13D/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 5
TO
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS
FILED PURSUANT TO RULE 13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
BANNER CENTRAL FINANCE COMPANY
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
06652W 10 7
(CUSIP Number of Class of Securities)
----------------------
Gary M. Cypres
5480 East Ferguson Drive
Commerce, CA 90022
(323) 720-8608
With Copies To:
William T. Quicksilver, Esq.
Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles, CA 90064
(310) 312-4210
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 3, 2002
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
1
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOs. OF ABOVE PERSONS (ENTITIES ONLY)
Gary M. Cypres
171-36-7242
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) [ ]
(b) [ ]
(3) SEC USE ONLY
(4) SOURCE OF FUNDS
Personal Funds and Bank Loaned Funds
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF SHARES : (7) SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH 3,848,720*
REPORTING PERSON WITH
: (8) SHARED VOTING POWER
795,744*
: (9) SOLE DISPOSITIVE POWER
3,848,720*
: (10) SHARED DISPOSITIVE POWER
795,744*
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,644,464*
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES [ ]
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
61.70%
(14) TYPE OF REPORTING PERSON
IN
* On June 25, 2002, Cypres beneficially owned 31,000 shares of Issuer Common
Stock and on February 28, 2002 Cypres beneficially owned 79,000 shares of Issuer
Common Stock pursuant to vested stock options. As a result of the foregoing
transaction, his vested stock options, and the 3,817,720 shares of Issuer Common
Stock previously reported as being beneficially owned by Cypres, Cypres has sole
voting power of 3,848,720 shares of Issuer Common Stock. In addition, Cypres as
the sole stockholder of G.M. Cypres & Co., Inc., which is the general partner of
(i) Cypres Investments Holdings, L.P., which owns 690,088 shares of the Issuer's
Common Stock and (ii) G.M. Cypres Investments, L.P., which owns 80,656 shares of
Issuer Common Stock, is deemed to beneficially own and control 770,744 shares of
Issuer Common Stock. Also, Cypres has shared voting power of 12,500 shares of
Issuer Common Stock held by Cypres' spouse and 12,500 shares of Issuer Common
Stock held in trust by Cypres and his spouse.
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(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOs. OF ABOVE PERSONS (ENTITIES ONLY)
G.M. Cypres & Co., Inc.
13-3559737
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) [ ]
(b) [ ]
(3) SEC USE ONLY
(4) SOURCE OF FUNDS
N/A
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
NUMBER OF SHARES : (7) SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH 0
REPORTING PERSON WITH
: (8) SHARED VOTING POWER
770,744*
: (9) SOLE DISPOSITIVE POWER
0
: (10) SHARED DISPOSITIVE POWER
770,744*
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
770,744*
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES [ ]
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
10.39%
(14) TYPE OF REPORTING PERSON
CO
* G.M. Cypres & Co., Inc. is the general partner of (i) Cypres Investments
Holdings, L.P., which owns 690,088 shares of Issuer Common Stock, and (ii) G.M.
Cypres Investments, L.P., which owns 80,656 shares of Issuer Common Stock.
3
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOs. OF ABOVE PERSONS (ENTITIES ONLY)
Cypres Investments Holdings, L.P.
13-3559738
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) [ ]
(b) [ ]
(3) SEC USE ONLY
(4) SOURCE OF FUNDS
N/A
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
NUMBER OF SHARES : (7) SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH 690,088*
REPORTING PERSON WITH
: (8) SHARED VOTING POWER
0
: (9) SOLE DISPOSITIVE POWER
690,088*
: (10) SHARED DISPOSITIVE POWER
0
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
690,088*
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11
EXCLUDES CERTAIN SHARES [ ]
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
9.30%
(14) TYPE OF REPORTING PERSON
PN
* On August 2, 2001, Cypres Investments Holdings, LP ("CIH") distributed a total
of 33,094 shares of Issuer Common Stock to three individuals. These
distributions decreased CIH's ownership of Issuer Common Stock from 723,182
shares to 690,088 shares.
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Item 1. Security and Issuer.
