Exhibit 10.02

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REVOLVING NOTE

September 29, 2006

$25,000,000.00

For value received, the undersigned Rackable Systems, Inc., a Delaware
corporation, with an address of 1933 Milmont Drive, Milpitas, California 95035
(the “Borrower”), promises to pay to the order of HSBC Bank USA, National
Association, a bank organized under the laws of the United States of America
with an address of 601 Montgomery Street, San Francisco, California 94111
(together with its successors and assigns, the “Bank”), the principal amount of
Twenty-Five Million Dollars and Zero Cents ($25,000,000.00) or, if less, such
amount as may be the aggregate unpaid principal amount of all loans or advances
made by the Bank to the Borrower pursuant hereto on or before the Expiration
Date of this Note, together with interest from the date hereof on the unpaid
principal balance from time to time outstanding until paid in full.

The aggregate principal balance outstanding shall bear interest, and interest
shall be payable, in accordance with that certain Interest Rate Election Rider,
attached hereto and made a part hereof (the “Interest Election Rider”).

Principal and interest shall be payable at the Bank’s main office or at such
other place as the Bank may designate in writing in immediately available funds
in lawful money of the United States of America without set-off, deduction or
counterclaim. Interest shall be calculated on the basis of actual number of days
elapsed in a 360-day year.

This Note is a revolving note and, subject to the foregoing and in accordance
with the provisions hereof and of any and all other agreements between the
Borrower and the Bank related hereto, the Borrower may, at its option, borrow,
pay, prepay and reborrow hereunder at any time prior to the expiration date of
this note or such earlier date as the obligations of the Borrower to the Bank
under this Note, and any other agreements between the Bank and the Borrower
related hereto, shall become due and payable; provided, however, that in any
event the principal balance outstanding hereunder shall at no time exceed the
face amount of this Note. This Note shall continue in full force and effect
until all obligations and liabilities evidenced by this Note are paid in full,
even if, from time to time, there are no amounts outstanding respecting this
Note. Notwithstanding that this Note shall be due and payable on the expiration
date of this Note, the Bank’s agreement to advance funds respecting this Note
shall expire on 364 days from the date of this Note (“Expiration Date”) and
there shall be no further advances respecting this Note unless the Bank agrees
in writing in the sole discretion of the Bank to extend such expiration date.
Nothing contained in this Note or otherwise is intended, nor shall constitute,
an obligation of the Bank to make any loan or advance.

At the option of the Bank (but automatically in the case of an Insolvency
Default (as hereinafter defined)), this Note shall become immediately due and
payable without notice or demand upon the occurrence at any time of any of the
following events of default (each, an “Event of Default”): (1) default of any
liability, obligation, covenant or undertaking of the Borrower, hereof to the
Bank, hereunder or otherwise, including, without limitation, failure to pay in
full and when due any installment of principal or interest or default of the
Borrower, hereof under any other loan document delivered by the Borrower, or in
connection with the loan evidenced by this Note or any other agreement by the
Borrower, with the Bank; (2) default of any liability, obligation or undertaking
of the Borrower, hereof to any other party; (3) if any statement, representation
or warranty heretofore, now or hereafter made by the Borrower, hereof in
connection with the loan evidenced by this Note or in any supporting financial
statement of the Borrower, hereof shall be determined by the Bank to have been
false or misleading in any material respect when made; (4) if the Borrower,
hereof is a corporation, trust, partnership or limited liability company, the
liquidation, termination or dissolution of any such organization, or the merger
or consolidation of such organization into another entity, or its ceasing to
carry on actively its present business or the appointment

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of a receiver for its property; (5) the death or judicial declaration of
incompetence of the Borrower, hereof and, if the Borrower, hereof is a
partnership or limited liability company, the death or judicial declaration of
incompetence of any partner or member; (6) the institution by or against the
Borrower, hereof of any proceedings under the Bankruptcy Code 11 USC §101 et
seq. or any other law in which the Borrower, hereof is alleged to be insolvent
or unable to pay its debts as they mature, or the making by the Borrower, hereof
of an assignment for the benefit of creditors or the granting by the Borrower,
hereof of a trust mortgage for the benefit of creditors (each of the foregoing
in this subclause, an “Insolvency Default”); (7) the service upon the Bank of a
writ in which the Bank is named as trustee of the Borrower; (8) a judgment or
judgments for the payment of money shall be rendered against the Borrower,
hereof, and any such judgment shall remain unsatisfied and in effect for any
period of thirty (30) consecutive days without a stay of execution; (9) any
levy, lien (including mechanics lien), seizure, attachment, execution or similar
process shall be issued or levied on any of the property of the Borrower;
(10) the occurrence of such a change in the condition or affairs (financial or
otherwise) of the Borrower, or the occurrence of any other event or
circumstance, such that the Bank, reasonably deemed that the prospects for
timely or full payment or performance of any obligation of the Borrower, hereof
to the Bank has been or may be impaired.

