EXHIBIT 10.11
TENTH AMENDMENT TO CREDIT AGREEMENT
THIS TENTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment" or "Tenth Amendment")
dated as of April 1, 1996, ("Effective Date") is between ERC INDUSTRIES, INC.
("Borrower"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking
association ("Bank").
PRELIMINARY STATEMENT. Bank and Borrower have entered into a Credit Agreement
(Borrowing Base), dated February 25, 1991, amended by a First Amendment dated
August 31, 1991, Second Amendment dated January 3, 1992, Third Amendment dated
May 31, 0000, Xxxxxx Xxxxxxxxx dated December 30, 1992, Fifth Amendment dated
February 28, 1994, Sixth Amendment dated February 27, 0000, Xxxxxxx Xxxxxxxxx
dated July 3, 1995, Eighth Amendment dated December 7, 1995 and Ninth Amendment
dated February 26, 1996 (as amended, "Credit Agreement" or "Agreement). All
defined terms and section, exhibit and annex references shall refer to the
Credit Agreement as amended. The Bank and the Borrower have agreed to amend
the Credit Agreement to the extent set forth herein, and in order to, among
other things, renew, extend and modify the Commitment and the Commitment 2.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, the Bank and the Borrower hereby agree as follows:
1. Subsection 1.1.A is amended to read as follows:
"REVOLVING CREDIT NOTE 1.1.A. Subject to the terms and conditions hereof,
Bank agrees to make loans to Borrower from time to time before the Termination
Date, not to exceed at any one time outstanding the lesser of the Borrowing
Base or $3,000,000.00 ("Commitment"). Loans shall take the form of advances
under the Note (as hereinafter defined) (each a "Loan"), or issuances by Bank
of commercial letters of credit ("Commercial L/Cs") and/or standby letters of
credit ("Standby L/Cs") (collectively, "Letters of Credit"). Borrower shall
have the right to borrow, repay and reborrow under the Note. Bank and Borrower
agree that Chapter 15 of the Texas Credit Code shall not apply to this
Agreement, the Note, or any Loan. Loans shall be evidenced by and shall bear
interest and be payable as provided in Borrower's $3,000,000.00 promissory
note dated the Tenth Amendment Effective Date (together with any and all
renewals, extensions, modifications replacements, and rearrangements thereof
and substitutions therefor, "Note"), given in renewal and modification of
Borrower's $3,000,000.00 promissory note dated February 26, 1996 (including
all prior notes of which said note represents a renewal, extension,
modification, increase, decrease, substitution, rearrangement or replacement
thereof, a "Renewed Note"). As of March 27, 1996 there was an outstanding
principal balance of $2,800,000.00 under the Commitment, and an aggregate of
$178,682.08 in L/C Obligations (representing Letter of Credit numbers I460191,
I451961, I444134, I455643 and I456977 issued and outstanding as of such date)
for a total outstanding against the Commitment of $2,978,682.08; leaving
$21,317.92 available under the Commitment on such date for additional Loans
and issuances of Letters of Credit subject to the terms and conditions of this
Agreement. Loans and Letters of Credit under the Commitment shall be for the
purpose of providing working capital and letters of credit for Borrower's
regular business operations."
2. Subsection 1.1.C is amended to read as follows:
"REVOLVING CREDIT NOTE-2 1.1.C. Subject to the terms and conditions hereof
the Bank agrees to make loans ("Loans 2") to the Borrower from time to time
before June 30, 1996 not to exceed at any one time outstanding the lesser of
the Borrowing Base or $1,000,000.00 ("Commitment 2"), Borrower having the
right to borrow, repay and reborrow. Bank and Borrower agree that Chapter 15
of the Texas Credit Code shall not apply to this Agreement, Note 2 (as
hereinafter defined) or any Loan 2. Loans 2 shall be evidenced by and shall
bear interest and be payable as provided in Borrower's $1,000,000.00
promissory note dated the Tenth Amendment Effective Date (together with any
and all renewals, extensions, modifications and replacements thereof and
substitutions therefor, the "Note 2"), given in renewal and modification of
Borrower's $1,000,000.00 promissory note dated July 3, 1995 (including all
prior notes of which said note represents a renewal, extension, modification,
increase, decrease, substitution, rearrangement or replacement thereof, a
"Renewed Note"). As of March 27, 1996 there was an outstanding principal
balance of $300,000.00 under the Commitment-2, leaving $700,000.00 available
under Commitment-2 for additional Loans 2 subject to the terms and conditions
of this Agreement. Loans 2 shall be for the purpose of providing working
capital for Borrower's regular business operations."