This Amendment No. 5 to Schedule 13D (the "Schedule 13D Amendment") relates
to the common stock, par value $0.01 per share (the "Shares" or the "Issuer
Common Stock"), of Banner Central Finance Company, a Delaware corporation (the
"Issuer"). The principal executive office of the Issuer is located at 5480 East
Ferguson Drive, Commerce, CA 90022.
Item 2. Identity and Background.
(a)-(c) This Schedule 13D Amendment is filed by Gary M. Cypres, a natural
person ("Cypres"), G.M. Cypres & Co., Inc., a Delaware corporation ("GMCC"), and
Cypres Investments Holdings, L.P., a Delaware limited partnership ("CIH")
(collectively, the "Reporting Persons"). The business address of Cypres is 5480
East Ferguson Drive, Commerce, CA 90022. The address of the principal business
and principal office of CIH and GMCC is also 5480 East Ferguson Drive, Commerce,
CA 90022. Cypres is the Chairman of the Board, President and Chief Executive
Officer of the Issuer. Cypres is the sole stockholder of GMCC and may exercise
voting power over shares of Issuer Common Stock beneficially owned by GMCC. GMCC
is the general partner of CIH and G.M. Cypres Investments, L.P. ("GMCI"), a
limited partnership stockholder of Issuer. CIH is a limited partnership
stockholder of Issuer.
(d)-(e) During the last five years, none of the Reporting Persons nor, to
the best knowledge of the Reporting Persons, any of the executive officers or
directors of GMCC has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, Federal
or State securities laws or finding any violation with respect to such laws.
(f) Cypres is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to the Stockholder Loan Program, which was disclosed in the
Company's Proxy Statement, Hispanic Express, Inc. paid off the Credit Starters
Note of $6,995,699.00 with City National Bank, NA and paid down $684,221.09 on
the Gary Cypres note with City National Bank, NA. In addition, Hispanic Express,
Inc. loaned Cypres $483,480.00 to exercise his stock options of 316,000 shares
of Hispanic Express, Inc. Common Stock. As a result of the foregoing
transactions, Cypres executed a promissory note in principal amount of
US$8,163,400 (the "Note") in favor of Hispanic Express, Inc. (the "Lender"). In
connection with, and as collateral for, the Note, Cypres and G.M. Cypres &
Company, Inc. pledged to the Lender 4,285,682 shares of Issuer Common Stock,
representing all of the shares of Issuer Common Stock owned by Cypres and G.M.
Cypres & Company, Inc. as of such date, plus 3,858,672 shares of the common
stock of Hispanic Express, Inc. ("HXPR"), representing all of the shares of
Issuer Common Stock owned by Cypres and G.M. Cypres & Company, Inc. as of such
date (the "Pledge"). The terms of the Pledge permit Cypres to retain voting and
investment power over the shares of Issuer Common Stock and BCFN common stock so
pledged. The funds available under the Note are restricted for use in the
acquisition of additional shares of Issuer Common Stock and HXPR common stock.
In addition, Cypres beneficially owns 110,000 shares of Issuer Common Stock
pursuant to vested stock options. Accordingly, Cypres beneficially owns and has
sole dispositive and voting power over 3,848,720 shares of Issuer Common Stock.
5
GMCC is the general partner of CIH and GMCI. On August 2, 2001, CIH
distributed a total of 33,094 shares of Issuer Common Stock to three
individuals. These distributions decreased CIH's ownership of Issuer Common
Stock from 723,182 shares to 690,088 shares. Thus, CIH has sole dispositive and
voting power over 690,088 shares of Issuer Common Stock. Also on August 2, 2001,
GMCI distributed a total of 24,661 shares of Issuer Common Stock to two
individuals. These distributions decreased GMCI's ownership of Issuer Common
Stock from 105,317 shares to 80,656 shares. Accordingly, GMCC has shared
dispositive and voting power over 770,744 shares of Issuer Common Stock through
its interest in CIH and GMCI. Cypres is the sole stockholder of GMCC and thus
has shared dispositive and voting power over 770,744 shares of Issuer Common
Stock. In addition, Cypres has shared dispositive and voting power over 12,500
shares of Issuer Common Stock held by Mr. Cypres' spouse and 12,500 shares of
Issuer Common Stock held in trust by Mr. Cypres and his spouse.
