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EXHIBIT 10.9
NATIONSBANK, N. A.
PROMISSORY NOTE
Customer# 61-187514
Date May 31, 1998 []New [X]Renewal Amount $6,000,000.00 Maturity Date May 31,
1999
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Bank: Borrower:
NationsBank, N.A.
Banking Center: Filetek, Inc.; FileTek UK Limited; William C. Thompson Revocable
Trust; Patsy A. Thompson Revocable Trust; William C. Thompson
Commercial Banking and Patsy A. Thompson
6610 Rockledge Drive 9400 Key West Avenue
Bethesda, Maryland 20817-1811 Rockville, Maryland 20850-3322
County: Montgomery
County: Montgomery
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FOR VALUE RECEIVED, the undersigned Borrower unconditionally (and jointly and
severally, if more than one) promises to pay to the order of Bank, its
successors and assigns, without setoff, at its offices indicated at the
beginning of this Note, or at such other place as may be designated by Bank,
the principal amount of Six Million and 00/100 Dollars ($6,000,000.00), or so
much thereof as may be advanced from time to time in immediately available
funds, together with interest computed daily on the outstanding principal
balance hereunder, at an annual interest rate, and in accordance with the
payment schedule, indicated below.
[THIS NOTE CONTAINS SOME PROVISIONS PRECEDED BY BOXES. IF A BOX IS MARKED, THE
PROVISION APPLIES TO THIS TRANSACTION; IF IT IS NOT MARKED, THE PROVISION DOES
NOT APPLY TO THIS TRANSACTION.]
1. Interest Rate. The Rate shall be the Eurodollar Rate, plus 2.00 percent,
per annum. The "Eurodollar Rate" is a fluctuating rate of interest equal to
the 1 month rate of interest (rounded upwards, if necessary to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the 1
month London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) on the second preceding business day, as adjusted from
time to time in Bank's sole discretion for then-applicable reserve
requirements, deposit insurance assessment rates and other regulatory costs.
If for any reason such rate is not available, the term "Eurodollar Rate" shall
mean the fluctuating rate of interest equal to the 1 month rate of interest
(rounded upwards, if necessary to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the 1 month London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) on the second preceding
business day, as adjusted from time to time in Bank's sole discretion for
then-applicable reserve requirements, deposit insurance assessment rates and
other regulatory costs; provided, however, if more than one rate is specified
on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean
of all such rates.
Notwithstanding any provision of this Note, Bank does not intend to charge and
Borrower shall not be required to pay any amount of interest or other charges
in excess of the maximum permitted by the applicable law of the State of
Maryland; if any higher rate ceiling is lawful, then that higher rate ceiling
shall apply. Any payment in excess of such maximum shall be refunded to
Borrower or credited against principal, at the option of Bank.
2. ACCRUAL METHOD. Unless otherwise indicated, interest at the Rate set forth
above will be calculated by the 365/360 day method (a daily amount of interest
is computed for a hypothetical year of 360 days; that amount is multiplied by
the actual number of days for which any principal is outstanding hereunder).
If interest is not to be computed using this method, the method shall be: N/A.
3. RATE CHANGE DATE. Any Rate based on a fluctuating index or base rate will
change, unless otherwise provided, each time and as of the date that the index
or base rate changes. If the Rate is to change on any other date or at any
other interval, the change shall be: N/A. In the event any index is
discontinued, Bank shall substitute an index determined by Bank to be
comparable, in its sole discretion.
4. PAYMENT SCHEDULE. All payments received hereunder shall be applied first to
the payment of any expense or charges payable hereunder or under any other loan
documents executed in connection with this Note, then to interest due and
payable, with the balance applied to principal, or in such other order as Bank
shall determine at its option.
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SINGLE PRINCIPAL PAYMENT. Principal shall be paid in full in a single payment
on May 31, 1999. Interest thereon shall be paid monthly, commencing on June
30, 1998, and continuing on the last day of each successive month, quarter or
other period (as applicable) thereafter, with a final payment of all unpaid
interest at the stated maturity of this Note.
