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PROMISSORY NOTE
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PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$2,500,000.00 06-23-1998 06-30-2001 624001 JM /s/ JM
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References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
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BORROWER: IMAGING TECHNOLOGIES CORPORATION; ET. AL. LENDER: IMPERIAL BANK
11031 VIA FRONTERA, SUITE 100 SAN DIEGO REGIONAL OFFICE
SAN DIEGO, CA 92127-1706 701 B STREET, SUITE 600
SAN DIEGO, CA 92112-4168
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PRINCIPAL AMOUNT: $2,500,000.00 INITIAL RATE: 9.250% DATE OF NOTE: JUNE 23,1998
PROMISE TO PAY. IMAGING TECHNOLOGIES CORPORATION, PRIMA INTERNATIONAL,
NEWGEN SYSTEMS ACQUISITIONS CORPORATION, MCMICAN CORPORATION, COLOR
SOLUTIONS, INC., ITEC EUROPE LIMITED and AMT ACCEL UK LIMITED (REFERRED TO
IN THIS NOTE INDIVIDUALLY AND COLLECTIVELY AS "BORROWER") JOINTLY AND
SEVERALLY PROMISE TO PAY TO IMPERIAL BANK ("LENDER"), OR ORDER, IN LAWFUL
MONEY OF THE UNITED STATES OF AMERICA, THE PRINCIPAL AMOUNT OF TWO MILLION
FIVE HUNDRED THOUSAND & 00/100 DOLLARS ($2,500,000.00), TOGETHER WITH
INTEREST ON THE UNPAID PRINCIPAL BALANCE FROM JUNE 23, 1998, UNTIL PAID IN
FULL.
PAYMENT. SUBJECT TO ANY PAYMENT CHANGES RESULTING FROM CHANGES IN THE
INDEX, BORROWER WILL PAY THIS LOAN IN 35 PAYMENTS OF $80,094.69 EACH
PAYMENT AND AN IRREGULAR LAST PAYMENT ESTIMATED AT $80,094.64. BORROWER'S
FIRST PAYMENT IS DUE JULY 30, 1998, AND ALL SUBSEQUENT PAYMENTS ARE DUE ON
THE SAME DAY OF EACH MONTH AFTER THAT. BORROWER'S FINAL PAYMENT WILL BE DUE
ON JUNE 30, 2001, AND WILL BE FOR ALL PRINCIPAL AND ALL ACCRUED INTEREST
NOT YET PAID. PAYMENTS INCLUDE PRINCIPAL AND INTEREST. 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 any unpaid collection costs and any late charges,
then to any unpaid interest, and any remaining amount to principal.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the Imperial Bank
Prime Rate (the "Index"). The Prime Rate is the rate announced by Lender as
its Prime Rate of interest from time to time. Lender will tell Borrower the
current Index rate upon Borrower's request. Borrower understands that
Lender may make loans based on other rates as well. The interest rate
change will not occur more often than each day. THE INDEX CURRENTLY IS
8.500%. THE INTEREST RATE TO BE APPLIED TO THE UNPAID PRINCIPAL BALANCE OF
THIS NOTE WILL BE AT A RATE OF 0.750 PERCENTAGE POINTS OVER THE INDEX,
RESULTING IN AN INITIAL RATE OF 9.250%. NOTICE: Under no circumstances will
the interest rate on this Note be more than the maximum rate allowed by
applicable law. Whenever increases occur in the interest rate, Lender, at
its option, may do one or more of the following: (a) increase Borrower's
payments to ensure Borrower's loan will pay off by its original final
maturity date, (b) increase Borrower's payments to cover accruing interest,
(c) increase the number of Borrower's payments, and (d) continue
Borrower's payments at the same amount and increase Borrower's final
payment.
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full
prepayment of this Note, Borrower understands that Lender is entitled to a
MINIMUM INTEREST CHARGE OF $250.00. Other than Borrower's obligation to pay
any minimum interest charge, Borrower may pay without penalty all or a
portion of the amount owed earlier than it is due. Early payments will not,
unless agreed to by Lender in writing, relieve Borrower of Borrower's
obligation to continue to make payments under the payment schedule. Rather,
they will reduce the principal balance due and may result in Borrower
making fewer payments.
LATE CHARGE. If a payment is 10 DAYS OR MORE LATE, Borrower will be charged
5.000% OF THE UNPAID PORTION OF THE REGULARLY SCHEDULED PAYMENT.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any
promise Borrower has made to Lender, or Borrower fails to comply with or to
perform when due any other term, obligation, covenant, or condition
contained in this Note or any agreement related to this Note, or in any
other agreement or loan Borrower has with Lender. (c) Any representation or
statement made or furnished to Lender by Borrower or on Borrower's behalf
is false or misleading in any material respect either now or at the time
made or furnished. (d) Borrower becomes insolvent, a receiver is appointed
for any part of Borrower's property, Borrower makes an assignment for the
benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (e) Any creditor
tries to take any of Borrower's property on or in which Lender has a lien
or security interest. This includes a garnishment of any of Borrower's
accounts with Lender. (f) Any guarantor dies or any of the other events
described in this default section occurs with respect to any guarantor of
this Note. (g) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired. (h) Lender in good faith deems itself insecure.