Item 4. Purpose of the Transaction.
(a)-(i) The information set forth in Item 3 is hereby incorporated herein
by reference.
The Reporting Person may continue from time to time to acquire additional
securities from the Issuer under conditions which are satisfactory to him.
The Reporting Persons do not have any plans or proposals which relate to or
would result in:
(a) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(b) A sale or transfer of a material amount of assets of the Issuer or any
of its subsidiaries;
(c) Any change in the present Board of Directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the Board;
(d) Any material changes in the present capitalization or dividend policy
of the Issuer;
(e) Any other material change in the Issuer's business or corporate
structure;
(f) Changes in the Issuer's charter, by-laws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Issuer by any person;
(g) Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(h) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934; or
(i) Any action similar to any of those enumerated above.
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Item 5. Interest in Securities of the Issuer.
(a)-(b) The number of shares of Issuer Common Stock beneficially owned by
CIH and covered by this report is 690,088, which constitutes, based on the
number of shares of Issuer Common Stock outstanding on a fully diluted basis on
July 1, 2002, approximately 9.30% of Issuer Common Stock. The number of shares
of Issuer Common Stock beneficially owned by GMCC and covered by this report is
770,744, which constitutes, based on the number of shares of Issuer Common Stock
outstanding on a fully diluted basis on July 1, 2002 approximately 10.39% of
Issuer Common Stock. Gary M. Cypres, who is President, Director and sole
stockholder of GMCC and Chairman of the Board, President and Chief Executive
Officer of the Issuer, beneficially owns 4,644,464 shares of Issuer Common
Stock, which constitutes, based on the number of shares of Issuer Common Stock
outstanding on a fully diluted basis on July 1, 2002, approximately 61.70% of
Issuer Common Stock.
(c) Other than as set forth in this Item 5(a)-(b), to the best of the
Reporting Persons' knowledge as of the date hereof (i) no subsidiary or
affiliate of the Reporting Persons nor any of executive officers or directors of
GMCC beneficially owns any shares of Issuer Common Stock, and (ii) other than,
as described in Item 3, there have been no transactions in the shares of Issuer
Common Stock effected during the past 60 days by the Reporting Persons.
(d) No other person is known by the Reporting Persons to have the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the Issuer's common stock held by the Reporting Persons.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
As described in Item 3, Cypres pledged to the Lender his 4,285,682 shares
of Issuer Common Stock and 3,858,672 shares of HXPR common stock to be used as
collateral for Note. However, Cypres still maintains his rights of voting and
investing power over such pledged stock.
The information set forth, or incorporated by reference, in Items 3 through
5 is hereby incorporated herein by reference.
To the best of the Reporting Persons' knowledge, except as described in
this Schedule 13D, there are at present no other contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
Item 2 above and between any such persons and any person with respect to any
securities to the Issuer, including but not limited to transfer or voting of any
of the securities, finder's fees, joint ventures, loan or option arrangements,
put or calls, guarantees of profits, division of profits or loss, or the giving
or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 - Promissory Note Gary Cypres &Hispanic Express, Inc.
7
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief, we
certify that this statement is true, complete and correct.
Dated: July 1, 2002
GARY M. CYPRES
/s/ Gary M. Cypres
-----------------------------------
Name: Gary M. Cypres
G.M. Cypres & Co., INC.
By: /s/ Gary M. Cypres
-----------------------------------
Name: Gary M. Cypres
Title: President
CYPRES INVESTMENTS HOLDINGS, L.P.
By: G.M. Cypres & Co., Inc.,
its general partner
By: /s/ Gary M. Cypres
-----------------------------------
Name: Gary M. Cypres
Title: President
8
EXHIBIT 1.
