Contract
Exhibit
10.2
THIS
AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE FEDERAL ARBITRATION ACT
AND
IF THE FEDERAL ARBITRATION ACT IS INAPPLICABLE, THE SOUTH CAROLINA UNIFORM
ARBITRATION ACT, § 15-48-10, ET. SEQ., CODE OF LAWS OF SOUTH CAROLINA (1976), AS
AMENDED.
CAROLINA
FIRST BANK
$10,000,000.00
Greenville,
South Carolina
June
5, 2007
FOR
VALUE
RECEIVED, SPAN-AMERICA
MEDICAL SYSTEMS, INC.,
A SOUTH
CAROLINA CORPORATION (“Borrower”),
PROMISES TO PAY TO THE ORDER OF CAROLINA
FIRST BANK, ITS
SUCCESSORS AND/OR ASSIGNS (hereinafter called the “Lender”),
at
the office of the Lender at 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx
00000, or at such other place as the holder may designate in writing, on the
Maturity Date (as defined in the Loan Agreement between Borrower and Lender,
dated of even date herewith (the “Loan
Agreement”)
in
immediately available funds the principal sum of Ten Million and no/100 Dollars
($10,000,000.00), or so much thereof as may be advanced from time to time.
Lender is hereby irrevocably authorized by Borrower to record the amount
outstanding from time to time of the Loan (as defined in the Loan Agreement)
together with the applicable interest, and notations of payments of interest
and/or principal received by Lender in respect thereof, which recordation shall,
in the absence of manifest error, be rebuttably presumed accurate. All advances
from Lender to Borrower hereunder may be repaid and readvanced and shall be
made
in accordance with and pursuant to the terms of the Loan Agreement. Any Event
of
Default under the Loan Agreement is an event of default under the terms of
this
Note (the “Note”).
Except as expressly provided herein, all capitalized terms used in this Note
shall have the same meaning as used in the Loan Agreement.
1
The
purpose of the Loan evidenced by this Note is for: (a) a one time cash dividend
not to exceed $5.00 per share plus a single regular quarterly dividend of $0.08
per share; (b) working capital; (c) capital expenditures; and (d) other general
corporate purposes.
Interest.
The
principal amount hereof from time to time outstanding and unpaid shall bear
interest from and including the date hereof until payment thereof in full.
From
the date hereof through the Maturity Date, and subject to the provisions set
forth herein for the increase in the applicable interest rate upon the
occurrence of an Event of Default (as defined in the Loan Agreement), interest
due hereunder shall accrue at the LIBOR Rate plus the applicable margin (the
LIBOR Rate plus the applicable margin, the “Interest Rate”) as indicated in the
following pricing matrix, as determined by the Leverage Ratio (as defined in
the
Loan Agreement). The applicable margin for the initial period shall be .85%
or
85 basis points.
|
Level
|
|
|
Ratio
|
|
|
Applicable
LIBOR Rate Margin
|
|
|
I
|
|
|
<
1.0 to 1.0
|
|
|
.85%
or 85 basis points
|
|
|
II
|
|
|
>
1.0 to 1.0 and <1.5 to 1.0
|
|
|
1.10%
or 110 basis points
|
|
|
III
|
|
|
>1.5
to 1.0 and
<2.0
to 1.0
|
|
|
1.35%
or 135 basis points
|
|
|
IV
|
|
|
>2.0
to 1.0
|
|
|
1.65%
or 165 basis points
|
Testing
shall be made as of the end of each Interest Period based upon the Leverage
Ratio for such Interest Period. Changes in the applicable margin shall become
effective as of the Rate Set Date based upon the Leverage Ratio of the previous
Interest Period.
For
the
purposes of this Note, the following terms shall apply:
“Leverage
Ratio” shall have the meaning given to it in the Loan Agreement.
2
“Interest
Period” means the date hereof through June 30, 2007, and each fiscal quarter
thereafter.
“LIBOR
Rate” means the thirty (30) day LIBOR as reported by the British Banker’s
Association (for the purpose of displaying London Interbank Offered Rates for
United States Dollar deposits) determined as of 11:00 a.m. (London time)
(rounded upward to the next higher of 1/100 of 1%), two (2) Business Days prior
to the first Business Day of each calendar month.
