Exhibit 10.3
PROMISSORY NOTE
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Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
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$712,086.00 03-18-1998 03-18-2008 9001 805 E 357577 JCT02
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References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
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Borrower: PACIFIC AEROSPACE & ELECTRONICS, INC. LENDER: KEYBANK NATIONAL ASSOCIATION
000 XXXX XXXXXXX XXXX WEN/ML COMMERCIAL BANKING CENTER
XXXXXXXXX, XX 00000 000 XXXXX XXXXXXXXX XXXXXX
X.X. XXX 0000 XX-00-00-0000
XXXXXXXXX, XX 00000
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Principal Amount: $712,086.00 Initial Rate: 8.50% Date of Note: March 18, 1998
PROMISE TO PAY. PACIFIC AEROSPACE & ELECTRONICS, INC. ("Borrower") promises to
pay to KEYBANK NATIONAL ASSOCIATION ("Lender"), or order, in lawful money of the
United States of America, the principal amount of Seven Hundred Twelve Thousand
Eighty Six & 00/100 Dollars ($712,086.00), together with interest in the unpaid
principal balance from March 18, 1998, until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in 119 regular payments of $7,065.72 each and one
irregular last payment estimated at $350,406.25. Borrower's first payment is due
April 18, 1998, and all subsequent payments are due on the same day of each
month after that. Borrower's final payment due March 18, 2008, will be for all
principal and all accrued interest not yet paid. Payments include principal and
interest. Interest on this Note is computed on a 365/360 simple interest basis;
that is, by applying the ratio of the annual interest rate over a year of 360
days, times the outstanding principal balance, times the actual number of days
the principal balance is outstanding. Borrower will pay Lender at Lender's
address shown above or at such other place as Lender may designate in writing.
Unless otherwise agreed or required by applicable law, payments will be applied
first to accrued unpaid interest, then to principal, and any remaining amount to
any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is the Prime Rate announced by
Lender (the "Index"). The interest rate will change automatically and
correspondingly on the date of each announced change on the Index by Lender. The
Index is not necessarily the lowest rate charged by Lender on its loans and is
set by Lender in its sole discretion. If the Index becomes unavailable during
the term of this loan, the Lender may designate a substitute index after
notifying Borrower. Lender will tell Borrower the current index rate upon
Borrower's request. Borrower understands that Lender may make loans based on
other rates as well. The interest rate change will not occur more often than
each day that the Index changes. The Index currently is 8.500% per annum. The
interest rate to be applied to the unpaid principal balance of this Note will be
at a rate equal to the Index, resulting in an initial rate of 8.500% per annum.
NOTICE: Under no circumstances will the interest rate on this Note be more than
the maximum rate allowed by applicable law. Whenever increases occur in the
interest rate, Lender, at its option, may do one or more of the following: (a)
increase Borrower's payments to ensure Borrower's loan will pay off by its
original final maturity date, (b) increase Borrower's payments to cover accruing
interest, (c) increase the number of Borrower's payments, and (d) continue
Borrower's payments at the same amount and increase Borrower's final payment.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower or
Borrower's obligation to continue to make payments under the payment schedule.
Rather, they will reduce the principal balance due and may result in Borrower
making fewer payments.
03-18-1998 PROMISSORY NOTE Page 2
Loan No 9001 (Continued)
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LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $10.00, whichever is greater.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note. (c) Any representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf is false or misleading
in any material respect either now or at the time made or furnished. (d)
Borrower becomes insolvent, a receiver is appointed for any part of Borrower's
property, Borrower makes an assignment for the benefit of creditors, or any
proceeding is commended either by Borrower or against Borrower under any
bankruptcy or insolvency laws. (e) Any creditor tries to take any of Borrower's
property on or in which Lender has a lien or security interest. This includes a
garnishment of any of Borrower's accounts with Lender. (f) Any guarantor dies or
any of the other events described in this default section occurs with respect to
any guarantor of this Note. (g) A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or performance
of the Indebtedness is impaired. If any default, other than a default in
payment, is curable and if Borrower has not been given a notice of a breach of
the same provision of this Note within the preceding twelve (12) months, it may
be cured (and no event of default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such default: (a) cures
the default within fifteen (15) days; or (b) if the cure requires more than
fifteen (15) days, immediately initiates steps which Lender deems in Lender's
sole discretion to be sufficient to cure the default and thereafter continues
and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note to 5.000
percentage points over the Index while the default remains uncured. The interest
rate will not exceed the maximum rate permitted by applicable law. Lender may
hire or pay someone else to help collect this Note if Borrower does not pay.
Borrower also will pay Lender that amount. This includes, subject to any limits
under applicable law, Lender's attorneys' fees and Lender's legal expenses
whether or not there is a lawsuit, including 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. If not prohibited by applicable law, Borrower also will pay any court
costs, in addition to all other sums provided by law. This Note has been
delivered to Lender and accepted by Lender in the State of Washington. If there
is a lawsuit, Borrower agrees upon Lender's request to submit to the
jurisdiction of the courts of King or Xxxxxx County, State of Washington. Lender
and Borrower hereby waive the right to any jury trial in any action, proceeding,
or counterclaim brought by either Lender or Borrower against the other. This
Note shall be governed by and construed in accordance with the laws of the State
of Washington.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $10.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
LIBOR ADDENDUM TO PROMISSORY NOTE. THE TERMS IN THE LIBOR ADDENDUM ATTACHED TO
THIS NOTE ARE INCORPORATED HEREIN.
GENERAL PROVISIONS. 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
presentment, demand for payment, protest and notice of dishonor. Upon any charge
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 or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral; and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All such
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
03-18-1998 PROMISSORY NOTE Page 3
Loan No 9001 (Continued)
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PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
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ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
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BORROWER:
PACIFIC AEROSPACE & ELECTRONICS, INC.
By: /s/ XXXXXX X. XXXXXX
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XXXXXX X. XXXXXX, CEO & PRESIDENT