SECURED PROMISSORY NOTE
$8,163,400.00 Dated: June 10, 2002
1. FOR VALUE RECEIVED, the undersigned, Gary M. Cypres, an individual
having an address at 5480 Ferguson Drive, Commerce, CA 90022 ("Borrower")
promises to pay to CENTRAL CONSUMER FINANCE COMPANY ("Lender"), or to Lender's
order, at 5480 Ferguson Drive, Commerce, CA 90022, or such other address as the
holder shall specify in writing, the principal sum of Eight Million One Hundred
Sixty-three Thousand Four Hundred DOLLARS ($8,163,400.00), together with
interest on the unpaid principal hereof at the floating rate per annum equal to
the rate publicly announced from time to time by City National Bank in Los
Angeles, California as its "base" or "prime" lending rate. Upon the occurrence
of an Event of Default, the rate of interest applicable to this Note shall be
increased to the sum of the rate otherwise applicable pursuant to the preceding
sentence plus five percent (5%) per annum. All payments under this Note shall be
made by check or wire transfer in accordance with Lender's instructions, and
shall be payable in lawful money of the United States.
2. Payments. The entire principal amount of this Note, together with all
accrued unpaid interest, shall be due and payable on November 14,2003(1) This
Note may be prepaid at any time, in whole or in part, without penalty.
3. Maximum Interest. Notwithstanding any other provision of this Note, in
no event shall the interest payable hereunder, whether before or after maturity,
exceed the maximum interest which, under applicable law, may be charged on this
Note. To the extent that any amount collected by Lender exceeds the maximum
interest permitted under applicable law, such excess shall be applied to reduce
the outstanding principal of this Note.
4. Pledge and Grant of Security Interest. As security for the prompt and
complete payment and performance of the Liability when due, Borrower hereby
delivers, pledges and grants a security interest to Lender in all of Borrower's
right, title and interest in and to the following (whether now existing or
hereafter arising or acquired): (a) all the issued and outstanding capital stock
of Hispanic Express, Inc., a Delaware corporation (the "Company"); (b) all
certificates and instruments from time to time evidencing such capital stock;
(c) all additional capital stock in the Company, or in any successor
corporation, hereafter acquired by Borrower; (d) all dividends and other
distributions received by Borrower in respect of any of the foregoing, and (e)
all proceeds of the foregoing items, which shall include whatever is received or
to be received when such items are sold, transferred, exchanged or otherwise
disposed of, voluntarily or involuntarily. For the purposes of this Note all of
the items described in clauses (a) through (e) above are collectively referred
to as the "Collateral".
A. Voting. Until an Event of Default shall occur and be continuing,
Borrower will be entitled to vote any and all of the capital stock comprising
the Collateral and to give any consents, waivers or ratifications in respect of
such stock but Borrower will not have the right to vote or take any action which
would violate or be inconsistent with this Note. Borrower's right to vote or
give consents, waivers or ratifications shall cease upon the occurrence of an
Event of Default.
(1) 18 months from date of issuance.
9
B. Dividends and Other Distributions. Until an Event of Default shall occur
and be continuing, Borrower will be entitled to retain all cash dividends on the
capital stock of the Company. However, Borrower will pay to Lender any and all
extraordinary, liquidating or other distribution in return of capital any
capital stock of Borrower, to be held by Lender as the proceeds of the
Collateral. Borrower will also pay to Lender, to be held by Lender as
Collateral, all other or additional stock, securities or property (other than
cash) distributed (ii) by way of dividend under the capital stock comprising the
Collateral whether as a result of stock-split, spin-off, reclassification,
combination of shares or other similar arrangement or (ii) as a result of any
consolidation, merger, exchange of stock, transfer of assets, liquidation or
similar corporate reorganization.
C. Delivery of Collateral. Concurrently with the execution and delivery of
this Note, Borrower shall deliver to Lender all the stock certificates
representing the Collateral, together with stock powers in blank duly executed
by Borrower. In the event that Borrower receives additional capital stock
certificates that constitute Collateral, Borrower will promptly deliver them to
Lender to be held in pledge by Lender pursuant to the terms of this Note,
together with stock powers in blank duly executed by Borrower.
5. Events of Default. Any one or more of the following events shall
constitute an Event of Default by Borrower under this Note.
(a) If Borrower fails to pay when due and payable or when declared due and
payable, any portion of the obligations hereunder, whether of principal or
interest (including any interest which, but for the provisions of the United
States Bankruptcy Code, would have accrued on such amounts);
(b) If Borrower fails or neglects to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in this Note;
(c) If any bankruptcy, reorganization, receivership or other insolvency
proceeding (each, an "Insolvency Proceeding") is commenced by or against
Borrower.
