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PROMISSORY NOTE

 

 

PROMISE TO PAY.  COMMUNITY WEST BANCSHARES, a California corporation (“Borrower”), promises to pay to the order of GRANDPOINT BANK, a California state-chartered bank (“Lender”), the principal amount of Ten Million Dollars ($10,000,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each Advance at the applicable interest rate as provided herein.  Interest shall be calculated from the date of each Advance until repayment of each Advance or, with respect to the Term Loan, from the Conversion Date until repayment of the Term Loan.  All principal, interest and other sums due hereunder shall be payable, without offset or deduction, in lawful money of the United States.  This Promissory Note (this “Note”) evidences a loan by Lender to Borrower pursuant to that certain Credit Agreement by Lender and Borrower dated concurrently herewith, as it may be supplemented, amended or restated from time to time (the “Credit Agreement”).  All capitalized terms not defined herein shall have the meanings given to such terms in the Credit Agreement.

PAYMENT.

 

INTEREST.

UNUSED COMMITMENT FEE.  During the Revolving Term, Borrower shall pay to Lender quarterly, in arrears, within thirty (30) days after each billing is sent by Lender, an amount calculated as of the last day of each three-month period ending January 31, 2016, April 30, 2016, July 31, 2016 and October 31, 2016 equal to one-half percent (0.5%) per annum of the unused portion of the Line of Credit (the “Unused Commitment Fee”).  The Unused Commitment Fee shall be calculated based on the average unused portion of the Line of Credit during the preceding three-month period.

LATE CHARGE.  Time is of the essence for all payments and other obligations due under this Note.  Borrower acknowledges that if any payment required under this Note is not received by Lender within ten (10) days after the same becomes due and payable, Lender will incur extra administrative expenses (i.e., in addition to expenses incident to receipt of timely payment) and the loss of the use of funds in connection with the delinquency in payment.  Because the actual damages suffered by Lender by reason of such administrative expenses and loss of use of funds would be impracticable or extremely difficult to ascertain, Borrower agrees that five percent (5.00%) of the amount of the delinquent payment, together with interest accruing on the entire unpaid principal balance of this Note at the Default Rate, as provided above, shall be the amount of damages which Lender is entitled to receive upon such breach, in compensation therefor.  Therefore, Borrower shall, in such event, without further demand or notice, pay to Lender, as Lender’s monetary recovery for such extra administrative expenses and loss of use of funds, liquidated damages in the amount of five percent (5.00%) of the amount of the delinquent payment (in addition to interest at the Default Rate).  The provisions of this paragraph are intended to govern only the determination of damages in the event of a breach in the performance of Borrower to make timely payments hereunder.  Nothing in this Note shall be construed as in any way giving Borrower the right, express or implied, to fail to make timely payments hereunder, whether upon payment of such damages or otherwise.  The right of Lender to receive payment of such liquidated and actual damages, and receipt thereof, are without prejudice to the right of Lender to collect such delinquent payments and any other amounts provided to be paid hereunder or under the Credit Agreement, the Stock Pledge and Security Agreement and/or the other Related Documents, or to declare a default hereunder or under the Credit Agreement, the Stock Pledge and Security Agreement and/or the other Related Documents.

ACCELERATION.  Upon the occurrence of an Event of Default or as otherwise provided in the Credit Agreement (but only after the expiration of any applicable grace periods or notice and cure periods), in addition to other default remedies available to Lender, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due and payable.

 

ATTORNEYS’ FEES; EXPENSES. Borrower agrees to pay upon demand all of Lender’s reasonable costs and expenses, including Lender’s reasonable attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Note.  Lender may hire or pay someone else to help enforce this Note, and Borrower shall pay the costs and expenses of such enforcement.  Costs and expenses include Lender’s reasonable attorneys’ fees and legal expenses whether or not there is a lawsuit, including reasonable 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 shall pay all court costs and such additional fees as may be directed by the court.  Notwithstanding the foregoing, in the event that an arbitrator appointed pursuant to the section entitled “Arbitration of Disputes,” below, determines that any action brought by Lender against Borrower or its Subsidiary Banks is frivolous, Lender shall be responsible for all costs and expenses, including Borrower’s and its Subsidiary Banks’ reasonable attorneys’ fees and legal expenses, incurred in connection with such frivolous action.

COLLATERAL.  Borrower acknowledges this Note is secured by Stock Pledge and Security Agreement dated concurrently herewith by Borrower in favor of Lender.

LINE OF CREDIT.  Upon and subject to the terms and conditions of the Credit Agreement, during the Revolving Term only, Borrower may borrow against this Note under the circumstances, in the manner and for the purposes specified in the Credit Agreement, but for no other purposes.   Advances against this Note by Lender or other holder shall be governed by the terms of the Credit Agreement.  The unpaid principal balance of this Note at any time shall be the total of all principal lent or advanced against this Note less the sum of all principal payments made on this Note by or for the account of Borrower.  Absent manifest error, Lender’s (or, if applicable, such other holder’s) records shall on any day conclusively evidence the unpaid balance of this Note and its advances and payments history posted up to that day.  Borrower agrees to be liable for all sums either:  (A) advanced in accordance with the instructions of a Responsible Officer or (B) credited to any of Borrower’s accounts with Lender.  The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender’s internal records, including daily computer printouts.