Any payments received by the Bank on account of this Note shall, at the Bank’s
option, be applied first, to accrued and unpaid interest; second, to the unpaid
principal balance hereof; third to any reasonable costs, expenses or charges
then owed to the Bank by the Borrower; and the balance to escrows, if any.
Notwithstanding the foregoing, any payments received after demand for payment
shall be applied in such manner as the Bank may determine. The Borrower hereby
authorizes the Bank to charge any deposit account which the Borrower may
maintain with the Bank for any payment required hereunder without prior notice
to the Borrower.

If pursuant to the terms of this Note, the Borrower is at any time obligated to
pay interest on the principal balance at a rate in excess of the maximum
interest rate permitted by applicable law for the loan evidenced by this Note,
the applicable interest rate shall be immediately reduced to such maximum rate
and all previous payments in excess of the maximum rate shall be deemed to have
been payments in reduction of principal and not on account of the interest due
hereunder. More specifically, if from any circumstances whatsoever, fulfillment
of any provision of this Note or any other loan document excuted and delivered
in connection with this Note, at the time performance of such provision becomes
due, would exceed the limit on interest then permitted by any applicable usury
statute or any other applicable law, the Bank may, at its option (a) reduce the
obligations to be fulfilled to such limit on interest, or (b) apply the amount
in excess of such limit on interest to the reduction of the outstanding
principal balance of the obligations, and not to the payment of interest, with
the same force and effect as though Borrower had specifically designated such
sums to be so applied to principal and Bank had agreed to accept such extra
payments(s) as a premium-free prepayment, so that in no event shall any exaction
be possible under this Note or any other loan document that is in excess of the
applicable limit on interest. It is the intention of Borrower and Bank that the
total liability for payments in the nature of interest shall not exceed the
limits imposed by any applicable state or federal interest rate laws. The
provisions of this paragraph shall control every other provision of this Note,
and any provision of any other loan document in conflict with this paragraph.

The Borrower represents to the Bank that the proceeds of this Note will not be
used for personal, family or household purposes or for the purpose of purchasing
or carrying margin stock or margin securities within the meaning of Regulations
U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts
221 and 224.

No delay or omission on the part of the Bank in exercising any right hereunder
shall operate as a waiver of such right or of any other right of the Bank, nor
shall any delay, omission or waiver on any one occasion be deemed a bar to or
waiver of the same or any other right on any future occasion. The Borrower and
of this Note, regardless of the time, order or place of signing, waives
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration and all other notices of every kind in

 

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connection with the delivery, acceptance, performance or enforcement of this
Note and assents to any extension or postponement of the time of payment or any
other indulgence, to any substitution, exchange or release of collateral, and to
the addition or release of any other party or person primarily or secondarily
liable and waives all recourse to suretyship and guarantor defenses generally,
including any defense based on impairment of collateral. To the maximum extent
permitted by law, the Borrower of this Note waive and terminate any homestead
rights and/or exemptions respecting any premises under the provisions of any
applicable homestead laws, including without limitation, California Code of
Civil Procedure Sections 704-710 et seq.

The Borrower of this Note shall indemnify, defend and hold the Bank and the Bank
Affiliates and their directors, officers, employees, agents and attorneys
harmless against any claim brought or threatened against the Bank by the
Borrower, or by any other person (as well as from attorneys’ reasonable fees and
expenses in connection therewith) on account of the Bank’s relationship with the
Borrower (which may be defended, compromised, settled or pursued by the Bank
with counsel of the Bank’s selection, but at the expense of the Borrower),
except for any claim arising out of the gross negligence or willful misconduct
of the Bank.