3. Section 8. The definition of Termination Date is amended by substituting
"June 30, 1996" in place of "April 1, 1996", where the latter appears.
4. Exhibit A is replaced with Exhibit A attached hereto.
5. Borrower confirms and ratifies each of the liens, security interests and
other interests granted to Bank in each and all security agreements executed in
connection with, related to, or securing each Renewed Note, L/C Obligation and
Note as extending to and securing all Loans, L/C Obligations, and Notes,
including but not limited to, each of those interests and liens described in the
following listed Security Agreements. Borrower further agrees and acknowledges
that "indebtedness secured hereby", "secured indebtedness", "Obligation" and any
similar reference in any Security Agreement includes each and all of the Loans,
Loans 2, Note, Note 2, L/C Obligations, Applications and all other indebtedness
evidenced or provided for in the Credit Agreement and Loan Documents. "Security
Agreement" includes the following as executed and delivered by Borrower in favor
of Bank: Security Agreement - (Accounts, Inventory, Equipment, Fixtures, General
Intangibles, Other) dated February 26, 1991; Agreement and First Amendment to
Security Agreement effective as of February 26, 1991; and any other security
agreement previously executed by Borrower and delivered to Bank and not released
by Bank which by its terms (general or specific) secure indebtedness provided
for in the Credit Agreement; and all security agreements executed as of or on or
about the Tenth Amendment Effective Date.
6. Each of the other Loan Documents are in all respects ratified and
confirmed, and all of the rights, powers and privileges created thereby or
thereunder are ratified, confirmed, extended, carried forward and remain in full
force and effect except as the Credit Agreement is amended by this Amendment.
Borrower hereby represents and warrants to the Bank that after giving effect to
the execution and delivery of this Amendment: (a) the representations and
warranties set forth in the Credit Agreement are true and correct on the date
hereof as though made on and as of such date; and (b) no Event of Default, or
event which with passage of time, the giving of notice or both would become an
Event of Default, has occurred and is continuing as of the date hereof.
7. This Amendment shall become effective as of its Effective Date upon its
execution and delivery by each of the parties named in the signature lines below
and receipt of additional documents in Proper Form as Bank may require in
connection with this Amendment. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed an original and all of which taken
together shall constitute but one and the same agreement. This Amendment and the
Credit Agreement as amended by this Amendment shall be included within the
definition of "Loan Documents" as used in the Credit Agreement and "Agreement",
as used in the Credit Agreement, shall mean the Credit Agreement as amended by
this Amendment.
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS AND AS APPLICABLE, THE LAWS OF THE UNITED STATES OF AMERICA.
THIS WRITTEN AMENDMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN
AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE TEXAS BUSINESS & COMMERCE CODE,
AND REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
effective as of the Effective Date.
BORROWER: ERC INDUSTRIES, INC. BANK: TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By: By:
Name: Name:
Title: Title:
PROMISSORY NOTE
(this "Note")
U.S. $1,000,000.00 April 1, 1996 ("Date")
FOR VALUE RECEIVED, ERC INDUSTRIES, INC. (the "Maker"), a Delaware
corporation, promises to pay to the order of TEXAS COMMERCE BANK NATIONAL
ASSOCIATION (the "Bank") on or before June 30, 1996 (the "Termination Date"), at
its banking house at 000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx, or at such
other location as the Bank may designate, in lawful money of the United States
of America, the lesser of: (i) the principal sum of ONE MILLION AND NO/100THS
DOLLARS (U.S. $1,000,000.00) (the "Maximum Loan Total"); or (ii) the aggregate
unpaid principal amount of all loans made by the Bank hereunder (each such loan
being a "Loan"), which may be outstanding on the Termination Date. Each Loan
shall be due and payable on the maturity date agreed to by the Bank and the
Maker with respect to such Loan (the "Maturity Date"). In no event shall any
Maturity Date fall on a date after the Termination Date. Subject to the
limitations set forth herein, Maker may borrow, repay and reborrow hereunder and
there is no limitation on the number of Loans made hereunder so long as the
total unpaid principal amount at anytime outstanding does not exceed the Maximum
Loan Total.
