WACHOVIA
Note
Date May 24, 1996 $2,000,000.00 FOR
VALUE RECEIVED, the undersigned (hereinafter called the "Borrower") hereby
promises to pay in the order of WACHOVIA BANK OF NORTH CAROLINA, N.A.
(hereinafter called the "Lender") at its office where borrowed, in immediately
available funds, the sum of
Two Million and NO/100-------------------------------dollars together
with any unpaid interest hereon from date of advance, in accordance with the
terms contained in this Note. The optional provisions applicable to the Note are
checked below:
Repayment:
____ One payment in full of principal and unpaid interest due_______________
____ On demand______________________________________
_________Payments of $_____________beginning ______________and thereafter_______
___________________________________________________________________________until
______________________,____________, when the entire principal amount then
outstanding and all accrued but unpaid interest shall be paid in full.
X On Demand the principal amount set forth above or the unpaid principal
amount of all advances which the Lender actually makes hereunder to the
Borrower, whichever amount is less. each advance and each payment made on
account of the principal thereof, shall be evidenced on an attachment hereto;
provided, however, any such notation or the failure of the Lender or other
holder to make any such notation shall not limit or otherwise affect the
obligation of the Borrower with respect to repayment of all advances actually
made hereunder. This Note and any attachment hereto shall be used to record the
outstanding principal balance advanced hereunder until it is surrendered to the
Borrower by the Lender, and it shall continue to be used even though there may
be periods prior to such surrender when no amount of principal or interest is
owing hereunder. If advances of the principal amount hereof are to be made by
Lender to the Borrower after the date of this Note, Lender, at its sole
discretion, is hereby authorized to make such advances under this Note upon
telephonic or written communication of a borrowing request from any person
representing himself or herself to be the Borrower or, in the event the Borrower
is a partnership or corporation, a duly authorized officer or representative of
Borrower.
Interest:
Payable: X in arrears; ____in advance.
X in addition to the payments described above; ____included in the
payments described above.
Payable at the rate per annum of: ____ Prime Rate plus_____________%; ____
_____________% of Prime Rate; ____ ________% Fixed; ____ Those rates which may
be offered from time to time by the Lender and agreed to by the Borrower and so
noted by the Lender on an attachment hereto. In the event of a good faith
dispute among the parties to this Note as to rate under this rate option, the
rate shall be the Prime Rate, adjusted for any changes in the Prime Rate as of
the day such Prime Rate changes;
____ The rate(s) set forth in Schedule 1 attached to this Note and
incorporated herein by reference;
X Those rates which have been offered by the Lender to the Borrower in the
Loan Agreement or Commitment Letter checked below, the provisions of which shall
determine such rates, the procedure for the selection of such rates and the time
periods for which such rates shall apply. In no case shall interest exceed the
maximum rate permitted by applicable law.
To the extent not prohibited by law, a late charge not to exceed 4% of the
payment amount shall be assessed on any payment remaining unpaid on the
fifteenth day after the payment due date or 30 days in the case interest is
payable in advance.
If the interest is based upon the Prime Rate, such interest rate will be
adjusted on: ____ The day the Prime Rate changes; ___Other____________________.
Due: ____ On principal payment dates; ____
Other______________________________________. Interest will be calculated on the
basis of X A year of 360 days and paid for the actual number of days elapsed;
____Other____________________. After demand or maturity (whether by acceleration
or otherwise), as applicable, interest on any unpaid balance hereof shall be
payable on demand at a rate per annum equal to 150% of the Prime Rate, or if
greater, 2% above the rate applicable prior to demand or maturity, adjusted for
any changes in the Prime Rate as of the day such Prime Rate changes, not to
exceed the maximum rate permitted by applicable law.
As used herein, "Prime Rate" refers to that interest rate so denominated and set
by the Lender from time to time as an interest rate basis for borrowings. The
Prime Rate is one of several interest rate bases used by the Lender. The Lender
lends at interest rates above and below the Prime Rate.
All payments on this Note shall be applied first to accrued interest, then to
principal, and then to late charges.