The Borrower of this Note agrees to pay, upon demand, costs of collection of all
amounts under this Note including, without limitation, principal and interest,
or in connection with the enforcement of, or realization on, any security for
this Note, including, without limitation, to the extent permitted by applicable
law, reasonable attorneys’ fees and expenses. Upon demand for payment of any
amounts hereunder, interest shall accrue at a rate per annum equal to the
aggregate of 3.0% plus the rate provided for herein. If any payment due under
this Note is unpaid for 10 days or more, the Borrower shall pay, in addition to
any other sums due under this Note (and without limiting the Bank’s other
remedies on account thereof), a late charge equal to 5.0% of such unpaid amount.

This Note shall be binding upon the Borrower hereof and upon their respective
heirs, successors, assigns and legal representatives, and shall inure to the
benefit of the Bank and its successors, endorsees and assigns.

The Borrower hereby waives presentment, demand, protest, notice of dishonor,
notice of protest and all other notices and demands of every kind, and all
suretyship defenses of any kind, in each case that would otherwise be available
in connection with this Note including, without limitation, any right (whether
now or hereafter existing) to require the holder hereof to first proceed against
the Borrower, for any security.

In the event that at any time, a surety is liable upon only a portion of the
Borrower’s obligations under this Note and the Borrower provides partial
satisfaction of any such obligation(s), each of the Borrower hereof, if any,
hereby waives any right it would otherwise have, under Section 2822 of the
California Civil Code, to designate the portion of the obligations to be
satisfied. The designation of the portion of the obligation to be satisfied
shall, to the extent not expressly made by the terms of this Note, be made by
the Bank rather than Borrower.

The liabilities of the Borrower of this Note are joint and several; provided,
however, the release by the Bank of the Borrower, shall not release any other
person obligated on account of this Note. Any and all present and future debts
of the Borrower of this Note are subordinated to the full payment and
performance of all present and future debts and obligations of the Borrower to
the Bank. Each reference in this Note to the Borrower, is to such person
individually and also to all such persons jointly. No person obligated on
account of this Note may seek contribution from any other person also obligated,
unless and until all liabilities, obligations and indebtedness to the Bank of
the person from whom contribution is sought have been irrevocably satisfied in
full. The release or compromise by the Bank of any collateral shall not release
any person obligated on account of this Note.

The Borrower hereof authorizes the Bank to complete this Note if delivered
incomplete in any respect. A photographic or other reproduction of this Note may
be made by the Bank, and any such reproduction shall be admissible in evidence
with the same effect as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence.

 

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The Borrower will from time to time execute and deliver to the Bank such
documents, and take or cause to be taken, all such other further action, as the
Bank may request in order to effect and confirm or vest more securely in the
Bank all rights contemplated by this Note or any other loan documents related
thereto (including, without limitation, to correct clerical errors) or to vest
more fully in or assure to the Bank the security interest in any collateral
securing this Note or to comply with applicable statute or law.

This Note is delivered to the Bank at one of its offices and shall be governed
by the laws of the State of California without giving effect to the conflicts of
laws principles thereof.

Any notices under or pursuant to this Note shall be deemed duly received and
effective if delivered in hand to any officer of agent of the Borrower or Bank,
or if mailed by registered or certified mail, return receipt requested,
addressed to the Borrower or Bank at the address set forth in this Note or as
any party may from time to time designate by written notice to the other party.

No change in any provision of this Note may be made except by a writing signed
by authorized signers of both parties to this Note, except that the Bank is
authorized to fill in any blank spaces and to otherwise complete this Note and
correct any patent errors herein.

All of the Bank’s rights and remedies not only under the provisions of this Note
but also under any other agreement or transaction shall be cumulative and not
alternative or exclusive, and may be exercised by the Bank at such time or times
and in such order of preference as the Bank in its sole discretion may
determine.

IN ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE,
BORROWER AND EACH INDORSER WAIVE (i) THE RIGHT TO INTERPOSE ANY SET-OFF OR
COUNTERCLAIM OF ANY NATURE OR DESCRIPTION, (ii) ANY OBJECTION BASED ON FORUM NON
CONVENIENS OR VENUE AND (iii) ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL
DAMAGES.