The Loans may be either Prime Rate Loans (as hereinafter defined) or
Eurodollar Loans (as hereinafter defined).
The Maker shall pay interest on each Prime Rate Loan for the Interest
Period (as hereinafter defined) with respect thereto at a rate per annum equal
to the lesser of: (i) the Prime Rate (as hereinafter defined) in effect from
time to time minus one half of one percent (1/2%) (the "Effective Prime Rate");
or (ii) the Highest Lawful Rate (as hereinafter defined), which interest shall
be due and payable on the last day of each calendar quarter and on the last day
of each Interest Period.
The Maker shall pay interest on each Eurodollar Loan for the Interest
Period with respect thereto on the unpaid principal amount thereof at a rate per
annum equal to the lesser of: (i) the Eurodollar Rate (as hereinafter defined)
plus two percent (2%) (the "Effective Eurodollar Rate"); or (ii) the Highest
Lawful Rate, which interest shall be due and payable on the last day of each
such Interest Period.
Any amount not paid when due with respect to principal (whether at
Maturity Date, by acceleration or otherwise), costs, expenses, and to the extent
permitted by applicable law, interest, shall bear interest at a rate per annum
equal to the lesser of: (i) the Prime Rate in effect from time to time plus five
percent (5%); or (ii) the Highest Lawful Rate, which interest shall be due and
payable on demand. The principal of any Loan shall be deemed past due if not
paid on or before the Maturity Date or any earlier maturity date resulting from
acceleration in accordance with the terms of this Note or as provided by law or
otherwise. Interest accrued and unpaid with respect to any Loan shall be deemed
past due if not paid on or before the applicable interest payment due date as
provided for herein.
Notwithstanding the foregoing, if at any time the effective rate of
interest which would otherwise be payable on any Loan evidenced by this Note
exceeds the Highest Lawful Rate, the rate of interest to accrue on the unpaid
principal balance of such Loan during all such times shall be limited to the
Highest Lawful Rate, but any subsequent reductions in such interest rate shall
not become effective to reduce such interest rate below the Highest Lawful Rate
until the total amount of interest accrued on the unpaid principal balance of
such Loan equals the total amount of interest which would have accrued if the
Effective Prime Rate, or Effective Eurodollar Rate, whichever is applicable, had
at all times been in effect.
Each Loan shall be in an amount not less than $100,000.00 and an
integral multiple of $100,000.00. Interest with respect to Prime Rate Loans and
Eurodollar Loans shall be calculated on the basis of a 360 day year for the
actual days elapsed, unless such calculation would result in a usurious interest
rate, in which case such interest shall be calculated on the basis of a 365 day
or 366 day year, as the case may be.
The following terms shall have the respective meanings indicated:
"Borrowing Date" means any Business Day on which the Bank shall make a
Loan hereunder.
"Business Day" means a day: (i) on which the Bank and commercial banks
in New York City are generally open for business; and (ii) with respect to
Eurodollar Loans, on which dealings in United States Dollar deposits are
carried out in the Eurodollar interbank markets.
"Eurodollar Lending Office" means the office of the Bank located at
000 Xxxx Xxxxxx, Xxxxxxx, Xxxxx, or such other office of the Bank as the
Bank may from time to time specify to the Maker.
"Eurodollar Loan" means a Loan which bears interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for each Eurodollar Loan, an interest rate
per annum determined by the Bank by dividing: (i) the rate per annum
determined by the Bank at or before 10:00 a.m. (Houston time) (or as soon
thereafter as practicable) two Business Days before the first day of such
Interest Period to be the rate per annum at which deposits of dollars are
offered to the Bank by prime banks in whatever Eurodollar interbank market
may be selected by the Bank in its sole discretion, acting in good faith,
at the time of determination and in accordance with the usual practice in
such market for delivery on the first day of such Interest Period in
immediately available funds and for a period equal to such Interest Period
and in an amount substantially equal to the amount of the Bank's Eurodollar
Loan during such Interest Period; by (ii) Statutory Reserves.