5. REVOLVING FEATURE.
[X] Borrower may borrow, repay and reborrow hereunder at any time, up to a
maximum aggregate amount outstanding at any one time equal to the principal
amount of this Note, provided, that Borrower is not in default under any
provision of this Note, any other documents executed in connection with this
Note, or any other note or other loan documents now or hereafter executed in
connection with any other obligation of Borrower to Bank, and provided that the
borrowings hereunder do not exceed any borrowing base or other limitation on
borrowings by Borrower. Bank shall incur no liability for its refusal to
advance funds based upon its determination that any conditions of such further
advances have not been met. Bank records of the amounts borrowed from time to
time shall be conclusive proof thereof.
[] UNCOMMITTED FACILITY. Borrower acknowledges and agrees that,
notwithstanding any provisions of this Note or any other documents executed
in connection with this Note, Bank has no obligation to make any advance,
and that all advances are at the sole discretion of Bank.
[] OUT-OF-DEBT PERIOD. For a period of at least __ consecutive days during
[] each fiscal year, [] any consecutive 12-month period, Borrower shall
fully pay down the balance of this Note, so that no amount of principal or
interest and no other obligation under this Note remains outstanding.
6. AUTOMATIC PAYMENT.
[X] Borrower has elected to authorize Bank to effect payment of sums due under
this Note by means of debiting Borrower's account number 2086538774. This
authorization shall not affect the obligation of Borrower to pay such sums when
due, without notice, if there are insufficient funds in such account to make
such payment in full on the due date thereof, or if Bank fails to debit the
account.
7. WAIVERS, CONSENTS AND COVENANTS. Borrower, any indorser, or guarantor
hereof or any other party hereto (individually an "Obligor" and collectively
"Obligors") and each of them jointly and severally: (a) waive presentment,
demand, protest, notice of demand, notice of intent to accelerate, notice of
acceleration of maturity, notice of protest, notice of nonpayment, notice of
dishonor, and any other notice required to be given under the law to any
Obligor in connection with the delivery, acceptance, performance, default or
enforcement of this Note, any indorsement or guaranty of this Note, or any
other documents executed in connection with this Note or any other note or
other loan documents now or hereafter executed in connection with any
obligation of Borrower to Bank (the "Loan Documents"); (b) consent to all
delays, extensions, renewals or other modifications of this Note or the Loan
Documents, or waivers of any term hereof or of the Loan Documents, or release
or discharge by Bank of any of Obligors, or release, substitution or exchange
of any security for the payment hereof, or the failure to act on the part of
Bank, or any indulgence shown by Bank (without notice to or further assent from
any of Obligors), and agree that no such action, failure to act or failure to
exercise any right or remedy by Bank shall in any way affect or impair the
obligations of any Obligors or be construed as a waiver by Bank of, or
otherwise affect, any of Bank's rights under this Note, under any indorsement
or guaranty of this Note or under any of the Loan Documents; and (c) agree to
pay, on demand, all costs and expenses of collection or defense of this Note or
of any indorsement or guaranty hereof and/or the enforcement or defense of
Bank's rights with respect to, or the administration, supervision,
preservation, protection of, or realization upon, any property securing payment
hereof, including, without limitation, reasonable attorney's fees, including
fees related to any suit, mediation or arbitration proceeding, out of court
payment agreement, trial, appeal, bankruptcy proceedings or other proceeding,
in the amount of 15% of the principal amount of this Note, or such greater
amount as may be determined reasonable by any arbitrator or court, whichever is
applicable.
8. PREPAYMENTS. Prepayments may be made in whole or in part at any time on
any loan for which the Rate is based on the Prime Rate or on any other
fluctuating Rate or index which may change daily. All prepayments of principal
shall be applied in the inverse order of maturity, or in such other order as
Bank shall determine in its sole discretion. No prepayment of any other loan
shall be permitted without the prior written consent of Bank. Notwithstanding
such prohibition, if there is a prepayment of any such loan, whether by consent
of Bank, or because of acceleration or otherwise, Borrower shall, within 15
days of any request by Bank, pay to Bank any loss or expense which Bank may
incur or sustain as a result of such prepayment. For the purposes of
calculating the amounts owed only, it shall be assumed that Bank actually
funded or committed to fund the loan through the purchase of an underlying
deposit in an amount and for a term comparable to the loan, and such
determination by Bank shall be conclusive, absent a manifest error in
computation.