NO OFFSETS OR DEDUCTIONS.  All payments under the Note shall be made by Borrower without any offset, decrease, reduction or deduction of any kind or nature whatsoever, including, but not limited to, any decrease, reduction or deduction for, or on account of, any offset, withholdings, present or future taxes, present or future reserves, imposts or duties of any kind or nature that are imposed or levied by or on behalf of any government and/or taxing agency, body or authority by or for any municipality, state, or nation.  If at any time, present or future, Lender shall be compelled by any law, rule, regulation and/or any other such requirement which on its face or by its application requires and/or establishes reserves, or payment, deduction or withholding of taxes, imposts or duties to act such that it causes or results in a decrease, reduction and/or deduction, in payment received by Lender, then Borrower shall pay to Lender such additional amounts, as Lender shall deem necessary and appropriate, such that every payment received under this Note, after such decrease, reserve, reduction, deduction, payment and/or required withholding, shall not be reduced in any manner whatsoever; provided Lender charges other borrowers with similar loans from Lender on generally the same basis that amounts due from Borrower are determined.

WAIVERS.  Lender shall not be deemed to have waived any rights under this Note unless such waiver is given in writing and signed by Lender.  No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right.  A waiver by Lender of a provision of this Note shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Note.  No prior waiver by Lender, nor any course of dealing between Lender and Borrower, shall constitute a waiver of any of Lender’s rights or of any of Borrower’s obligations as to any future transactions.  Whenever the consent of Lender is required under this Note, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in Lender’s reasonable discretion.  Subject to all applicable notice and cure provisions provided in this Note and the Credit Agreement, Borrower hereby waives grace, diligence, presentment, demand, notice of demand, dishonor, notice of dishonor, protest, notice of protest, any and all exemption rights against the indebtedness evidenced by this Note and the right to plead any statute of limitations as a defense to the repayment of all or any portion of this Note, and interest thereon, to the fullest extent allowed by law, and all compensation of cross‑demands pursuant to California Code of Civil Procedure Section 431.70.

AMENDMENT.  No alteration of or amendment to this Note shall be effective unless given in writing and signed by Lender and Borrower.

SUCCESSORS AND ASSIGNS.  All covenants and agreements by or on behalf of Borrower contained in this Note shall bind Borrower’s successors and assigns and shall inure to the benefit of Lender and its successors and assigns.  Borrower shall not, however, have the right to assign Borrower’s rights under this Note or any interest herein, without the prior written consent of Lender.

GOVERNING LAW.  This Note is governed by the laws of the State of California.  This Note has been accepted by Lender in the State of California.

NOTICES.  Any notice required to be given under this Note shall be given in writing, and shall be effective when actually delivered, by a nationally recognized overnight courier, by the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Note, or by email.  Notices given by email to Lender shall be sent to mwalsh@grandpointbank.com.  Notices given by email to Borrower shall be sent to mplourd@communitywestbank.com and to cbaltuskonis@communitywestbank.com.  Any party may change its address and/or email address for notices under this Note by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address.  For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current address.

 

SEVERABILITY.  If a court of competent jurisdiction finds any provision of this Note to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance.  If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable.  If the offending provision cannot be so modified, it shall be considered deleted from this Note.  Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Note shall not affect the legality, validity or enforceability of any other provision of this Note.

CONSTRUCTION OF NOTE.  Neither this Note nor any uncertainty or ambiguity herein shall be construed or resolved against Lender or Borrower, whether under any rule of construction or otherwise.  On the contrary, this Note has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties.  It is acknowledged by the parties that: (i) each party is of equal bargaining strength; (ii) each party has actively participated in the drafting, preparation and negotiation of this Note; and (iii) any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Note, any portion hereof or any amendments hereto.  Caption headings in this Note are for convenience purposes only and are not to be used to interpret or define the provisions of this Note.

LENDER’S CONSENT.  Wherever in this Note there is a requirement for Lender’s consent, it is understood that Lender shall exercise its consent, right or judgment reasonably and without undue delay.

AUTHORITY TO FILE NOTICES.  Borrower appoints and designates Lender as its attorney-in-fact to file for the record any notice that Lender deems necessary to protect its interest under this Note.  This power shall be deemed coupled with an interest and shall be irrevocable while any sum or performance remains due and owing under any of the Related Documents.

ARBITRATION OF DISPUTES.

(i)

LIMIT OR PROHIBIT LENDER OR BORROWER FROM BRINGING ANY ACTION IN ANY COURT OF COMPETENT JURISDICTION FOR INJUNCTIVE RELIEF; FOR APPOINTMENT OF A RECEIVER; FOR PROVISIONAL REMEDIES, INCLUDING TEMPORARY PROTECTIVE ORDERS AND WRITS OF ATTACHMENT; OR FOR JUDICIAL FORECLOSURE; AND THE FILING OF SUCH ACTIONS BY LENDER OR BORROWER SHALL NOT:

(a)

CONSTITUTE A WAIVER OF THIS ARBITRATION PROVISION; OR

(b)

LIMIT THE COURT FROM REFERRING AS MUCH OF THE CLAIMS IN THE ACTION TO ARBITRATION AS POSSIBLE; OR

(ii)

LIMIT OR PROHIBIT LENDER FROM EXERCISING ANY OF ITS RIGHTS AS LENDER UNDER THIS NOTE INCLUDING, WITHOUT LIMITATION, THE INVOCATION OF THE POWER OF SALE UNDER ANY DEED OF TRUST SECURING THIS NOTE OR THE USE OF ANY SET‑OFF OR LIEN RIGHTS;

 

 

 

GENERAL PROVISIONS.  If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.  Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them.  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, 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, partner, or guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the Pledged Stock; and take any other action deemed necessary by Lender without the consent of or notice to anyone.

IN WITNESS WHEREOF, Borrower has executed this Promissory Note on the date first set forth above.

BORROWER:

COMMUNITY WEST BANCSHARES,

a California corporation

 

 

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