"Highest Lawful Rate" as used herein shall mean the maximum
nonusurious interest rate permitted from time to time to be contracted for,
taken, reserved, charged or received on any Loan under applicable federal
or Texas laws, whichever permits the higher lawful rate; provided, however,
that in the event: (i) such maximum nonusurious interest rate shall, at any
time or times during the term of a Loan evidenced hereby, be reduced to a
rate less than the maximum nonusurious rate in effect on the date of such
Loan; and (ii) applicable law permits contracting for, taking, reserving,
charging, and receiving on such Loan throughout the duration thereof the
maximum nonusurious rate in effect on the date such Loan was made, then and
at all such times the Highest Lawful Rate shall be the maximum nonusurious
rate permitted to be contracted for, taken, reserved, charged or received
on such Loan under applicable law in effect on the date of such Loan. At
all such times, if any, as Texas law shall establish the Highest Lawful
Rate, the Highest Lawful Rate shall be the "indicated rate ceiling" (as
defined in Tex. Rev. Civ. Stat. art. 5069-1.04) from time to time in
effect.
"Interest Period" means, with respect to any Loan, the period
commencing on the Borrowing Date and ending on the Maturity Date,
consistent with the following provisions. The duration of each Interest
Period shall be:
(a) in the case of a Prime Rate Loan, a period of up to the Termination
Date; and (b) in the case of a Eurodollar Loan, 1, 2, or 3 months; in each
case as selected by the Maker and agreed to by the Bank. The Maker's
choice of Interest Period is also subject to the following limitations:
(i) No Interest Period shall end on a date after the Termination Date; and
(ii) If the last day of an Interest Period would be a day other than a
Business Day, the Interest Period shall end on the next succeeding Business
Day (unless the Interest Period relates to a Eurodollar Loan and the next
succeeding Business Day is in a different calendar month than the day on
which the Interest Period would otherwise end, in which case the Interest
Period shall end on the next preceding Business Day).
"Prime Rate" shall mean the rate of interest per annum determined from
time to time by the Bank as its prime rate in effect at its principal
office in Houston, Texas and thereafter entered in the minutes of its Loan
and Discount Committee; each change in the Prime Rate shall be effective on
the date such change is determined; without special notice to the Maker or
any other person or entity. THE PRIME RATE IS A REFERENCE RATE AND DOES
NOT NECESSARILY REPRESENT THE LOWEST OR BEST RATE ACTUALLY CHARGED TO ANY
CUSTOMER AND ANY STATEMENT, REPRESENTATION OR WARRANTY IN THAT REGARD OR TO
THAT EFFECT IS EXPRESSLY DISCLAIMED BY BANK. BANK MAY MAKE LOANS AT RATES
OF INTEREST AT, ABOVE OR BELOW THE PRIME RATE.
"Prime Rate Loan" means a loan which bears interest at a rate
determined by reference to the Prime Rate
"Statutory Reserves" shall mean the difference (expressed as a
decimal) of the number one minus the aggregate of the maximum reserve
percentages (including, without limitation, any marginal, special,
emergency, or supplemental reserves) expressed as a decimal established by
the Board and any other banking authority to which the Bank is subject: (a)
with respect to the CD Rate, for new negotiable time deposits in dollars of
over $100,000 with maturities approximately equal to the applicable
Interest Period; and (b) with respect to the Eurodollar Rate, for
Eurocurrency Liabilities (as defined in Regulation D of the Board). Such
reserve percentages shall include, without limitation, those imposed under
such Regulation D. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities and as such shall be deemed to be subject to such
reserve requirements without benefit of or credit for proration, exceptions
or offsets which may be available from time to time to any Bank under such
Regulation D. Statutory Reserves shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
The unpaid principal balance of this Note at any time shall be the
total of all Loans made by the Bank to or for the benefit of the Maker, less the
amount of all payments of principal made hereon by or for the account of the
Maker. The Bank's records shall serve as presumptive evidence of any and all
amounts outstanding hereunder.
