EXHIBIT 10.1
Loan No.: 1960082-0001
PROMISSORY NOTE
$8,000,000.00 November 10, 1997
FOR VALUE RECEIVED, INDUSTRIAL HOLDINGS, INC., a Texas corporation,
AMERICAN RIVET COMPANY, Inc., an Illinois corporation, LSS-LONE STAR-HOUSTON,
INC., a Texas corporation, and BOLT MANUFACTURING COMPANY, INC., a Texas
corporation (collectively, "Maker"), jointly and severally, promises to pay to
the order of XXXXXX FINANCIAL, INC., a Delaware corporation (together with any
holder of this Note, "Payee"), at its office located at 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, or at such other place as Payee may from time to time
designate, the principal sum of Eight Million and 00/100 Dollars
($8,000,000.00), together with interest thereon at a rate per annum equal to the
One Month LIBOR Rate (hereafter defined), plus two and 50/100 percent (2.50%),
payable in seventy-two (72) consecutive monthly installments of principal plus
interest commencing January 1, 1998, and continuing on the same day of each
consecutive calendar month thereafter until this Note is fully paid. Subject to
adjustment in accordance with the next sentence in the event of the Mandatory
Prepayment (as defined in Section 3 of the Security Agreement (defined below)),
the first seventy-one (71) such monthly installments shall each be in the
principal amount of One Hundred Eleven Thousand One Hundred Eleven and 12/100
Dollars ($111,111.12), plus accrued interest, and the final monthly installment
shall be in the amount of the entire then outstanding principal balance
hereunder, plus all accrued and unpaid interest, charges and other amounts owing
hereunder or under the Security Agreement (defined below). Notwithstanding
anything else in this Note, if Maker makes the Mandatory Prepayment, each
consecutive monthly installment payment hereunder shall thereafter be in an
equal amount of principal, plus accrued interest, provided, however that the
final monthly installment shall be in the amount of the entire then outstanding
principal balance hereunder, plus all accrued and unpaid interest, charges and
other amounts owing hereunder or under the Security Agreement. All payments
shall be applied first to interest and then to principal. Interest shall be
computed on the basis of a 360-day year and charged for the actual number of
days elapsed. Maker shall make an interest only initial payment on December 1,
1997 of all accrued interest from the date of this Note through November 30,
1997.
For purposes of this Note, the term "One Month LIBOR Rate" means, for each
calendar month, a rate of interest equal to:
(a) the rate of interest determined by Payee at which deposits in
U.S. Dollars are offered for the one (1) month interest period based on
information presented on the Reuters Screen LIBO Page as of 11:00 A.M. (London
time) on the day which is two (2) business days (not counting Saturdays) prior
to the first day of each calendar month; provided that if at least two (2) such
offered rates appear on the Reuters Screen LIBO Page in respect of such interest
period, the arithmetic mean of all such rates (as determined by Xxxxx) will be
the rate used; provided further that if there are fewer than two (2) offered
rates or Reuters ceases to provide LIBOR quotations, such rate shall be
the average rate of interest determined by Payee at which deposits in U.S.
Dollars are offered for the one
Ex-4
(1) month interest period by Bankers Trust Company and Chase Bank, N. A. (or
their respective successors) to banks with combined capital and surplus in
excess of $500,000,000 in the London interbank market as of 11:00 A.M. (London
time) on the applicable interest rate determination date, divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) business days prior to the
beginning of each calendar month (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of such Board) which are required to be maintained
by a member bank of the Federal Reserve System;
(Such rate to be adjusted to the nearest one sixteenth of one percent (1/16
of 1%) or, if there is no nearest one sixteenth of one percent (1/16 of 1%), to
the next higher one sixteenth of one percent (1/16 of 1%)).
For the initial funding month (or any fraction thereof) under this Note,
the interest rate hereunder shall be the One Month LIBOR Rate in effect on the
day of funding, plus Two and 50/100 percent (2.50%).
Notwithstanding the foregoing, if at any time implementation of any
provision hereof shall cause the interest contracted for or charged herein or
collectable hereunder to exceed the applicable lawful maximum rate, then the
interest shall be limited to such applicable lawful maximum.