9. DELINQUENCY CHARGE. To the extent permitted by law, a delinquency charge
may be imposed in an amount not to exceed four percent (4%) of any payment that
is more than fifteen days late.
10. EVENTS OF DEFAULT. The following are events of default hereunder:
(a) the failure to pay or perform any obligation, liability or indebtedness of
any Obligor to Bank, or to any affiliate or subsidiary of NationsBank
Corporation, whether under this Note or any Loan Documents, as and when due
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(whether upon demand, at maturity or by acceleration); (b) the failure to pay
or perform any other obligation, liability or indebtedness of any Obligor to
any other party; (c) the death of any Obligor (if an individual); (d) the
resignation or withdrawal of any partner or a material owner/Guarantor of
Borrower, as determined by Bank in its sole discretion; (e) the commencement
of a proceeding against any Obligor for dissolution or liquidation, the
voluntary or involuntary termination or dissolution of any Obligor or the
merger or consolidation of any Obligor with or into another entity; (f) the
insolvency of, the business failure of, the appointment of a custodian,
trustee, liquidator or receiver for or for any of the property of, the
assignment for the benefit of creditors by, or the filing of a petition under
bankruptcy, insolvency or debtor's relief law or the filing of a petition for
any adjustment of indebtedness, composition or extension by or against any
Obligor; (g) the determination by Bank that any representation or warranty made
to Bank by any Obligor in any Loan Documents or otherwise is or was, when it
was made, untrue or materially misleading; (h) the failure of any Obligor to
timely deliver such financial statements, including tax returns, other
statements of condition or other information, as Bank shall request from time
to time; (i) the entry of a judgment against any Obligor which Bank deems to be
of a material nature, in Bank's sole discretion; (j) the seizure or forfeiture
of, or the issuance of any writ of possession, garnishment or attachment, or
any turnover order for any property of any Obligor; (k) the determination by
Bank that it is insecure for any reason; (l) the determination by Bank that a
material adverse change has occurred in the financial condition of any Obligor;
or (m) the failure of Borrower's business to comply with any law or regulation
controlling its operation.
11. REMEDIES UPON DEFAULT. Whenever there is a default under this Note (a) the
entire balance outstanding hereunder and all other obligations of any Obligor
to Bank (however acquired or evidenced) shall, at the option of Bank, become
immediately due and payable and any obligation of Bank to permit further
borrowing under this Note shall immediately cease and terminate, and/or (b) to
the extent permitted by law, the Rate of interest on the unpaid principal shall
be increased at Bank's discretion up to the maximum rate allowed by law, or if
none, 25% per annum (the "Default Rate"). The provisions herein for a Default
Rate shall not be deemed to extend the time for any payment hereunder or to
constitute a "grace period" giving Obligors a right to cure any default. At
Bank's option, any accrued and unpaid interest, fees or charges may, for
purposes of computing and accruing interest on a daily basis after the due date
of the Note or any installment thereof, be deemed to be a part of the principal
balance, and interest shall accrue on a daily compounded basis after such date
at the Default Rate provided in this Note until the entire outstanding balance
of principal and interest is paid in full. Bank is hereby authorized at any
time to set off and charge against any deposit accounts of any Obligor, as well
as any money, instruments, securities, documents, chattel paper, credits,
claims, demands, income and any other property, rights and interests of any
Obligor which at any time shall come into the possession or custody or under
the control of Bank or any of its agents, affiliates or correspondents, without
notice or demand, any and all obligations due hereunder. Additionally, Bank
shall have all rights and remedies available under each of the Loan Documents,
as well as all rights and remedies available at law or in equity.
