIFORNIA
FOR VALUE RECEIVED, MTI TECHNOLOGY CORPORATION, a Delaware corporation
("COMPANY"), hereby promises to pay to the order of THE CANOPY GROUP, INC.
("LENDER") the principal sum of Seven Million and no/100 Dollars
($7,000,000.00), or such other greater or lesser amount as may be outstanding,
together with accrued interest thereon as provided below, on or before the
Maturity Date (as that term is defined in Section 1 below) at the offices of
Lender, or at such other address as Lender may specify in writing. This Note is
issued in connection with that certain Loan Agreement by and between Company and
Lender dated as of an even date herewith (the "Loan Agreement")
1. "Maturity Date" shall mean June 30, 2003 for all advances on this
Note.
2. Interest shall accrue on the unpaid principal amount of this Note
at the rate of nine percent (9%) per annum, computed on the basis
of the actual number of days elapsed and a year of 365 days and
shall be payable to Lender within three days of the end of each
calendar quarter; provided, however, that in the event of an
Event of Default pursuant to Section 8, below, interest shall
accrue at a rate of twelve percent (12%) per annum or, if such
rate is prohibited by applicable law, the highest interest rate
permitted by applicable law.
3. Company's obligations under this Note are secured by the
collateral described in that certain Security Agreement between
Company and Lender dated as of the date hereof (the "Security
Agreement" and, together with this Note and the Loan Agreement
the "Loan Documents"). A UCC Financing Statement will be filed to
perfect the security interest granted therein.
4. Company may prepay this Note at any time, in whole or in part.
Acceptance by Lender of any partial payment shall not be deemed
to constitute a waiver by Lender to require prompt payment of the
Note on the Maturity Date, or as otherwise provided herein. Any
partial payment will be applied (a) first, to the payment of
accrued interest, and (b) second, to the extent that the amount
of such prepayment exceeds the amount of all such accrued
interest, to the payment of principal.
5. This Note evidences a revolving line of credit. Advances on the
revolving line of credit may be requested by the authorized
agents as provided in the Loan Agreement. Lender may, but need
not, require that all oral requests be confirmed in writing. Upon
the Company's request for an advance pursuant to the conditions
set forth in the Loan Agreement, Lender shall deliver such
requested amount to
Borrower. The Company agrees to be liable for all sums advanced
in accordance with the instructions of its officers or authorized
persons. The unpaid principal balance owing on this Note at any
time may be evidenced by Lender's records for the Loans,
endorsements on this Note, or by a Schedule attached to this
Note. Notwithstanding anything to contrary contained in this
Note, in no event shall Lender be obligated to advance and have
outstanding at any one time more than a total amount of principal
exceeding $7,000,000. Notwithstanding anything to the contrary
contained in this Note or the Loan Agreement, Lender has no
obligation to make advances under this Note if the Company is in
default under any of the Loan Documents.
6. In the event of any action to enforce payment of this Note, in
addition to all other relief, the prevailing party in such action
shall be entitled to reasonable attorneys' fees and expenses.
7. Company hereby waives presentment, protest and demand, notice of
protest, demand, nonpayment or dishonor.
8. The occurrence of any of the following conditions shall
constitute an event of default ("Event of Default") under this
Note:
a. Default in Payment. If Company fails to make any
payment due and payable within ten (10) days of the due date
under the terms of the Loan Documents.
b. Loan Documents. If Company shall be in material default
as provided in the Loan Agreement.
c. Bankruptcy. If a petition in bankruptcy is filed
against Company, and such petition is not dismissed within sixty
(60) days of filing, a petition in bankruptcy is filed by Company
or a receiver, trustee or custodian of any part of the Collateral
is appointed; or if Company files a petition for reorganization
under any of the provisions of the Bankruptcy Act or any law,
State or Federal, or makes an assignment for the benefit of
creditors or is adjudged insolvent by any State or Federal Court
of competent jurisdiction.
In the event of an Event of Default under this Section 8, Lender
shall, in addition to any other remedies allowed by law, by
written notice to Company, be entitled to accelerate all unpaid
principal and interest under this Note and to exercise all
remedies provided in the Loan Agreement and/or available at law
and in equity. Waiver of any Event of Default will not constitute
a waiver of any other or subsequent Event of Default.
9. This Note is to be governed by and construed in accordance with
the laws of the State of Utah.
10. As of the date of this Note, Company hereby represents and
warrants to Lender that Company is a corporation duly organized,
validly existing and in good
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standing under the laws of the State of Delaware and has all
requisite corporate power and authority to carry on its business
and to issue this Note and the Security Agreement.
11. Company shall pay to Lender the reasonably attorneys' fees and
costs incurred by Lender in connection to the issuance of this
Note and the Security Agreement and the advancement of funds
hereunder.
IN WITNESS WHEREOF, this Note is hereby executed as of the date first
set forth above:
MTI TECHNOLOGY CORPORATION
By: /s/ Mark A. Franzen
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Name: Mark A. Franzen
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Title: Chief Financial Officer
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