X The terms and conditions in a Loan Agreement dated May 24, 1996 between the
parties hereto, as the same may be amended from time to time, shall be
considered a part hereof to the same extent as if written herein.
____ The terms and conditions in a Commitment Letter
dated_______________________from the Lender to the Borrower, as the same may be
amended, extended or replaced from time to time, shall be considered a part
hereof to the same extent as if written herein.
No waiver by the Lender of any default shall be effective unless in writing nor
operate as a waiver of any other default on a past or future occasion. To the
extent not prohibited by law, the Borrower hereby grants to the Lender and to
such Lender's Affiliates (as the case may be) a security interest in and
security title to and does hereby assign, pledge, transfer and convey to Lender
and such Lender's Affiliates (as the case may be) (i) all property of the
Borrower of every kind or description now or hereafter in the possession or
control of he Lender or of any of the Lender's Affiliates,
Wachovia Bank of Northe Carolina, N.A.
exclusive of any such property in the possession or control of the Lender any of
the Lender's Affiliates as a fiduciary other than as agent, for any reason
including, without limitation, all cash, stock or other dividends and all
proceeds thereof, and all rights to subscribe for securities incident thereto
and any substitutions or replacements for, or other rights in connection with,
any such collateral and (ii) any balance or deposit accounts of the Borrower,
whether such accounts be general or special, or individual or multiple party,
and upon all drafts, notes, or other items deposited for collection or presented
for payment by the Borrower with the Lender or the Lender's Affiliates (as the
case may be), exclusive of any such property in the possession or control of the
Lender or any of the Lender's Affiliates as a fiduciary other than as agent, and
the Lender and the Lender's Affiliates (as the case may be) may at any time,
without demand or notice, appropriate and apply any of such to the payment of
any indebtedness, obligations and liabilities of the Borrower to the Lender or
to any of Lender's Affiliates (as the case may be), now existing or hereafter
incurred or arising (hereinafter sometimes referred to collectively as the
"Obligations"), whether or not due, with the exception of indebtedness,
obligations and liabilities owing to Lender or Lender's Affiliates that
constitute open-end credit under, or are subject to, the disclosure requirements
of the Truth -In-Lending Act and federal Reserve Board Regulation Z or any
applicable state consumer protection laws. As used herein, "Lender's Affiliates"
means any entity or entities now or hereafter directly or indirectly controlled
by Wachovia Corporation or any successor thereto. All parties to this Note,
including the makers, endorsers, sureties and guarantors, whether bound by this
or by separate instrument or agreement, shall be jointly and severally liable
for the indebtedness evidenced by this Note and hereby (1) waive presentment for
payment, demand, protest, notice of nonpayment or dishonor and of protest and
any and all other notices and demands whatsoever; (2) consent that at any time,
or from time to time, payment of any sum payable under this Note may be extended
without notice, whether for a definite or indefinite time; and (3) agree to
remain liable until the indebtedness evidenced hereby is paid in full
irrespective of any extension, modification or renewal. No conduct of the holder
shall be deemed a waiver or release of such liability, unless the holder
expressly releases such party in writing. Upon (i) any failure of any Obligor
(which term shall include the Borrower and each endorser, surety guarantor of
this Note) to pay any of the Obligations when due or to observe or perform any
agreement, covenant or promise hereunder or in any other agreement, note,
instrument or certificate of any Obligor to the Lender, or to any of Lender's
Affiliates, now existing or hereafter executed in connection with any of the
Obligations, including, but not limited to, a loan agreement, if applicable, and
any agreement guaranteeing payment of any of the Obligations; (ii) any default
of any Obligor in the payment or performance of any other liabilities,
indebtedness or obligations to any other creditor or to allow or permit any
other liabilities, indebtedness or obligations to any other creditor to be