DEBTOR AUTHORIZES ANY ATTORNEY ADMITTED TO PRACTICE BEFORE ANY COURT OF RECORD
IN THE UNITED STATES TO APPEAR ON BEHALF OF DEBTOR IN ANY COURT IN ONE OR MORE
PROCEEDINGS, OR BEFORE ANY CLERK THEREOF OR PROTHONOTARY OR OTHER COURT
OFFICIAL, AND TO CONFESS JUDGMENT AGAINST DEBTOR IN FAVOR OF THE HOLDER OF THIS
AGREEMENT IN THE FULL AMOUNT DUE UNDER THIS AGREEMENT (INCLUDING PRINCIPAL,
ACCRUED INTEREST AND ANY AND ALL CHARGES, FEES AND COSTS) PLUS ATTORNEYS' FEES
EQUAL TO FIFTEEN PERCENT (15%) OF THE AMOUNT DUE, PLUS COURT COSTS, ALL WITHOUT
PRIOR NOTICE OR OPPORTUNITY OF DEBTOR FOR PRIOR HEARING. DEBTOR AGREES AND
CONSENTS THAT VENUE AND JURISDICTION SHALL BE PROPER IN THE CIRCUIT COURT OF
ANY COUNTY OF THE STATE OF MARYLAND OR OF BALTIMORE CITY, MARYLAND, OR IN THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND. DEBTOR WAIVES THE
BENEFIT OF ANY AND EVERY STATUTE, ORDINANCE, OR RULE OF COURT WHICH MAY BE
LAWFULLY WAIVED CONFERRING UPON DEBTOR ANY RIGHT OR PRIVILEGE OF EXEMPTION,
HOMESTEAD RIGHTS, STAY OF EXECUTION, OR SUPPLEMENTARY PROCEEDINGS, OR OTHER
RELIEF FROM THE ENFORCEMENT OR IMMEDIATE ENFORCEMENT OF A JUDGMENT OR RELATED
PROCEEDINGS ON A JUDGMENT. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER
JUDGMENT AGAINST DEBTOR SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISES
THEREOF, OR BY ANY IMPERFECT EXERCISE THEREOF, AND SHALL NOT BE EXTINGUISHED BY
ANY JUDGMENT ENTERED PURSUANT THERETO; SUCH AUTHORITY AND POWER MAY BE
EXERCISED ON ONE OR MORE OCCASIONS FROM TIME TO TIME, IN THE SAME OR DIFFERENT
JURISDICTIONS, AS OFTEN AS THE HOLDER SHALL DEEM NECESSARY, CONVENIENT, OR
PROPER.
12. NON-WAIVER. The failure at any time of Bank to exercise any of its options
or any other rights hereunder shall not constitute a waiver thereof, nor shall
it be a bar to the exercise of any of its options or rights at a later date.
All rights and remedies of Bank shall be cumulative and may be pursued singly,
successively or together, at the option of Bank. The acceptance by Bank of any
partial payment shall not constitute a waiver of any default or of any of
Bank's rights under this Note. No waiver of any of its rights hereunder, and
no modification or amendment of this Note, shall be deemed to be made by Bank
unless the same shall be in writing, duly signed on behalf of Bank; each such
waiver shall apply only with respect to the specific instance involved, and
shall in no way impair the rights of Bank or the obligations of Obligor to Bank
in any other respect at any other time.
13. APPLICABLE LAW, VENUE AND JURISDICTION. This Note and the rights and
obligations of Borrower and Bank shall be governed by and interpreted in
accordance with the law of the State of Maryland. In any litigation in
connection with or to enforce this Note or any indorsement or guaranty of this
Note or any Loan Documents, Obligors, and each of them, irrevocably consent to
and confer personal jurisdiction on the courts of the State of Maryland or the
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United States located within the State of Maryland and expressly waive any
objections as to venue in any such courts. Nothing contained herein shall,
however, prevent Bank from bringing any action or exercising any rights within
any other state or jurisdiction or from obtaining personal jurisdiction by any
other means available under applicable law.
14. PARTIAL INVALIDITY. The unenforceability or invalidity of any provision of
this Note shall not affect the enforceability or validity of any other
provision herein and the invalidity or unenforceability of any provision of
this Note or of the Loan Documents to any person or circumstance shall not
affect the enforceability or validity of such provision as it may apply to
other persons or circumstances.
