LOCKBOX AGREEMENT
THIS
AGREEMENT, is
executed effective the 19th day of October, 2005, between XXXXXXX INDUSTRIES
INC. (formerly EXCALIBUR INDUSTRIES, INC.), a Delaware corporation
(“Industries”), XXXXXXX MACHINE WORKS, INC., a Texas corporation (“Machine”),
and STILLWATER NATIONAL BANK AND TRUST COMPANY, a national banking association
(the "Lender"). Industries and Machine are sometimes referred to hereafter
collectively as “Account Holders.”
WHEREAS,
Account Holders and SNB entered into and executed a certain Amended and Restated
Loan Agreement (the “Loan Agreement”) of even date herewith, whereby SNB agreed
to loan and did loan Account Holders certain funds for the uses and purposes
therein set forth;
WHEREAS,
as a part and parcel of the same transaction, and in order to secure the payment
of same, Account Holders granted SNB a security interest in the Account Holders’
accounts receivables; and
WHEREAS,
Account Holders requested SNB to enter into this Agreement for the purpose
of
timely applying the proceeds of the accounts receivable processed under the
terms of this Agreement to the obligations of Account Holders in favor of
SNB;
NOW,
THEREFORE, in consideration of the execution of this Agreement and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, it is agreed by and between the parties hereto as
follows:
1) Certain
Defined Terms.
Unless
otherwise defined herein, terms defined in the Loan Agreement shall have the
same meanings and interpretation when used herein.
2) Lockbox.
SNB
maintains X.X. Xxx 0000, Xxxxxxxx Xxxx, Xxxxxxxx, 00000 (the “Lockbox”). The
Lockbox shall be designated by Account Holders on their invoices as the point
of
remittance for payments on their accounts receivable when the accounts are
not
disputed or not submitted as payments in full if in an amount less than the
full
invoice.
3) Notice
to Account Debtors.
Account
Holders will, within three (3) business days after execution of this Agreement,
send notices to all of Account Holders’ account debtors instructing the account
and contract debtors to send to the Lockbox all payments on account. Account
Holders agree that, without the prior written consent of the Lender, Account
Holders will not revoke or alter the instructions contained in such notices
until such time as all of the indebtedness has been finally paid in full. The
Lender may also provide notice to Account Holders’ account and contract debtors
at any time in such a manner as Lender deems appropriate.
4) Receipts/Processing.
During
normal business days of SNB, SNB will cause the contents of the Lockbox to
be
removed and taken to SNB for processing. Upon removal of the contents of the
Lockbox, employees of SNB will separate the contents of the Lockbox so only
mail
addressed to Account Holders will be processed under this Agreement. Account
Holders direct SNB to open all contents of the Lockbox addressed to Account
Holders. The items representing payments on accounts receivable shall be
processed as follows: Deposit all checks, money orders or other like instruments
in Account No. at SNB. SNB shall then process these items for collections in
its
ordinary course of business. In addition, SNB will prepare a list of items
deposited showing the name of the maker and the amount of the check or other
instrument. SNB shall furnish Account Holders with copies of all deposit slips
showing all deposits to the account pursuant to this Agreement and copies of
all
checks or other instruments included in the deposit at the time and in the
manner specified in paragraph 8.
5) Payment
of Debts.
SNB is
directed to remove from the Lockbox all collected funds and apply the amount
removed to the interest payments due under the Revolving Note (as defined in
the
Loan Agreement) or any note into which it may be renewed. If any item is
returned unpaid after the amount of the item is applied to the interest payment
of the Revolving Note, the payment on the Revolving Note shall be reversed
effective the date of the payment on the Revolving Note. All uncollected or
returned items will be forwarded to Account Holder for Account Holder's
action.
6) Improper/Returned
Items.
Any
check or other instrument handled by SNB pursuant to this Agreement which is
improper or otherwise appears to employees of SNB to be non-payable in a proper
manner will be forwarded to Account Holder rather than deposited in the account
as above set forth.
7) Notation
of Items.
If SNB
notices any notation on checks or other instruments which indicated the checks
or other instruments are tendered as full payment of all obligations due by
the
maker to the Account Holder and such checks or other instruments are in an
amount different from the invoice, if any, submitted with the payments, SNB
is
directed to deposit the check or other instrument in the account of Account
Holder. Account Holder warrants that receipt of a copy of the check or other
instrument is sufficient notification of the notation and fulfills all duties
of
SNB to Account Holder under this Agreement or otherwise.
8) Accounting.
SNB
shall furnish Account Holder photocopies of all checks or other instruments
processed under this Agreement, photocopies of deposit slips and the contents
of
any envelope. Same will be furnished to the Account Holder by SNB depositing
same in the United States Mail, by first-class mail, within three (3) business
days of processing by SNB. Account Holder may request SNB telecopy copies of
the
checks or other instruments and/or the deposit slips or may request SNB hold
all
items for pickup by Account Holder.
9) Standard
of Care.
SNB
shall use reasonable and ordinary care in performing its obligations under
this
Agreement and shall not be liable or responsible to Account Holder for any
damages it may sustain by reason of the failure of SNB to exercise ordinary
care
in performing its duties under this Agreement.
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IN
WITNESS WHEREOF, we the undersigned have executed this Agreement the date and
year first above written.
|
XXXXXXX
INDUSTRIES, INC., (formerly EXCALIBUR INDUSTRIES, INC.), a Delaware
corporation
|
||
| By: /s/ Xxxxxxx X. Xxxxxxxx | ||
| Name: Xxxxxxx X. Xxxxxxxx | ||
| Title: Chief Financial Officer | ||
| XXXXXXX MACHINE WORKS, INC. | ||
| a Texas corporation | ||
| By: /s/ Xxxxxxx X. Xxxxxxxx | ||
| Name: Xxxxxxx X. Xxxxxxxx | ||
| Title: CFO | ||
| STILLWATER NATIONAL BANK AND TRUST COMPANY, a national banking association | ||
| By: /s/ Xxxxxxx Xxxxxxx | ||
| Name: Xxxxxxx Xxxxxxx | ||
| Title: Vice President |
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