accelerated; (iii) any failure of any Obligor to furnish Lender current
financial information upon request; (iv) any failure of any person to observe or
perform any agreement, covenant or promise contained in any agreement,
instrument or certificate executed in connection with the granting of a security
interest in property to secure the Obligations; (v) any warranty, representation
or statement made or furnished to the Lender by or on behalf of any Obligor in
connection with the extension of credit evidenced by this Note proving to have
been false in any material respect when made or furnished; (vi) the death,
dissolution, change of control, termination of existence, insolvency, business
failure or appointment of a receiver of any part of the property of, assignment
for the benefit of creditors by, or the commencement of any proceeding under any
bankruptcy or insolvency laws, state or federal, by or against, the Borrower or
any other Obligor; (vii) any discontinuance or termination or any guaranty of
any of the Obligations by a guarantor; or (viii) the Lender deeming itself
insecure, thereupon, or at any time thereafter, the Lender at its option may
terminate any obligation to extend any additional credit or make any other
financial accommodation to the Borrower and/or may declare all of the
Obligations to be immediately due and payable. If any Obligation (including but
not limited to the Note) is a demand instrument, the statement of a maturity
date, the requirement of periodic interest or the recitation of defaults and the
right of Lender to declare any Obligation due and payable shall not constitute
an election by Lender to waive its right to demand payment under a demand at any
time and in any event as Lender in its sole discretion may deem appropriate. In
the event the indebtedness evidenced hereby is collected by or through an
attorney, the holder shall be entitled to recover reasonable attorney's fees
(15% of the then outstanding principal and interest of the indebtedness, to the
extent not prohibited by law) and all other costs and expenses of collection.
Time is of the essence.
This Note, and the rights and obligations of the parties hereunder, shall be
governed and construed in accordance with the laws of the State of North
Carolina.
IN WITNESS WHEREOF, the Borrower has executed this Note under seal the day and
year set forth above.
Witness: ______________________________(Seal)
(Individual Borrower)
______________________________________ ______________________________(Seal)
(Individual Borrower)
______________________________________ Borrower:
Attest: Digital Recorders,
Inc.
(Name of Corporation or Partnership)
Michael J. Schierbeek By J. Phillips L. Johnston (Seal)
Title Asst Secretary Title President
[Corporate Seal]
ACCOUNT NUMBER NOTE LENDING FRB SECUR NOTE- REPAY NOTE TRANSACTION PRIME RATE CLASS BRAN
NUMBER OFFICER CODE CODE TYPE CODE QUAL DATE CODE-FACTOR
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INTEREST PAID TO INT. INTEREST/DISCOUNT FEES COLLECTED COMMITTMENT COMMIT. C TAX BILLING
DATE BASE COLLECTED ACCOUNT NUMBER NUMBER BAL CODE CODE
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Wachovia Bank of North Carolina, N.A.
WACHOVIA
Wachovia Bank of North Carolina, N.A.
Post Office Box 27886
Raleigh, North Carolina 27611-7886
May 24, 1996
Mr. J. Phillips L. Johnston
President and Chief Executive Officer
Digital Recorders, Inc.
P.O. Box 14068
Research Triangle Park, NC 27709-4068
Dear Phil:
Wachovia Bank of North Carolina, N.A. ("Bank"), is pleased to make available to
your company a Two Million dollar ($2,000,000.00) credit facility for Import
Letters of Credit and Line of Credit borrowings. This credit facility will
become effective upon your acceptance of this commitment letter, your return of
the executed copy of same to the Bank, and, subject to the conditions set forth
herein, a closing transaction in a manner satisfactory to the Bank. "Closing,"
"close, " or "closed," as used herein, shall mean the execution, recordation
where necessary, and delivery to the Bank of all documentation required by this
commitment letter. After closing, this line of credit will expire on May 23,
1997. This line of credit commitment is subject to the maintenance by your
company of a condition satisfactory to the Bank and the following terms and
conditions.
As used herein, the term "loan" shall include loan, line of credit, advance.
drawing, debit, liability, and any other obligation of your company to the Bank
arising out of this commitment.