Upon the occurrence of an Event of Default, all amounts outstanding under
this Note shall, at the option of the holder hereof, become immediately due and
payable without notice or demand; provided that in the case of an Event of
Default described in clause (c), all amounts outstanding under this Note shall
become due and payable immediately and automatically, without notice, demand or
any action on the part of any party.
6. Remedies. (a) In case an Event of Default shall occur and be continuing,
Lender shall be entitled to exercise all of Lender's rights, powers and remedies
(whether pursuant to applicable law or this Note) for the protection and
enforcement of Lender's rights in the Collateral, including, without limitation,
the following:
(i) the right to receive all monies or other property which, but for the
occurrence of the Event of Default, Borrower would have been entitled to retain;
(ii) to transfer registration of the Collateral into Lender's name;
(iii) to vote all the shares of stock comprising the Collateral, give all
consents, waivers and ratifications with respect to them and to otherwise act as
if Lender were the outright owner of such stock and Borrower hereby gives Lender
an irrevocable power of attorney and proxy to do same; and
10
(iv) to sell, assign or otherwise dispose of the Collateral, in the
entirety or in separate lots, and generally in such manner, at such time or
times, at such place or places and on such terms as Lender, in compliance with
any mandatory requirements of applicable law, may determine to be commercially
reasonable, and, to the extent permitted by any such requirement of law, Lender
may bid (which may be a credit bid) for and become the purchaser of the
Collateral (or any portion thereof), offered for sale in accordance with this
section without accountability to Borrower, except pursuant to subsection
(b)(iii) below.
Notwithstanding the foregoing or any other provision of this Note to the
contrary, Lender shall have recourse solely to the Collateral for the
enforcement of this Note, and not to the general credit or other assets of
Borrower.
(b) The proceeds of any disposition of any Collateral obtained pursuant to
this section shall be applied as follows:
(i) first, to the payment of any and all expenses and fees (including
reasonable attorney's fees) incurred by Lender in foreclosing on and
disposing of the Collateral;
(ii) next, any surplus then remaining to the payment of the
outstanding principal of this Note, interest accrued thereon, and all
additional amounts and other sums at any time due and owing, and required
to be paid, to Lender under the terms of this Note (collectively, the
"Liabilities"), whether matured or unmatured, in such order as Lender may
determine in its sole discretion; and
(iii) thereafter, if no other Liabilities are outstanding, any surplus
then remaining shall be paid to Borrower or to such other person legally
entitled to same; it being understood that Borrower will remain liable to
Lender to the extent of any deficiency between the amount of the
Liabilities and the aggregate of all amount realized from Collateral.
7. Cumulative Rights. Lender's rights, powers and remedies under this Note
shall be in addition to all rights, powers and remedies given to Lender under
law or under this Note or under any other agreement between Borrower and Lender,
all of which rights, powers and remedies shall be cumulative and may be
exercised successively or concurrently without Lender's security interest in the
Collateral.
8. Representations and Warranties. Borrower hereby represents and warrants
to Lender that:
(a) Borrower is, and at all times will be, the beneficial owner of the
Collateral and no one else has or will have, any pre-emptive right, title,
claim, lien, interest or other right in or against the Collateral (other than
the rights and interest of Lender pursuant to this Note); the certificate
numbers representing the capital stock of the Company which Borrower is
delivering herewith constitute all of the outstanding capital stock of the
Company in which Borrower has any right, title or interest;
(b) Borrower is legally competent and has the power and authority to
execute and deliver this Note and has duly executed and delivered this Note;
(c) this Note is the legal, valid and binding obligation of Borrower;
(d) each item of Collateral is genuine, validly issued and outstanding and
is fully paid and nonassessable and was issued in accordance with all applicable
laws and regulations;
11
(e) each item of Collateral is free of any restriction on transfer or
assignment and Borrower has the right to pledge the Collateral to Lender without
restriction; and
(f) the execution and delivery of this Note and the borrowing evidenced
hereby do not require the consent or approval of any other party (including any
governmental or regulatory body), and do not violate any law, regulation or
agreement to which Borrower or the Company is a party or by which Borrower or
the Company or any of their assets may be subject.