“Rate
Set
Date” shall be the date hereof, and on the first (1st)
day of
each Interest Period thereafter.
Interest
shall accrue and be computed on the basis of a year of 360 days.
Repayment
of Principal and Interest.
Principal, interest, and prepayment premiums, if any, are payable in United
States dollars, without offset or deduction of any kind for taxes or otherwise.
Commencing on the first (1st)
business day of the first month following the date of the initial advance under
this Note and continuing on the first (1st)
business day of each consecutive month thereafter as long as any principal
amounts are due hereunder, Borrower shall make payments to Lender of accrued
interest on all outstanding principal amounts. All outstanding principal and
accrued but unpaid interest shall be paid in full by the Maturity
Date.
Advances.
Lender
has agreed, on the terms and subject to the conditions set forth in the Loan
Agreement, to make advances to Borrower from time to time prior to the Maturity
Date, upon the request of Borrower. Each advance shall be made in accordance
with the terms and conditions set forth in the Loan Agreement and each of
Borrower’s requests shall specify the date of the requested advance and the
amount thereof. Upon Borrower’s fulfillment of all applicable conditions for
making an advance, Lender shall make the requested advance in the manner or
manners designated in the Loan Agreement, or make the advance in such other
manner as Lender and Borrower from time to time may agree. Lender may rely
on
any verbal request for an advance as fully as if such request were in
writing.
3
This
Note
is issued pursuant to the Loan Agreement and is entitled to the benefits
thereof. The holder of this Note may enforce the agreements of Borrower
contained in the Loan Agreement and, upon the occurrence of an Event of Default,
may exercise the remedies provided for therein or otherwise available at law
or
in equity.
Borrower,
at its option, subject to the terms of the Loan Agreement and the payment of
accrued interest to the date of prepayment, may prepay, and upon the occurrence
of certain events shall prepay, all or part of the principal outstanding under
this Note, without prepayment premium or penalty of any kind.
Upon
the
occurrence of an Event of Default, any outstanding principal amounts advanced
under this Note and any interest then accrued thereon may be declared to be
immediately due
and
payable as provided in the Loan Agreement. Following the occurrence of any
such
Event of Default, the outstanding principal shall bear interest thereafter
until
cured at the interest rate stated herein plus
four
percent (4%).
If
Borrower shall fail to make any installment of principal or interest within
twenty (20) days from the due date thereof, whether by acceleration or
otherwise, Borrower agrees to pay to Lender a late charge equal to one percent
(1.0%) of the overdue installment.
This
Note
shall be subject to arbitration as provided in the Loan Agreement. Borrower
shall pay to the holder hereof such amounts in United States dollars as shall
be
sufficient to pay the enforcement costs and expenses of such holder, including
without limitation, attorney’s fees and expenses, including, but not limited to,
fees and expenses incurred on appeal in each case only in the event Lender
prevails in such actions or in the event the holder takes actions to protect
its
interests hereunder in proceedings in bankruptcy.
4
No
reference herein to the Loan Agreement and no provision of this Note or the
Loan
Agreement shall alter or impair the obligation of Borrower, which is absolute
and unconditional, to pay the principal of (and any default rate, late charge,
or other charges, if any) and interest on this Note as provided
herein.
Borrower
hereby waives presentment, demand, protest and notice of any kind whatsoever.
The non-exercise by the holder of any of its rights hereunder in any particular
instance shall not constitute a waiver hereof in that or any subsequent
instance.
This
Note, and all future advances, are secured as provided in the Loan
Agreement.
This
Note
is the Note referred to in the Loan Agreement. This Note, except as governed
by
applicable federal law, shall be construed in accordance with and governed
by
the laws of the State of South Carolina.
Agreed
to
this 5th
day of
June, 2007 and given under the hand and seal of the undersigned.
|
SPAN
AMERICA MEDICAL SYSTEMS, INC.
|
||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
|
Its: Chief Financial Officer |
||
|
[Corporate
Seal]
|
||
5