15. WAIVER OF JURY TRIAL. Obligors waive trial by jury in any action or
proceeding to which Obligors and Bank may be parties, arising out of, in
connection with or in any way pertaining to, this Note or the Loan Documents.
It is agreed and understood that this waiver constitutes a waiver of trial by
jury of all claims against all parties to such action or proceedings, including
claims against parties who are not parties to this Note. This waiver is
knowingly, willingly and voluntarily made by Obligors.
16. BINDING EFFECT. This Note shall be binding upon and inure to the benefit
of Borrower, Obligors and Bank and their respective successors, assigns, heirs
and personal representatives, provided, however, that no obligations of
Borrower or Obligors hereunder can be assigned without prior written consent of
Bank.
17. CONTROLLING DOCUMENT. To the extent that this Note conflicts with or is in
any way incompatible with any other Loan Document concerning this obligation,
the Note shall control over any other document, and if the Note does not
address an issue, then each other document shall control to the extent that it
deals most specifically with an issue.
18. YEAR 2000 REPRESENTATIONS AND WARRANTIES.
(A) Borrower has (i) begun analyzing the operations of Borrower and its
subsidiaries and affiliates that could be adversely affected by failure to
become Year 2000 compliant (that is, that computer applications, imbedded
microchips and other systems will be able to perform date-sensitive functions
prior to and after December 31, 1999) and; (ii) developed a plan for becoming
Year 2000 compliant in a timely manner, the implementation of which is on
schedule in all material respects. Borrower reasonably believes that it will
become Year 2000 compliant for its operations and those of its subsidiaries and
affiliates on a timely basis except to the extent that a failure to do so could
not reasonably be expected to have a material adverse effect upon the financial
condition of Borrower.
(B) Borrower reasonably believes any suppliers and vendors that are
material to the operations of Borrower or its subsidiaries and affiliates will
be Year 2000 compliant for their own computer applications except to the extent
that a failure to do so could not reasonably be expected to have a material
adverse effect upon the financial condition of Borrower.
(C) Borrower will promptly notify Bank in the event Borrower determines
that any computer application which is material to the operations of Borrower,
its subsidiaries or any of its material vendors or suppliers will not be fully
Year 2000 compliant on a timely basis, except to the extent that such failure
could not reasonably be expected to have a material adverse effect upon the
financial condition of Borrower.
BORROWER REPRESENTS TO BANK THAT THE PROCEEDS OF THIS LOAN ARE TO BE USED
PRIMARILY FOR BUSINESS, COMMERCIAL OR AGRICULTURAL PURPOSES. BORROWER
ACKNOWLEDGES HAVING READ AND UNDERSTOOD, AND AGREES TO BE BOUND BY, ALL TERMS
AND CONDITIONS OF THIS NOTE, AND HEREBY EXECUTES THIS NOTE INTENDING TO CREATE
AN INSTRUMENT EXECUTED UNDER SEAL.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN PROMISSORY NOTE REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS.
BORROWERCORPORATE OR PARTNERSHIP BORROWER
FILETEK, INC.
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/s/ William C. Thompson (Seal) By: /s/ William C. Thompson (Seal)
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WILLIAM C. THOMPSON
Name: William C. Thompson
Title: Chief Executive Officer
/s/ Patsy A. Thompson (Seal)
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PATSY A. THOMPSON
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Attest (If Applicable)
[Corporate Seal]
FILETEK UK LIMITED WILLIAM C. THOMPSON REVOCABLE TRUST
By: /s/ William C. Thompson (Seal) By: William C. Thompson (Seal)
---------------------------------------- ---------------------------------------
Name: William C. Thompson Name: William C. Thompson
Title: Director Title: Trustee
- -------------------------------------------- ----------------------------------------------------
Attest (If Applicable) Attest (If Applicable)
[Corporate Seal] [Corporate Seal]
PATSY A. THOMPSON REVOCABLE TRUST
By: Patsy A. Thompson (Seal)
----------------------------------------
Name: Patsy A. Thompson
Title: Trustee
- --------------------------------------------
Attest (If Applicable)
[Corporate Seal]
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