This Note is secured by the collateral described in the Security Agreement
dated November 10, 1997, between Maker and Payee (the "Security Agreement;" and
together with all related documents and instruments, the "Loan Documents") to
which reference is made for a statement of the nature and extent of protection
and security afforded, certain rights of Payee and certain rights and
obligations of Maker, including Maker's rights and obligations, if any, to
prepay the principal balance hereof.
Time is of the essence hereof. If payment of any installment or any other
sum due under this Note or the Loan Documents is not paid within ten (10) days
of its hen due date, Maker agrees to pay a late charge equal to the lesser of
(i) five cents (5(cent)) per dollar on, and in addition to, the amount of each
such payment, or (ii) the maximum amount Payee is permitted to charge by law. In
the event of the occurrence of an Event of Default (as defined in the Security
Agreement), then the entire unpaid principal balance hereof with accrued and
unpaid interest thereon, together with all other sums payable under this Note or
the Loan Documents, shall, at the option of Payee and without notice or demand,
become immediately due and payable, such accelerated balance bearing interest
until paid at the rate of Three Five and 50/100 percent (35.50%) per annum above
the then otherwise applicable interest rate hereunder.
Maker and all endorsers, guarantors or any others who may at any time
become liable for the payment hereof hereby consent to any and all extensions of
time, renewals, waivers and modifications of, and substitutions or release of
security or of any party primarily or secondarily liable on, or with respect to,
this Note or any of the Loan Documents or any of the terms and provisions
thereof that may be made, granted or consented to by Payee, and agree that suit
may be brought and maintained against any one or more of them, at the election
of Xxxxx, without joinder of the others as parties thereto, and that Payee shall
not be required to first foreclose, proceed against, or exhaust any security
herefor, in order to enforce payment of this Note by any one or more of them.
Maker and all endorsers, guarantors or any others who may at any time become
liable for the payment hereof hereby severally waive presentment, demand for
payment, notice of nonpayment, protest, notice of protest, notice of dishonor,
and all other notices in connection with this Note, filing of suit and diligence
in collecting this Note or enforcing any of the security herefor, and, without
limiting any provision of any of the Loan Documents, agree to pay, if permitted
by law, all expenses incurred in collection, including reasonable attorneys'
fees, and hereby waive all benefits of valuation, appraisement and exemption
laws.
If there be more than one Maker, all the obligations, promises, agreements
and covenants of Maker under this Note are joint and several.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. AT PAYEE'S ELECTION AND WITHOUT LIMITING PAYEE'S
RIGHT TO COMMENCE AN ACTION IN ANY OTHER JURISDICTION, MAKER HEREBY SUBMITS TO
THE EXCLUSIVE JURISDICTION AND VENUE OF ANY COURT (FEDERAL, STATE OR LOCAL)
HAVING SITUS WITHIN THE STATE OF ILLINOIS, EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF MAKER, WHICH SERVICE SHALL BE DEEMED COMPLETED WITHIN
TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF.
MAKER HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS NOTE. THIS WAIVER IS INFORMED AND
FREELY MADE. MAKER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT XXXXX HAS ALREADY RELIED ON THE WAIVER
IN MAKING THE LOAN EVIDENCED BY THIS NOTE, AND THAT PAYEE WILL CONTINUE TO RELY
ON THE WAIVER IN ITS RELATED FUTURE DEALINGS. MAKER FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
INDUSTRIAL HOLDINGS, INC. AMERICAN RIVET COMPANY, INC.
By:/s/ XXXXXXXXX X. XXXXX By:/s/ XXXXXXXXX X. XXXXX
Name: Xxxxxxxxx X. Xxxxx Name: Xxxxxxxxx X. Xxxxx
Title: Vice President Title: Vice President
LSS-LONE STAR-HOUSTON, INC. BOLT MANUFACTURING CO., INC.
By:/s/ XXXXXXXXX X. XXXXX By:/s/ XXXXXXXXX X. XXXXX
Name: Xxxxxxxxx X. Xxxxx Name: Xxxxxxxxx X. Xxxxx
Title: Vice President Title: Vice President
Witness/Attest:
/s/ XXXXX XXXXXXX
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use of our report dated January 24, 1997, on the financial
statements of Bolt Manufacturing Co., Inc. as of December 31, 1996 and 1995, and
for each of the years then ended included herein in the Industrial Holdings,
Inc. Current Report to the Securities and Exchange Commission, Form 8-X.
XXXXXXXXX XXXXX & COMPANY, P.C.
Houston, Texas
November 26, 1997