The Borrower of this Note irrevocably submits to the nonexclusive jurisdiction
of any Federal or state court sitting in California, over any suit, action or
proceeding arising out of or relating to this Note. The Borrower irrevocably
waives, to the fullest extent it may effectively do so under applicable law, any
objection it may now or hereafter have to the laying of the venue of any such
suit, action or proceeding brought in any such court and any claim that the same
has been brought in an inconvenient forum. The Borrower hereby consents to any
and all process which may be served in any such suit, action or proceeding,
(i) by mailing a copy thereof by registered and certified mail, postage prepaid,
return receipt requested, to the Borrower’s, address shown below or as notified
to the Bank and (ii) by serving the same upon the Borrower(s), in any other
manner otherwise permitted by law, and agrees that such service shall in every
respect be deemed effective service upon the Borrower.

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER, AND THE BANK
EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY
TO CONSULT WITH LEGAL COUNSEL, (A) WAIVES ANY AND ALL RIGHTS TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS NOTE, ANY OF THE OBLIGATIONS
OF THE BORROWER TO THE BANK, AND ALL MATTERS CONTEMPLATED HEREBY AND DOCUMENTS
EXECUTED IN CONNECTION HEREWITH AND (B) AGREES NOT TO SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN NOT BE, OR HAS NOT
BEEN, WAIVED. THE BORROWER AND THE BANK EACH CERTIFIES THAT NEITHER THE BANK NOR
ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE BANK WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

 

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Executed as of September 29, 2006.     Borrower:   Rackable Systems, Inc.   By:
 

/s/ Madhu Ranganathan

  Title:   CFO  

1933 Milmont Drive

Milipitas, California

95035

 

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INTEREST RATE ELECTION RIDER

1. INTEREST RATE(S); PAYMENTS AND PREPAYMENTS.

1.1 Interest Rates. So long as the Bank has not demanded payment of any amounts
hereunder, and subject to the other terms of this Note, the outstanding
principal balance shall bear interest at a rate per annum for the Interest
Periods (as hereinafter defined) which the Borrower selects in accordance with
this paragraph and the other provisions of this Note equal to: (a) a variable
rate (the “Variable Rate”) equal to the Prime Rate (as hereinafter defined) (a
“Variable Rate Advance”); or (b) One and Eighty-Five Hundredths Percent (1.85%)
above the LIBOR Rate (as hereinafter defined) for Interest Periods of 30, 60, 90
or 180 days, but no such period should be beyond the Expiration Date (a “LIBOR
Advance”).

1.2 Rate Selection. When the Borrower desires to select an interest rate, the
Borrower shall give the Bank prior notice in a form satisfactory to the Bank
specifying the effective date thereof (which shall be a Banking Day (as
hereinafter defined)), the type of interest rate, the amount to which the
interest rate shall apply and the duration of the first Interest Period
therefor. Any such notice shall be irrevocable and shall be subject to other
terms and conditions set forth in this Note. If the Bank does not receive timely
notice of a requested LIBOR Advance, the Borrower shall be deemed to have
selected a Variable Rate Advance. Each LIBOR Advance may only be requested in
increments greater than One Million Dollars and Zero Cents ($1,000,000.00). If
any interest rate is selected, the Bank shall record on the books and records of
the Bank an appropriate notation evidencing such selection, each repayment on
account of the principal thereof and the amount of interest paid, and the
Borrower authorizes the Bank to maintain such records and make such notations
and agrees that the amount shown on the books and records as outstanding from
time to time shall constitute the amount owing to the Bank pursuant to this
Note, absent manifest error.

1.3 Payment of Interest. Interest on all amounts outstanding (except for LIBOR
Advances) shall be payable monthly in arrears on the 1st day of each month
commencing the month following the date of this Note, and continuing thereafter
on the same day of each succeeding month until the principal balance shall be
paid in full. Interest on all LIBOR Advances shall be payable, in arrears, on
the first Banking Day following the expiration of the applicable Interest Period
or, at the Bank’s option, on the 1st day of each month commencing the month
following the date of this Note and on the day LIBOR advances are paid in full
and, in respect of any LIBOR Advance of more than 90 days’ duration, interest
shall also be payable, in arrears, on each earlier Banking Day which is 90 days
after the first day of the applicable Interest Period.

1.4 Interest Periods. Each Interest Period shall commence on the date selected
and shall end on the date the Borrower shall elect, in each case as set forth in
Paragraph 1.1 hereof; provided, however, that (a) any Interest Period that would
otherwise end on a day which is not a Banking Day shall be extended to the next
Banking Day and (b) any Interest Period that would otherwise extend beyond
demand for payment of any amount shall end on the date of such demand.