If any default, other than a default in payment, is curable and if
Borrower has not been given a notice of a breach of the same provision
of this Note within the preceding twelve (12) months, it may be cured
(and no event of default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such default: (a)
cures the default within ten (10) days; or (b) if the cure requires more
than ten (10) days, immediately initiates steps which Lender deems in
Lender's sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest immediately
due, without notice, and then Borrower will pay that amount. Upon
Borrower's failure to pay all amounts declared due pursuant to this
section, including failure to pay upon final maturity, Lender, at its
option, may also, if permitted under applicable law, do one or both of the
following: (a) increase the variable interest rate on this Note to 5.750
percentage points over the Index, and (b) add any unpaid accrued interest
to principal and such sum will bear interest therefrom until paid at the
rate provided in this Note (including any increased rate). Lender may hire
or pay someone else to help collect this Note if Borrower does not pay.
Borrower also will pay Lender that amount. This includes, subject to any
limits under applicable law, Lender's attorneys' fees and Lender's legal
expenses whether or not there is a lawsuit, including attorneys' fees and
legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Borrower also will pay any court costs,
in addition to all other sums provided by law. THIS NOTE HAS BEEN DELIVERED
TO LENDER AND ACCEPTED BY LENDER IN THE STATE OF CALIFORNIA. IF THERE IS A
LAWSUIT, BORROWER AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF LOS ANGELES COUNTY, THE STATE OF CALIFORNIA.
LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST
THE OTHER. (INITIAL HERE [ILLEGIBLE]/GB) THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if
Borrower makes a payment on Borrower's loan and the check or preauthorized
charge with which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest
in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender
all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all
accounts Borrower may open in the future, excluding however all IRA and
Keogh accounts, and all trust accounts for which the grant of a security
interest would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on
this Note against any and all such accounts.
REFERENCE PROVISION. 1. Other than (i) non-judicial foreclosure and all
matters in connection therewith regarding security interests in real or
personal property; or (ii) the appointment of a receiver, or the exercise
of other provisional remedies (any and all of which may be initiated
pursuant to applicable law), each controversy, dispute or claim between the
parties arising out of or relating to this document ("Agreement"), which
controversy, dispute or claim is not settled in writing within thirty (30)
days after the "Claim Date" (defined as the date on which a party subject
to the Agreement gives written notice to all other parties that a
controversy, dispute or claim exists), will be settled by a reference
proceeding in California in accordance with the provisions of Section 638
et seq. of the California Code of Civil Procedure, or their successor
section ("CCP"), which shall constitute the exclusive remedy for the
settlement of any controversy, dispute or claim concerning this Agreement,
including whether such controversy, dispute or claim is subject to the
reference proceeding and except as set forth above, the parties waive their
rights to initiate any legal proceedings against each other in any court or
jurisdiction other than the Superior Court in the County where the Real
Property, if any, is located or Los Angeles County if none (the "Court").
The referee shall be a retired Judge of the Court selected by mutual
agreement of the parties, and if they cannot so agree within forty-five
(45) days after the Claim Date, the referee shall be promptly selected by
the Presiding Judge of the Court (or his representative). The
referee shall be appointed to sit as a temporary judge, with all of the
powers for a temporary judge, as authorized by law, and upon selection
should take and subscribe to the oath of office as provided for in Rule 244
of the California Rules of Court (or any subsequently enacted Rule). Each
party shall have
06-23-1998
PROMISSORY NOTE PAGE 2
(CONTINUED)
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Date and (b) try any and all issues of law or fact and report a statement
of decision upon them, if possible, within ninety (90) days of the Claim
Date. Any decision rendered by the referee will be final, binding and
conclusive and judgment shall be entered pursuant to CCP 644 in any court
in the State of California having jurisdiction. Any party may apply for a
reference proceeding at any time after thirty (30) days following notice to
any other party of the nature of the controversy, dispute or claim, by
filing a petition for a hearing and/or trial. All discovery permitted by
this Agreement shall be completed no later than fifteen (15) days before
the first hearing date established by the referee. The referee may extend
such period in the event of a party's refusal to provide requested
discovery for any reason whatsoever, including, without limitation, legal
objections raised to such discovery or unavailability of a witness due to
absence or illness. No party shall be entitled to "priority" in conducting
discovery. Depositions may be taken by either party upon seven (7) days
written notice, and request for production or inspection of documents shall
be responded to within ten (10) days after service. All disputes relating
to discovery which cannot be resolved by the parties shall be submitted to
the referee whose decision shall be final and binding upon the parties.
Pending appointment of the referee as provided herein, the Superior Court
is empowered to issue temporary and/or provisional remedies, as
appropriate.
2. Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted
including the time and place of all hearings, the order of presentation
of evidence, and all other questions that arise with respect to the
course of the reference proceeding. All proceedings and hearings
conducted before the referee, except for trial, shall be conducted
without a court reporter, except that when any party so requests, a
court reporter will be used at any hearing conducted before the referee.
The party making such a request shall have the obligation to arrange for
and pay for the court reporter. The costs of the court reporter at the
trial shall be borne equally by the parties.
3. The referee shall be required to determine all issues in accordance
with existing case law and the statutory laws of the State of California.
The rules of evidence applicable to proceedings at law in the State of
California will be applicable to the reference proceeding. The referee
shall be empowered to enter equitable as well as legal relief, to provide
all temporary and/or provisional remedies and to enter equitable orders
that will be binding upon the parties. The referee shall issue a single
judgment at the close of the reference proceeding which shall dispose of
all of the claims of the parties that are the subject of the reference. The
parties hereto expressly reserve the right to contest or appeal from the
final judgment or any appealable order or appealable judgment entered by
the referee. The parties hereto expressly reserve the right to findings of
fact, conclusions of law, a written statement of decision, and the right to
move for a new trial or a different judgment, which new trial, if granted,
is also to be a reference proceeding under this provision.
4. In the event that the enabling legislation which provides for
appointment of a referee is repealed (and no successor statute is enacted),
any dispute between the parties that would otherwise be determined by the
reference procedure herein described will be resolved and determined by
arbitration. The arbitration will be conducted by a retired judge of the
Court, in accordance with the California Arbitration Act, 1280 through
1294.2 of the CCP as amended from time to time. The limitations with
respect to discovery as set forth hereinabove shall apply to any such
arbitration proceeding.
SECURITY AND LOAN AGREEMENT. This Note is subject to the provisions of the
Security and Loan Agreement and Addendum dated June 23, 1998 and all
amendments thereto and replacements therefor.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights
or remedies under this Note without losing them. Each Borrower understands
and agrees that, with or without notice to Borrower, Lender may with
respect to any other Borrower (a) make one or more additional secured or
unsecured loans or otherwise extend additional credit; (b) alter,
compromise, renew, extend, accelerate, or otherwise change one or more
times the time for payment or other terms any indebtedness, including
increases and decreases of the rate of interest on the indebtedness; (c)
exchange, enforce, waive, subordinate, fail or decide not to perfect, and
release any security, with or without the substitution of new collateral;
(d) apply such security and direct the order or manner of sale thereof,
including without limitation, any nonjudicial sale permitted by the terms
of the controlling security agreements, as Lender in its discretion may
determine; (e) release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms
or in any manner Lender may choose; and (f) determine how, when and what
application of payments and credits shall be made on any other indebtedness
owing by such other borrower. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive any
applicable statute of limitations, presentment, demand for payment, protest
and notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be
released from liability. All such parties agree that Lender may renew or
extend (repeatedly and for any length of time) this loan, or release any
party or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral; and take any other
action deemed necessary by Lender without the consent of or notice to
anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom
the modification is made. The obligations under this Note are joint and
several.
PRIOR TO SIGNING THIS NOTE, EACH BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
EACH BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A
COMPLETED COPY OF THE NOTE.
BORROWER:
IMAGING TECHNOLOGIES CORPORATION
IMAGING TECHNOLOGIES CORPORATION
BY: /s/ Brian Bonar
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BRIAN BONAR, C.E.O.
BY: /s/ Gerry Berg
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GERRY BERG, VICE PRESIDENT
PRIME INTERNATIONAL, CO-BORROWER
BY: /s/ Brian Bonar
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BRIAN BONAR, C.E.O.
BY: /s/ Gerry Berg
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GERRY BERG, VICE PRESIDENT
NEWGEN SYSTEMS ACQUISITIONS CORPORATION, CO-BORROWER
BY: /s/ Brian Bonar
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BRIAN BONAR, C.E.O.
BY: /s/ Gerry Berg
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GERRY BERG, VICE PRESIDENT
MCMICAN CORPORATION, CO-BORROWER
BY: /s/ Brian Bonar
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BRIAN BONAR, C.E.O.
BY: /s/ Gerry Berg
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GERRY BERG, VICE PRESIDENT
COLOR SOLUTIONS INC., CO-BORROWER
BY: /s/ Brian Bonar
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BRIAN BONAR, C.E.O.
BY: /s/ Gerry Berg
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GERRY BERG, VICE PRESIDENT
06-23-1998
PROMISSORY NOTE PAGE 3
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ITEC EUROPE LIMITED, CO-BORROWER
BY: /s/ Brian Bonar
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BRIAN BONAR, C.E.O.
BY: /s/ Gerry Berg
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GERRY BERG, VICE PRESIDENT
AMT ACCEL UK LIMITED, CO-BORROWER
BY: /s/ Brian Bonar
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BRIAN BONAR, C.E.O.
BY: /s/ Gerry Berg
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GERRY BERG, VICE PRESIDENT