9. Certain Covenants.
(a) Further Assurances. Borrower will, and will cause Borrower to,
cooperate with Lender and execute and deliver, or cause to be executed and
delivered, all such other stock powers, proxies, instruments and documents, and
will take all such other action, including, without limitation, the filing of
financing statements, as Lender may reasonably request from time to time in
order to maintain, preserve and protect the Collateral and Lender's first
priority security interest, and otherwise to carry out the provisions and
purposes of this Note. Borrower further agrees that it will not create, permit
or suffer to exist, and will defend the Collateral against and take such other
action as is necessary to remove, any lien on the Collateral and will defend the
right, title and interest of Lender in and to the Collateral against the claims
and demands of all other persons or entities.
(b) Compliance With Laws, etc. Borrower will comply with all laws and
regulations relating to the possession and control of the Collateral and, in the
event that Lender forecloses on the security interest granted to Lender under
this Note, to cooperate with Lender in any foreclosure or private sale as may be
required to sell or transfer the Collateral.
(c) Prohibited Actions. Borrower shall not sell, assign, exchange, grant a
security interest in, transfer, encumber, grant any option
of, or otherwise dispose of, any of the Collateral, or attempt or contract to do
so.
10. Severability. Wherever possible each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable laws
and regulations, but if any provision of this Note shall be prohibited by or
invalid thereunder, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note.
11. Choice of Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
12. Expenses. If this Note is not paid when due, Borrower promises to pay
all costs and expenses of collection, and attorneys' fees incurred by the holder
hereof on account of such collection, whether or not suit is filed hereon.
13. Successors and Assigns. This Note shall bind Borrower and its
successors and assigns and shall inure to the benefit of Lender and its
successors and assigns; provided, however, that Borrower may not assign this
Note or any rights or duties hereunder without Lender's prior written consent.
No consent by Lender to an assignment by Borrower shall release Borrower from
its obligations. This Note shall be freely assignable by Lender.
14. Amendments, etc. No amendment, modification, termination, or waiver of
any provision of this Note, or any other document or instrument executed in
connection herewith, or consent to any departure by Borrower, shall in any event
be effective without the written concurrence of Lender.
12
15. Waivers and Consents. The holder shall not be deemed to have waived any
of its rights hereunder or under any other agreement, instrument or paper signed
by either maker unless such waiver is in writing and signed by the holder. No
delay or omission on the part of the holder in exercising any right shall
operate as a waiver thereof or of any other right. A waiver upon any one
occasion shall not be construed as a bar or waiver of any right or remedy on any
future occasion. BORROWER EXPRESSLY WAIVES DEMAND, PROTEST, NOTICE OF PROTEST,
NOTICE OF DISHONOR, PRESENTMENT FOR PAYMENT AND THE RIGHT TO ASSERT ANY STATUTE
OF LIMITATIONS IN CONNECTION WITH THIS NOTE AND THE TRANSACTIONS EVIDENCED
HEREIN.
16. Service of Process. Borrower agrees that service of process in any
such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to it at its address set forth above or at such other address
of which Lender shall have been notified in accordance with Section 18 below,
and agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law.
17. Notices. All notices, demands, declarations, consents, directions,
approvals, instructions, requests and other communications required or permitted
by this Note shall be in writing and shall be deemed to have been duly given
when addressed to the appropriate Person and deposited in the U.S. Postal
Service via registered mail. The initial address for notices is forth in Section
1 of this Note.
18. WAIVER OF JURY TRIAL. BORROWER AND LENDER ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. LENDER AND
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE (AFTER CONSULTING
OR HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL OF THEIR CHOICE) ANY RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS NOTE OR ANY OTHER RELATED
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF LENDER OR BORROWER. BORROWER ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN
EVIDENCED HEREBY.
IN WITNESS WHEREOF, this Note is executed by Borrower as of the date
hereof.
/s/ Gary M. Cypres
--------------------------------
WITNESS:
/s/ Carol C. Covert
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