1. Interest Rate: The rate of interest for the term of the loan shall be
a choice of the 30, 60 or 90 day "LIBOR Base Rate" plus 2.30%, subject
to change by the Bank from time to time. Rate of
interest shall be calculated on a basis of a 360 day a year for the
actual number of days in each interest period. As used herein, the
"LIBOR Base Rate" shall mean a rate for deposits in US dollars, with
maturities comparable to the selected LIBOR interest period that
appears on the displayed designated as page "3750" of the Telerate
Service (or as such page as may replace page 3750 of that service or
such other services or services as may be nominated by the British
bankers Association for the purpose of displaying London Interbank
offered rates for US dollar deposits) determined as of 1:00 p.m. New
York Time two business days prior to commencement of such interest
period.
2. Interest Payments and Principal Payments: At the end of each applicable
Interest period or quarterly, if earlier, calculated on an actual /360
day basis. Adjusted LIBOR Loans may not be prepaid before the end of
the Interest Period applicable to such Loans. Base Rate Loans may be
paid at any time on one Business Day's notice in a minimum amount of
$1,000,000.00 and any incremental multiple of $500,000.00.
3. Fees: The bank shall receive a commitment and documentation fee in
the amount of $500.00 to be paid to the Bank simultaneously with the
acceptance of this commitment by your Company, which commitment and
documentation fee shall be fully earned when paid and non-refundable.
In addition, there will be an unused fee of .20% annually on the
unused portion of the commitment amount, calculated and payable
quarterly in arrears.
4. Used of Proceeds: The loan will be used by your company for general
working capital purposes and Import Letters of Credit.
5. Loan Covenants: Unless the Bank shall otherwise agree in writing, for
so long as this agreement shall remain in effect and until all of the
Obligations are paid in full, the Borrower agrees as follows:
1. Cash plus short term, liquid investments shall not be less than
$1,500,000.00 and shall at all times be at least 1.5 times greater
than the amount of cash borrowings outstanding under the line of
credit.
2. Each calendar quarter, Digital Recorders shall have a positive net
income; and total net income for the year shall be greater than
$500,000.00.
3. All of the assets of the Company are to remain unencumbered.
4. All changes in executive management require the prior approval of
the Bank and the President will maintain key man life insurance in
the amount of $1,000,000.00.
5. The Company will inform the Bank of any acquisitions insofar as
this information compliance with all SEC regulations.
6. The Bank will be provided with monthly internal financial
statements in addition to quarterly and annual financial reports on
the Company.
6. Applicable Law: This commitment shall be interpreted, construed,
enforced, and governed by the laws of the State of North Carolina.
Upon return by your company to the Bank of a fully-executed copy of
this commitment by its expiration date of June 7, 1996, this
commitment will be considered accepted and will constitute an agreement
obligating the Bank to make your company accept the loan in accordance
with the terms as conditions set forth above. If the executed copy is
not received by the Bank by the expiration date noted above, this
commitment shall be considered null and void.
Should you have any questions concerning the terms hereof, please do
not hesitate to call me at (919) 755-7628.
Very truly yours,
/s/ Tom Roberts
Thomas A. Roberts, III
Banking Officer
ACCEPTED THE 24TH DAY OF MAY, 1996.
DIGITAL RECORDERS, INC.
By: /s/ J. Phillips L. Johnston
Title: President
Accepted Copy Received by Bank
Date: May 24, 1996
By: /s/ Thomas A. Roberts, III
WACHOVIA
International
CONTINUING LETTER OF CREDIT AGREEMENT
THIS AGREEMENT, dated the 24th day of May, 1994, and hereby executed by
Digital Recorders, Inc. (hereinafter called the "Company") for the benefit of
the Banks.
RECITALS:
A. From time to time the Company and its Affiliates are required in the ordinary
course of business to obtain on short notice certain Credits and amendments
thereto, and the Company wishes to establish procedures to facilitate the
reasonably prompt issuance of such Credits by the Banks, or the remote
Correspondent Banks upon electronic instructions.
B. This Agreement sets forth the procedures pursuant to which such Credits and
amendments thereto shall be issued and certain other terms and provisions
applicable thereto.
NOW, THEREFORE, the Company agrees with and for the benefit of the
Banks as follows:
1(a). Definitions. As used herein:
"Affiliate" means (a) as to the Company, each corporation that
directly or indirectly through one or more intermediaries, controls, or is
controlled by or under common control with the Company; and (b) as to the
Principal Bank, any other bank that is, directly or indirectly, a wholly-owned
subsidiary of Wachovia Corporation. An Affiliate as to any of the Banks includes
without limitation all of the other banks.
"Authorized Representative" means the person or persons from
time to time designated to act on behalf of the Company by written certificate
in the form of Exhibit A attached hereto furnished to the Principal Bank. Once
such a certificate is submitted to the Principal Bank, the Company may
thereafter make no changes thereto except such changes as are specifically
acknowledged by the Principal Bank in writing.
"Banks" means Wachovia (GA), Wachovia (NC), Wachovia (SC),
Wachovia International Banking Corporation and any other banks or financial
institutions which are Affiliates of Wachovia (GA), Wachovia (NC) or Wachovia
(SC).
"Credit(s)" means Letters of Credit and includes both
Commercial and Standby Letters of Credit.
"Principal Bank" means the Bank listed on the signature page
to this Agreement.
"Remote Correspondent Bank" means any bank or trust company
with which any of the Banks may have contracted, or otherwise made arrangements,
to issue Credits for the account of any of the Banks or the Company or the
Company's Affiliates.
"Wachovia (GA)" means Wachovia Bank of Georgia, N.A., a
national banking association.
"Wachovia (NC)" means Wachovia Bank of North Carolina, N.A., a
national banking association.
"Wachovia (SC)" means Wachovia Bank of South Carolina, N.A., a
national banking association.
1(b). Other References. References in Exhibit B ("TERMS AND CONDITIONS
OF APPLICATION AND AGREEMENT FOR DOCUMENTARY LETTER OF CREDIT") to the
"undersigned," "we", "us", "our", "ourselves" and similar words shall be deemed
to refer to the Company. references in Exhibit B to "you", "your" and similar
words shall be deemed to refer to the Banks. references in Exhibit B to
"correspondents" shall be deemed to include any Remote Correspondent Banks.
References in Exhibit B to the "Application" shall be deemed with respect to a
Credit to refer to the instructions received by the Principal Bank pursuant to
paragraph 3 below from an Authorized representative with respect to such Credit.
references in Exhibit B to "your issuing office" or the "office" of any of the
Banks shall be deemed to refer to the Principal Bank's most recent address
furnished to the Company. References in Exhibit B to "agreement" shall be deemed
to refer to this Agreement, Exhibit B and, with respect to a Credit, the
instructions received by the Principal Bank pursuant to paragraph 3 below from
an Authorized Representative with respect to such Credit. Whenever used herein
or in Exhibit B, the singular shall be deemed to include the plural and the
plural the singular.
2. The Credits. At the Company's request, but in the Banks' sole
discretion, the Banks shall issue, or cause to be issued, Credits for the
account of the Company or the Company's Affiliates. The Principal Bank shall be
the issuer of each Credit unless the Principal Bank, in its sole discretion,
determines that an Affiliate of the Principal Bank or a Remote Correspondent
bank shall be the issuer of such credit. In the case of Credits issued by a
Remote Correspondent Bank, the applicant on such credits may appear as "Wachovia
Bank/for the account of [Company or the Company's Affiliate(s)]" or words of
similar import. The Company, however, shall be primarily obligated hereunder
with respect to, and liable for, each Credit issued, whether such Credit is
issued for the account of the Company or one or more of the Company's
Affiliates, and whether issued by one of the Banks or by a Remote Correspondent
Bank.
3. Instructions to Issue Credits and Amendments. The Company hereby
authorizes the Banks to issue, or cause to be issued, Credits and amendments
thereto upon receipt of instructions from an Authorized Representative of the
Company. Such instructions shall specify the amount, beneficiary, and terms of
the requested Credit. Such instructions may be communicated to the Principal
Bank by means of data transmission (telex, telecopier, terminals, telephone or
otherwise) at the most recent address furnished to the Company by or on behalf
of the Principal Bank or by means of direct telephonic instructions from an
Authorized Representative. The Company agrees to promptly confirm to the
Principal Bank in writing any verbal instructions, but the failure of the
Company to confirm such instructions shall not impair or diminish the Company's
duties and obligations to the Banks hereunder arising on account of such
instructions.