Any Loan which the Bank agrees to make hereunder shall be made on the
Maker's irrevocable notice, given not later than 10:00 A.M. (Houston time) on,
in the case of Eurodollar Loans, the third Business Day prior to the proposed
Borrowing Date or, in the case of Prime Rate Loans, the first Business Day prior
to the proposed Borrowing Date, from the Maker to the Bank. Each such notice of
a requested borrowing (a "Notice of Requested Borrowing") under this paragraph
may be oral or written, and shall specify: (i) the requested amount of such
Loan; (ii) the proposed Borrowing Date; (iii) whether the requested Loan is to
be a Prime Rate Loan, or Eurodollar Loan; and (iv) the Interest Period for such
Loan. If any Notice of Requested Borrowing shall be oral, the Maker shall
deliver to the Bank prior to the Borrowing Date a confirmatory written Notice of
Requested Borrowing.
If at any time the Bank determines in good faith (which determination
shall be conclusive) that any change in any applicable law, rule or regulation
or in the interpretation, application or administration thereof makes it
unlawful, or any central bank or other governmental authority asserts that it is
unlawful, for the Bank or its foreign branch or branches to maintain or fund any
Loan by means of dollar deposits obtained in any Eurodollar interbank market
(any of the above being described as a "Eurodollar Event"), then, at the option
of the Bank, the aggregate principal amount of the Bank's Eurodollar Loans then
outstanding, which Loans are directly affected by such Eurodollar Event, shall
be prepaid by the Maker. Upon the occurrence of any Eurodollar Event, and at
any time thereafter so long as such Eurodollar Event shall continue, the Bank
may exercise its aforesaid option by giving written notice thereof to the Maker.
Any prepayment of any Eurodollar Loan which is required under the
preceding paragraph shall be made, together with accrued and unpaid interest and
all other amounts payable to the Bank under this Note with respect to such
prepaid Eurodollar Loan on the date stated in the notice to the Maker referred
to above, which date ("required prepayment date") shall be not less than 15 days
from the date of such notice. If any Eurodollar Loan is required to be prepaid
under the
preceding paragraph, the Bank shall make on the required prepayment date an
Alternate Base Rate Loan in the same principal amount and with an Interest
Period ending on the same day as the Eurodollar Loan so prepaid.
If any domestic or foreign law, treaty, rule or regulation (whether
now in effect or hereinafter enacted or promulgated, including Regulation D of
the Board of Governors of the Federal Reserve System) or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law):
(a) changes, imposes, modifies, applies or deems applicable any reserve,
special deposit or similar requirements in respect of any such Loan
(excluding those for which the Bank is fully compensated pursuant to
adjustments made in the definition of the CD Rate) or against assets
of, deposits with or for the account of, or credit extended or
committed by, the Bank; or
(b) imposes on the Bank or the interbank eurocurrency deposit and transfer
market or the market for domestic bank certificates of deposit any
other condition affecting any such Loan;
and the result of any of the foregoing is to impose a cost to the Bank of
agreeing to make, funding or maintaining any such Loan or to reduce the amount
of any sum receivable by the Bank in respect of any such Loan, then the Bank may
notify the Maker in writing of the happening of such event and Maker shall upon
demand pay to the Bank such additional amounts as will compensate the Bank for
such costs. Without prejudice to the survival of any other agreement of the
Maker under this Note, the obligations of the Maker under this paragraph shall
survive the termination of this Note.
The Maker may on any Business Day prepay the outstanding principal
amount of any Prime Rate Loan, in whole or in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid.
Partial prepayments shall be in an aggregate principal amount of $100,000.00 or
a greater integral multiple of $100,000.00. Except as specified in this
paragraph, the Maker shall have no right to prepay any Loan.