1.5 Conversion of Outstanding Amounts. So long as the Bank has not demanded
payment of any amounts hereunder, the Borrower may (a) on any Banking Day,
convert any outstanding Variable Rate Advance to a LIBOR Advance in the same
aggregate principal amount and (b) on the last Banking Day of the then current
Interest Period applicable to a LIBOR Advance, convert such LIBOR Advance to a
Variable Rate Advance. If the Borrower desires to convert an advance as set
forth in the prior sentence, it shall give the Bank prior notice in a form
satisfactory to the Bank, specifying the date of such conversion, the amount to
be converted and if the conversion is from a Variable Rate Advance to a LIBOR
Advance, the duration of the Interest Period therefor.

1.6 End of Interest Period. Subject to all of the terms and conditions
applicable to a request that a new interest rate selected be a LIBOR Advance,
the Borrower may elect to continue a LIBOR Advance as of the last day of the
applicable Interest Period to a new LIBOR Advance. If the Borrower fails to
notify the Bank of the Interest Period for a subsequent LIBOR Advance prior to
the last day of the then current

 

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Interest Period, then, at the Bank’s discretion, such outstanding LIBOR Advance
shall become a Variable Rate Advance at the end of the current Interest Period
for such outstanding LIBOR Advance and shall accrue interest in accordance with
the provisions regarding Variable Rate Advances described herein.

1.7 Basis for Determining LIBOR Inadequate or Unfair. In the event that the Bank
shall determine that by reason of circumstances affecting the interbank
Eurodollar market, adequate and reasonable means do not exist for determining
the LIBOR Rate, or Eurodollar deposits in the relevant amount and for the
relevant maturity are not available to the Bank in the interbank Eurodollar
market, with respect to a proposed LIBOR Advance or a proposed conversion of any
Variable Rate Advance to a LIBOR Advance, the Bank shall give the Borrower
prompt notice of such determination. If such notice is given, then: (a) any
requested LIBOR Advance shall be made as a Variable Rate Advance, unless the
Borrower gives the Bank one Banking Day’s prior written notice that its request
for such borrowing is canceled; (b) any advance which was to have been converted
to a LIBOR Advance shall be continued as a Variable Rate Advance; and (c) any
outstanding LIBOR Advance shall be converted to a Variable Rate Advance on the
last Banking Day of the then current Interest Period for such LIBOR Advance.
Until such notice has been withdrawn, the Bank shall have no obligation to make
LIBOR Advances or maintain outstanding LIBOR Advances and the Borrower shall not
have the right to request LIBOR Advances or convert advances to LIBOR Advances.

1.8 Illegality of LIBOR Rate. Notwithstanding any other provision of this Note,
if, after the date of this Note, any applicable law, treaty, regulation or
directive, or any change therein or in the interpretation or application
thereof, shall make it unlawful for the Bank to make or maintain any LIBOR
Advance, the obligation of the Bank hereunder to make or maintain such LIBOR
Advance shall forthwith be suspended for the duration of such illegality and the
Borrower shall, if any such LIBOR Advance is outstanding, promptly upon request
from the Bank, prepay such LIBOR Advance or convert such LIBOR Advance to
another type of advance. If any such payment is made on a day that is not the
last Banking Day of the then current Interest Period applicable to such advance,
the Borrower shall pay the Bank, upon the Bank’s request, any amount required
under Paragraph 1.10 of this Note.

1.9 Termination of Pricing Option. After the earlier of the Expiration Date or
the Bank has demanded payment of any amounts hereunder, the Borrower’s right to
select pricing options, if applicable, shall cease, and, if the Borrower would,
but for the application of the preceding clause, have had the right to elect
among interest rate options, notwithstanding anything to the contrary in this
Note, interest shall accrue at a rate per annum equal to 3.0% plus the Variable
Rate.

1.10 Optional Prepayment.

 

  (a) The Borrower has the right to pay before due the unpaid balance of any
Variable Rate Advance or any part thereof without penalty or premium, but with
accrued interest on the principal being prepaid to the date of such repayment.

 

  (b) At its option and upon prior written notice to the Bank, the Borrower may
prepay any LIBOR Advance in whole or in part from time to time without premium
or penalty but with accrued interest on the principal being prepaid to the date
of such repayment; provided, however, that such LIBOR Advance may only be
prepaid on the last Banking Day of the then current Interest Period applicable
thereto.

 

  (c)

In the event that any prepayment of a LIBOR Advance is required or permitted on
a date other than the last Banking Day of the then current Interest Period
applicable thereto, then so long as this Note has not become due and payable in
accordance with its terms, the Borrower shall have the right to prepay such
LIBOR Advance in whole (but not in part), provided that the Borrower shall pay
to the Bank concurrently with such prepayment a Yield Maintenance Fee in an
amount computed as follows: The current rate for United States Treasury
securities (bills on a discounted basis shall be converted to a bond equivalent)
with a maturity date closest to the maturity date of the term chosen pursuant to
the Interest Period as to which the prepayment is made, shall be subtracted from
the “cost of funds” component of the LIBOR

 

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Advance in effect at the time of prepayment. If the result is zero or a negative
number, there shall be no Yield Maintenance Fee payable. If the result is a
positive number, then the resulting percentage shall be multiplied by the amount
of the principal balance being prepaid. The resulting amount shall be divided by
360 and multiplied by the number of days remaining in the term chosen pursuant
to the Interest Period as to which the prepayment is made. Said amount shall be
reduced to present value calculated by using the number of days remaining in the
designated term and using the above-referenced United States Treasury security
rate and the number of days remaining in the designated term chosen pursuant to
the Interest Period as to which the prepayment is made. The resulting amount
shall be the Yield Maintenance Fee due to the Bank upon prepayment of the LIBOR
Advance. If this Note shall become due and payable for any reason, then any
Yield Maintenance Fee with respect to the Note shall become due and payable in
the same manner as though the Borrower had exercised its right of prepayment.
The Borrower recognizes that the Bank will incur substantial additional costs
and expenses including loss of yield and anticipated profitability in the event
of prepayment of all or part of this Note and that the Yield Maintenance Fee
compensates the Bank for such costs and expenses. The Borrower acknowledges that
the Yield Maintenance Fee is bargained-for consideration and not a penalty.

 

  (d) All prepayments of any LIBOR Advance shall be applied first to fees and
expenses then due hereunder, then to interest on the unpaid principal balance
accrued to the date of prepayment and last to the principal balance then due
hereunder.

2. DEFINITIONS.

2.1 Definitions. The following definitions are applicable to this Interest Rate
Election Rider:

 

  (a) “Banking Day” shall mean with respect to LIBOR Advances, a London Banking
Day and with respect to all other advances, any day other than a day on which
commercial banks in California are required or permitted by law to close.

 

  (b) “Interest Period” shall mean with respect to any LIBOR Advance, the 30,
60, 90 or 180 day period selected by the Borrower pursuant to Paragraph 1.1 and
with respect to any other advance the period of duration, if any, selected by
the Borrower pursuant to Paragraph 1.1 respecting such advance.

 

  (c) “LIBOR Advance” shall have the meaning set forth in Paragraph 1.1 above.

 

  (d) “LIBOR Rate” shall mean the rate of interest (rounded upwards if necessary
to the next 100th of one percent) determined by the Bank to be the prevailing
rate per annum at which deposits in United States dollars for an applicable
period, determined by the Bank in its sole discretion, are offered to the Bank
by first class banks in the London Interbank Market in which the Bank regularly
participates at any such time, or, in the discretion of the Bank, the base,
reference or other rate then designated by the Bank for general commercial loan
reference purposes, it being understood that such rate is a reference rate, not
necessarily the lowest, established from time to time, which serves as the basis
upon which effective interest rates are calculated for loans making reference
thereto.

 

  (e) “London Banking Day” shall mean with respect to LIBOR Advances, any day on
which commercial banks are open for international business (including dealings
in U.S. Dollar ($) deposits) in London, England and California.

 

  (f)

“Prime Rate” shall mean the rate per annum from time to time established by the
Bank as the Prime Rate and made available by the Bank at its main office or, in
the discretion of the Bank, the base, reference or other rate then designated by
the Bank for general commercial loan reference purposes, it being understood
that such rate is a reference rate, not necessarily the

 

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lowest, established from time to time, which serves as the basis upon which
effective interest rates are calculated for loans making reference thereto.

 

  (g) “Variable Rate Advance” shall have the meaning set forth in Paragraph 1.1
above.

2.2 Other Terms. Terms set forth in this Note which are defined in the Note
shall have the meanings set forth in the Note.

 

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