4. Company's Covenants. Except as otherwise provided herein, the
Company hereby agrees that as to each Credit issued hereunder, the terms and
provisions set forth on Exhibit B attached hereto shall apply to such Credit and
shall bind the Company with respect to such Credit.
5. Responsibility. The Banks shall be entitled to rely and act upon
instructions from any Authorized Representative. The Banks shall also be
entitled to rely and act upon the instructions of any person identifying himself
or herself as an Authorized Representative, whether or not such person is in
fact an Authorized Representative, and the Company shall be bound thereby in the
same manner and to the same extent as if such person was actually authorized.
The Company agrees to indemnify and hold the Banks harmless from any and all
claims, damages, losses, liability, costs and expenses (including reasonable
attorneys' fees) which may result from or arise out of or may be incurred by the
Banks, the Remote Correspondent Banks, or any of them, as a result of acceptance
of and reliance on instructions from or on behalf of the Company pursuant to the
provisions of this Agreement.
6. Examination of Documents by Company. Upon receipt by the Company,
the Company agrees to promptly examine all drafts and documents presented under
any credit and to notify the Principal Bank in writing of any alleged
discrepancies or irregularities. Failure of the Company to give such notice to
the Principal Bank within a reasonable time not to exceed five business days
shall be deemed to be a waiver by the Company (and any Affiliate of the Company)
of any such alleged discrepancies and/or irregularities.
7. Termination. This Agreement shall continue in effect until such date
of discontinuance as may be specified in a written notice from the Company to
the Principal Bank at the Principal Bank's most recent address furnished to the
Company; provided, however, that the date so specified shall be at least ten
(10) days after the receipt of such notice by the Principal Bank; and provided,
further, that notwithstanding any discontinuance or termination of this
Agreement, this Agreement shall apply to all Credits issued prior to the
effective date of such discontinuance or termination and to all obligations and
liabilities of the Company with respect to such Credits existing at such date.
Any security interests granted to the Banks hereunder and under Exhibit B shall
continue until such time as all obligations and liabilities of the Company
hereunder have been satisfied.
8. Construction and Interpretation. This Agreement (but not the Credits
or Exhibit B) shall be governed by and construed in accordance with the Laws of
the state where the Principal Bank has its principal office. The Credits and
Exhibit B shall be governed by and construed in accordance with the provisions
of Exhibit B.
9. Delay and Waiver. No delay on the part of the Banks or the Remote
Correspondent Banks in the exercise of any right or remedy shall operate as a
waiver thereof, and no single or partial exercise by the Banks or the Remote
Correspondent Banks of any right or remedy shall preclude other or further
exercise thereof, or the exercise of any other right or remedy. The Banks and
the Remote Correspondent Banks shall not be deemed to have waived any of their
rights hereunder unless they or their duly authorized agent shall have signed an
express waiver thereof in writing. No such waiver shall, unless expressly stated
therein, be effective as to any transaction or event which occurred subsequent
to the date of such waiver, nor as to any continuance of any breach.
10. Miscellaneous. This Agreement may not be amended or modified except
by a writing signed by the Company, the Principal Bank and any other Bank which
then has issued a Credit hereunder which remains outstanding. This Agreement
shall be binding upon the Company and its successors and assigns and shall inure
to the benefit of the Banks and their successors and assigns.
Digital Recorders, Inc.
(Corporation or Firm)
By: J. Phillips L. Johnston, President
(Authorized Signature & Title)
PRINCIPAL BANK:
Wachovia Bank of North Carolina, N.A.
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Address of Principal Bank:
Post Office Box 27886 Raleigh, North Carolina 27611
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Telephone: (919) 755-7628
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Telex: (919) 755-7722
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Telecopier:________________________