The Maker will indemnify the Bank against, and reimburse the Bank on
demand for, any loss, cost or expense incurred or sustained by the Bank
(including without limitation any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by the Bank
to fund or maintain Loans bearing interest at the Eurodollar Rate) as a result
of: (a) any payment or prepayment (whether permitted by the Bank or required
hereunder or otherwise) of all or a portion of any Eurodollar Loan on a day
other than Maturity Date of such Loan; (b) any payment or prepayment, whether
required hereunder or otherwise, of any Eurodollar Loan made after the delivery
of a Notice of Requested Borrowing but before the applicable Borrowing Date if
such payment or prepayment prevents the proposed Loan from becoming fully
effective; or (c) the failure of any Eurodollar Loan to be made by the Bank due
to any action or inaction of the Maker. For purposes of this paragraph, funding
losses arising by reason of liquidation or reemployment of deposits or other
funds acquired by the Bank to fund or maintain Loans bearing interest at the
Eurodollar Rate shall be calculated as the remainder obtained by subtracting:
(i) the yield (reflecting both stated interest rate and discount, if any) to
maturity of obligations of the United States Treasury in an amount equal or
comparable to such Loan for the period of time commencing on the date of the
payment, prepayment or change of rate as provided above and ending on the last
day of the subject Interest Period; from (ii) the interest payable at the
Eurodollar Rate for the period commencing on the date of such payment,
prepayment or change of rate and ending on the last day of such Interest Period.
Such funding losses and other costs and expenses shall be calculated and billed
by the Bank and such xxxx shall, as to the costs incurred, be conclusive absent
manifest error.
If after the date of this Note, the Bank shall have determined that
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Bank with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
Bank's capital as a consequence of making any Loans hereunder to a level below
that which the Bank could have achieved but for such adoption, change or
compliance (taking into consideration the Bank's policies with respect to
capital adequacy) by an amount deemed by the Bank in good faith to be material,
then from time to time, the Maker shall pay to the Bank such additional amount
or amounts as will compensate the Bank for such reduction.
A certificate of the Bank setting forth such amount or amounts as
shall be necessary to compensate the Bank as specified in the immediately
preceding paragraphs above shall be delivered as soon as practicable to the
Maker and shall be conclusive and binding, absent manifest error. The Maker
shall pay the Bank the amount shown as due on any such certificate within 15
days after Bank delivers such certificate. In preparing such certificate, the
Bank may employ such assumptions and allocations of costs and expenses as it
shall in good xxxxx xxxx reasonable and may use any reasonable averaging and
attribution method.
If any payment of interest or principal herein provided for is not
paid when due, or if the holder or owner of this Note shall deem itself
insecure, then the owner or holder of this Note may at its option, by notice to
the Maker, declare the unpaid principal balance of all Loans, all accrued and
unpaid interest thereon and all other amounts payable under this Note to be
forthwith due and payable, whereupon the Loans, all such interest and all such
amounts shall become and be forthwith due and payable in full, without
presentment, demand, protest, notice of intent to accelerate, notice of actual
acceleration or further notice of any kind, all of which are hereby expressly
waived by the Maker.
If default is made in the payment of this Note and it is placed in the
hands of an attorney for collection, or collected through probate or bankruptcy
proceedings, or if suit is brought on the same, the Maker agrees to pay
attorneys' fees and all costs and expenses.
This Note is issued by the Maker to evidence Loans outstanding from time
to time not to exceed the Maximum Loan Total in the aggregate, pursuant to a
$1,000,000.00 line of credit (the "Line of Credit") extended by the Bank to the
Maker. This Note is a renewal and modification of the promissory note of Maker
delivered to Bank dated July 3, 1995, in the principal amount of $1,000,000.00
and is the "Note 2" as defined in and subject to the terms and conditions of a
Credit Agreement dated as of February 25, 1991, as duly amended through the date
hereof (the "Credit Agreement"). This Note, the Credit Agreement, and all other
agreements, documents, instruments, certificates or other writings executed or
delivered in connection with or pursuant to the terms of any of the foregoing
are herein referred to as the "Loan Documents").
The Maker warrants and represents to the Bank, and to all other owners
and/or holders of any indebtedness evidenced hereby, that all Loans evidenced by
this Note are for business, commercial, investment or other similar purpose and
not primarily for personal, family, household or agricultural use, as such terms
are used in Chapter One of the Texas Credit Code, Tex. Rev. Civ. Stat. arts.
5069-1.01 et. seq.
The Maker warrants and represents to the Bank and to all other owners or
holders of this Note that no Loans shall be used for the purchase or carrying of
any "margin stock" within the meaning of Regulation "U" of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, as in effect on the
date hereof.
Except as otherwise specified in this Note, the Maker and any and all
co-makers, endorsers, guarantors and sureties hereby severally waive grace,
presentment, demand, notice of default, notice of intent to accelerate, notice
of acceleration, and all other demands and notices of any nature or type
whatsoever, in connection with the delivery, acceptance, performance, default,
dishonor or enforcement of, or entry of judgment in connection with this Note,
and further waive the filing of suit hereon for the purpose of fixing liability.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
NOTE SHALL BE PERFORMABLE FOR ALL PURPOSES IN THE COUNTY OF THE BANK'S PRINCIPAL
OFFICE IN TEXAS, AND THE MAKER AND THE BANK AGREE THAT THE COUNTY IN WHICH
BANK'S PRINCIPAL OFFICE IS LOCATED IN TEXAS IS PROPER VENUE FOR ANY ACTION OR
PROCEEDING BROUGHT BY THE MAKER OR THE BANK, WHETHER IN CONTRACT, TORT, OR
OTHERWISE. ANY ACTION OR PROCEEDING AGAINST THE MAKER MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT IN SUCH COUNTY. THE MAKER HEREBY IRREVOCABLY (A) SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (B) WAIVES ANY OBJECTION IT
MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN INCONVENIENT FORUM. THE
MAKER AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED BELOW.
NOTHING HEREIN OR IN ANY OF THE OTHER LOAN DOCUMENTS SHALL AFFECT THE RIGHT OF
THE BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF THE BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE MAKER OR
WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER JURISDICTIONS OR VENUES.
The Maker and the Bank expressly agree, pursuant to Article 15.10(b) of
Chapter 15 ("Chapter 15") of the Texas Credit Code, that Chapter 15 shall not
apply to this Note or to any Loan and that this Note and all such Loans shall
not be governed by or subject to the provisions of Chapter 15 in any manner
whatsoever.
It is the intention of Maker and Bank to comply with usury laws in force
in the State of Texas and in the United States of America as applicable.
Anything in this Note to the contrary notwithstanding, the Maker shall never be
required to pay unearned interest on this Note and shall never be required to
pay interest on this Note at a rate in excess of the Highest Lawful Rate, and if
the effective rate of interest which would otherwise be payable under this Note
would exceed the Highest Lawful Rate, or if the holder of the Note shall receive
any unearned interest or shall receive monies that are deemed to constitute
interest which would increase the effective rate of interest payable under this
Note to a rate in excess of the Highest Lawful Rate, then: (i) the amount of
interest which would otherwise be payable under this Note shall be reduced to
the amount allowed under applicable law; and (ii) any unearned interest paid by
the Maker or any interest paid by the Maker in excess of the Highest Lawful Rate
shall, at the option of the holder of this Note, be either refunded to the Maker
or credited on the principal of this Note. It is further agreed that, without
limitation of the foregoing, all calculations of the rate of interest contracted
for, charged or received by the Bank or any holder of this Note that are made
for the purpose of determining whether such rate exceeds the Highest Lawful Rate
shall be made, to the extent permitted by usury laws applicable to the Bank (now
or hereafter enacted), by amortizing, prorating and spreading in equal parts
during the period of the full stated term of the Loans evidenced by this Note
all interest at any time contracted for, charged or received by the Bank in
connection therewith.
The Bank reserves the right in its sole discretion without notice to
Maker, to sell participations or assign its interest, or both in all or part of
the Loans, the Note, or the Line of Credit.
THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Maker has executed this Note effective the Date
first aforesaid.
MAKER: ERC INDUSTRIES, INC.
By:
Name:
Title:
Acknowledged for purposes of
notice pursuant to the above
cited statute by:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By:
Name:
Title:
