Exhibit 10.1
PURSUANT TO THE TERMS OF AN AGREEMENT AMONG THE HOLDER, XXXXX INDUSTRIES,
INC., XXXXX REGULATOR COMPANY, AND THE OTHER SIGNATORIES TO SUCH
AGREEMENT, THE HOLDER OF THIS PROMISSORY NOTE MAY NOT SELL, TRANSFER,
ASSIGN OR CONVEY ALL OR ANY PORTION OF THIS NOTE, OR ANY INTEREST HEREIN,
PRIOR TO MAY 9, 2005. SUCH AGREEMENT ALSO PROHIBITS ANY MORTGAGE, PLEDGE,
LIEN CONDITIONAL SALE AGREEMENT, SECURITY INTEREST, ENCUMBRANCE OR OTHER
CHARGE ON THIS PROMISSORY NOTE PRIOR TO MAY 9, 2005.
PROMISSORY NOTE
Sacramento, California May 9, 2002
$6,297,445.27
FOR VALUE RECEIVED, the undersigned, XXXXX REGULATOR COMPANY, a
Massachusetts corporation, and XXXXX INDUSTRIES, INC., a Delaware corporation
(referred to herein individually as "Borrower" and together as "Borrowers"),
jointly and severally promise to pay to the order of [Payee], (hereinafter,
together with his/her/its successors, heirs and assigns, the "Payee") at
[Address], or at such other place as the holder of this promissory note ("Note")
may designate in writing from time to time, the principal sum of Six Million Two
Hundred Ninety-Seven Thousand Four Hundred Forty-Five DOLLARS and Twenty-Seven
CENTS ($6,297,445.27), together with interest on the unpaid principal balance of
this Note from time to time outstanding, until paid in full at the rate
hereinafter provided.
1. Interest. Borrowers shall pay interest on the unpaid and outstanding
principal balance of this Note, commencing on the date hereof and continuing
until the repayment of the Note in full, at an annual rate equal to the London
InterBank Offered Rate (LIBOR) for one-year loans plus 1.45%, such rate
initially determined as of the date of this Note and adjusted on each Payment
Date (as defined below). The LIBOR for one-year loans will be such rate in
effect as published in the Wall Street Journal on the date of this Note and on
each Payment Date. All interest under this Note shall be computed on the basis
of the actual number of days elapsed over an assumed year consisting of three
hundred sixty (360) days.
2. Terms and Conditions of Payment. The principal amount of this Note, or
so much thereof as remains outstanding from time to time, together with all
interest and other sums owed to Payee pursuant to any other terms and conditions
hereof, shall be due and payable by Borrowers as follows:
(a) Equal installments of principal in the amount of One Million
Five Hundred Seventy-Four Thousand Three Hundred Sixty-One DOLLARS and
Thirty-Two CENTS ($1,574,361.32) plus accrued and unpaid interest calculated in
accordance with the terms of Paragraph 1 above shall be paid annually no later
than 4:30 p.m. Pacific Standard Time on May
PROMISSORY NOTE
9, of each of 2003, 2004, 2005 and on the Maturity Date (defined below) (or if
such day is not a business day, on the next business day thereafter, and such
extension of time shall be included in the computation of payment of interest)
(each a "Payment Date").
(b) All outstanding principal, together with all accrued and unpaid
interest on the unpaid principal balance of this Note and all other sums then
owed with respect to this Note, if not sooner due and payable as provided
herein, shall be due and payable in full on May 9, 2006 ("Maturity Date").
(c) All sums paid by Borrowers to Payee in connection with this Note
shall be applied: (i) first to sums, other than principal and interest, due to
Payee pursuant to this Note; (ii) next, to accrued but unpaid interest on this
Note; and (iii) next, to the unpaid principal balance of this Note. Principal,
interest and all other sums payable under this Note shall be payable in lawful
money of the United States and by immediately available funds.
3. Fees. Without limiting the rights or remedies of Payee under this Note
or the Agreement, Borrowers shall indemnify Payee from and against, and shall
pay to Payee on demand, any reasonable fees, costs, expenses or losses
(including, without limitation, reasonable attorneys' fees, court costs,
reasonable expert witness fees and administrative costs) ("Fees") incurred by
Payee as a result of the failure of Borrowers to make any payment of interest
and/or principal when due. It is further expressly agreed that if this Note is
referred to an attorney or if suit is brought to collect this Note or any part
hereof or to enforce or protect any rights conferred upon Payee by this Note or
any other document evidencing this Note, then Borrowers promise and agree to pay
all Fees incurred by Xxxxx. Any Fees incurred by Payee shall be added to the
principal amount outstanding hereunder and shall bear interest at the interest
rate then in effect as calculated under the terms of Paragraph 1 of this Note.
4. Prepayment. Borrowers may prepay the unpaid principal balance of this
Note, in whole or in part, together with all accrued but unpaid interest on the
portion so prepaid and any Fees or other sums payable to Payee under this Note
without premium or penalty, at any time.
5. Default; Acceleration. The unpaid principal balance of this Note,
together with all accrued interest thereon, shall, at the option of the Payee,
become immediately due and payable upon the occurrence any of the following
events:
(a) the failure of Borrowers to make payment of any interest and/or
principal due hereunder that is not cured within ten (10) days of the delivery
to one or both Borrowers by the Payee of written notice of such failure and the
intention by the Payee to exercise its right of acceleration under this
Paragraph 5;
(b) the failure of Borrowers to perform or observe any other terms
or provision of this Note, other than as specified in (a) above ("Nonmonetary
Default"); except that if a Nonmonetary Default is curable, then, upon written
notice of the Nonmonetary Default to a Borrower, the failure of Borrowers to
cure the Nonmonetary Default within thirty (30) days from the date notice is
given;
2 PROMISSORY NOTE
(c) the dissolution, liquidation or insolvency of a Borrower;
(d) the filing of a petition in bankruptcy by, or the initiation of
any proceeding under any bankruptcy or insolvency laws against, a Borrower;
(e) any judgment, garnishment, seizure, tax lien or levy against any
assets of a Borrower in excess of fifty million dollars ($50,000,000); and
(f) the making of a general assignment for the benefit of creditors
by a Borrower of this Note.
Borrowers shall notify Payee promptly in writing of any transaction
or event which may give rise to such right of acceleration described in
subsections (c), (d), (e), or (f) of this Paragraph 5. The Payee acknowledges
and agrees that in no event shall any exercise by Borrowers of their right to
offset against amounts payable hereunder any unpaid amounts of Stockholders'
Equity Shortage, as defined and provided in Section 1.2(b) of the Agreement (as
defined below), or any exercise by Payee of its option, as provided in Section
7.5(d) of the Agreement, to apply all or a portion of sums due hereunder to
offset any amounts owed for the payment of indemnification claims pursuant to
Section 7 of the Agreement, constitute or be deemed to constitute an event of
default or a failure to make a timely payment of principal, interest or any
other charge hereunder. Borrowers expressly acknowledge and agree that Borrowers
shall not have any right of offset against any sums payable hereunder other than
as described in the preceding sentence.
6. Authority. Xxxxxxxxx represent that each has full power, authority and
legal right to execute and deliver this Note and to perform each of their
obligations hereunder, and that this Note constitutes the valid and binding
obligation of Borrowers, enforceable against Borrowers in accordance with its
terms, except as enforceability may be limited by: (i) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally; and (ii) general principles of equity,
regardless of whether considered in proceedings at law or in equity.
7. No Guarantor or Surety. Borrowers acknowledge that (i) the maker of
this Note is comprised of more than one person or entity, and (ii) no Borrower
is a guarantor or surety because each Borrower is jointly and severally liable
for the obligations under this Note. If, and to the extent, any Borrower is
determined by a court of competent jurisdiction to have rights as a guarantor,
surety or secondary obligor as against any other Borrower or if any Borrower
raises or asserts as a defense to the payment or performance of any obligation
of any Borrower under this Note that such Borrower is a guarantor, surety or
secondary obligor and entitled to rights of suretyship or other similar rights,
then the agreements and waivers set forth in Exhibit A, attached hereto and by
reference incorporated herein, shall apply to each Borrower to the maximum
extent permitted by law. Borrowers each hereby acknowledge that it has read and
is bound by the agreements and waivers set forth in Exhibit A.
8. Miscellaneous.
3 PROMISSORY NOTE
(a) This Note arises in connection with that certain Stock Purchase
Agreement of even date herewith by and among Borrowers, Hunter Innovations,
Inc., a California corporation (the "Company"), Hunter Technology Partners, a
California general partnership, Payee and other Equity Holders of the Company
identified therein (the "Agreement"). All capitalized terms not defined and used
herein shall have the meanings assigned to them in the Agreement unless the
context hereof requires otherwise.
(b) Borrowers each represent and warrant that none of (i) the
Revolving Credit Agreement, dated as of February 28, 2002, by and among Xxxxx
Industries, Inc., Xxxxx Regulator Co., Xxxxx Industries Europe B.V., Fleet
National Bank and the lenders listed therein, (ii) the Indenture governing the
Xxxxx 8 3/8% notes, or (iii) the Industrial Revenue Bonds requires the
subordination of this Note or any obligation of Borrowers hereunder.
(c) Borrowers hereby waive all rights to presentment for payment,
demand, protest, notice of nonpayment and any other notices, except as expressly
provided herein.
(d) The Payee shall not be deemed, by any act or omission, to have
waived any of its rights or remedies hereunder unless such waiver is in writing
and signed by the Payee and then only to the extent specifically set forth in
such writing. A waiver with reference to one event shall not be construed as
continuing or as a bar to or waiver of any right or remedy as to a subsequent
event. No delay or omission of the Payee to exercise any right, whether before
or after a default hereunder, shall impair any such right or shall be construed
to be a waiver of any right or default, and the acceptance at any time by the
Payee of any past-due amount shall not be deemed to be a waiver of the right to
require prompt payment when due of any other amounts then or thereafter due and
payable.
(e) Time is of the essence. Upon any default hereunder, the Payee
may exercise all rights and remedies provided for herein and by law including,
but not limited to, the right to immediate payment in full of this Note.
(f) The remedies of the Payee as provided herein or in law or in
equity, shall be cumulative and concurrent, and may be pursued singularly,
successively, or together at the sole discretion of the Payee, and may be
exercised as often as occasion therefor shall occur.
(g) The Payee shall have the right to sell, assign, transfer,
negotiate, hypothecate, pledge, or grant participations in, either in part or in
its entirety, this Note and any other instrument evidencing the indebtedness of
this Note, without Borrowers' consent, except as otherwise provided in Section
3.5 of the Agreement. Within five (5) days after the Payee's request, Borrowers
shall certify to the holder and any proposed transferee as to the then
outstanding amounts of principal, interest and other amounts owing hereunder,
that no default exists on the part of the Payee and, except as set forth herein,
that Borrowers have no claims against the Note or offsets against amounts owing
under the Note. At the request of Payee or such transferee, Borrowers shall
simultaneously deliver a copy of any notice given to Payee hereunder to such
transferee.
4 PROMISSORY NOTE
(h) The terms, covenants and conditions contained herein shall be
binding upon the successors and assigns of Borrowers and shall inure to the
benefit of the successors and permitted assigns of Payee.
(i) All notices or other communications required or permitted to be
given pursuant hereto shall be given in the manner specified in the Agreement
directed to the parties at their respective addresses as provided therein.
(j) This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Borrowers or Payee, but only by an agreement in writing signed by the
party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
(k) It is the intention of Borrowers and Xxxxx that the interest to
accrue and other charges of this Note for the use, forbearance or detention of
money shall at all times comply with any usury limitations that may become
applicable. In the event that interest charged or to be charged under this Note
shall at any time be determined by a court of competent jurisdiction to exceed
the highest applicable federal or state usury limit, the amount of such
excessive interest shall, at the option of Payee, be immediately refunded by its
recipient(s) to Borrowers or credited against outstanding principal under this
Note.
(l) If any provision of this Note, or the application of it to any
party or circumstance, is held to be invalid, the remainder of this Note and the
application of that provision to other parties or circumstances shall not be
affected by that invalidity, the provision of this Note being severable in any
such instance.
(m) The word "undersigned" and each of "Borrower" and "Borrowers" as
used herein shall mean all such parties signing as maker of this Note, each one
of whom shall be jointly and severally liable as maker. The liability of such
maker of this Note shall be that of principals and not that of accommodation
parties, sureties or guarantors. The Payee may bring and prosecute a separate
action or actions against one Borrower whether or not the other Borrower, or any
other person or entity, is joined in any such action or a separate action or
actions are brought against the other Borrower for all or part of the
obligations due under the Note.
(n) This Note may be executed in counterparts, each of which taken
together shall constitute one and the same instrument.
(o) THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE WITHOUT GIVING EFFECT TO SUCH STATE'S PRINCIPLES OF CONFLICTS OF
LAWS.
(p) BORROWERS IRREVOCABLY SUBMIT TO THE JURISDICTION AND VENUE OF
THE STATE SUPERIOR COURT SITTING IN SACRAMENTO COUNTY OR FEDERAL DISTRICT COURT
SITTING IN THE EASTERN DISTRICT OF THE STATE
5 PROMISSORY NOTE
OF CALIFORNIA, OVER ANY ACTION OR PROCEEDING RELATING TO THIS NOTE. XXXXXXXXX
AGREE THAT ALL CLAIMS RELATING TO THIS NOTE MAY BE HEARD AND DETERMINED IN SUCH
STATE OR FEDERAL COURT AND THAT BORROWERS WILL NOT SEEK TO TRANSFER TO ANY OTHER
VENUE ON ANY GROUNDS, INCLUDING, WITHOUT LIMITATION, INCONVENIENCE OR
IMPROPRIETY OF THE VENUE, OR REMOVE FROM STATE TO FEDERAL COURT ANY SUCH ACTION
OR PROCEEDING. BORROWERS ALSO IRREVOCABLY CONSENT TO THE SERVICE OF ANY AND ALL
LEGAL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH
PROCESS TO BORROWERS AT THE ADDRESS SET FORTH OPPOSITE EACH BORROWER'S SIGNATURE
HERETO, OR AT SUCH OTHER ADDRESSES AS BORROWERS MAY HEREAFTER DESIGNATE IN A
WRITTEN NOTICE TO THE PAYEE. XXXXXXXXX AGREE THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PERMITTED BY LAW.
NOTHING IN THIS PARAGRAPH SHALL AFFECT THE RIGHT OF THE PAYEE TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE PAYEE TO
BRING ANY ACTION OR PROCEEDING AGAINST BORROWERS OR ITS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.
6 PROMISSORY NOTE
IN WITNESS WHEREOF, the undersigned have executed this Note the day and
year set forth above.
BORROWER:
XXXXX REGULATOR COMPANY, Address:
a Massachusetts corporation
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
BORROWER:
XXXXX INDUSTRIES, INC., a Address:
Delaware corporation
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Corporate Vice President
7 PROMISSORY NOTE
EXHIBIT A
---------
SURETYSHIP WAIVERS
------------------
1. Additional Waivers. In addition, and without limiting any other waiver
contained in this Note:
(a) Obligation Absolute. Borrowers each hereby unconditionally waive any
defense to the enforcement of the Note based on the characterization of any
Borrower as a guarantor and without limitation:
(i) The obligations of Borrowers hereunder shall remain in full
force and effect without regard to, and shall not be impaired by the following,
any of which may be taken by the Payee without the consent of or notice to
Borrowers, nor shall any of the following give any Borrower any recourse or
right of action against Payee:
(1) Any renewal, compromise, extension, acceleration or other
change in the time for payment or performance of, or change in the
terms of the Note or any part thereof, including, without
limitation, extensions beyond the original term;
(2) Any exercise or non-exercise by Payee of any right or
remedy it may have under the Note;
(3) Any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding
relating to either Borrower or any guarantor (which terms shall
include any other party at any time directly or contingently liable
for any of a Borrower's obligations under the Note) or any action
taken with respect to the Note by any trustee or receiver, or by any
court, in any such proceeding, whether or not the Borrowers have had
notice or knowledge of any of the foregoing;
(4) Any settlement, compromise, release or substitution of any
maker, endorser or guarantor of the Note;
(5) Any acceptance or receipt of partial payments or
performance on the Note;
(6) Any entering into such other transaction or business
dealings with any Borrower as the Payee may desire;
(7) Any assignment of the Note, or any interest therein, in
whole or in part, provided that Xxxxx has given prior written notice
to Borrowers regarding such assignment; provided, however,
notwithstanding anything to the contrary in
8 PROMISSORY NOTE
this Note, Borrowers' rights with respect to any breach or violation
of Section 3.5 of the Agreement shall not be waived due to any
assignment of the Note;
(8) Any acceptance or making of arrangements to, or file or
refrain from, filing a claim in any bankruptcy proceeding of any
Borrower; and
(9) Any making of other or additional loans to Borrowers in
such amount and at such times as the Payee may determine.
(b) Waivers. Borrowers each hereby unconditionally waive any defense to
the enforcement of this Note, including:
(1) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor,
and any other notice, except as provided for specifically in this
Note;
(2) Any right to require the Payee to proceed against any
other Borrower or any guarantor at any time or to proceed against or
to pursue any other remedy whatsoever at any time;
(3) The defense of any statute of limitations affecting the
liability of Borrowers hereunder, the liability of any guarantor or
the enforcement hereof, to the extent permitted by law;
(4) Any defense arising by reason of any invalidity or
unenforceability of (or any limitation of liability in) the Note or
the Agreement or any disability of any Borrower or any guarantor or
of any manner in which the Payee has exercised its rights and
remedies under the Note or the Agreement, or by any cessation from
any cause whatsoever of the liability of any Borrower or any
guarantor;
(5) Without limitation on clause (4) above, any defense based
upon any lack of authority of the officers, directors, partners or
agents acting or purporting to act on behalf of any Borrower or any
principal of any Borrower or any defect in the formation of any
Borrower or any principal of any Borrower;
(6) Any bankruptcy, insolvency, reorganization arrangement,
readjustment of debt, liquidation or dissolution proceeding
commenced by or against any Borrower, including any discharge of,
bar or stay against collecting, all or any part of the Note in or as
a result of any such proceeding;
(7) Any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in any other aspects more burdensome than that of a
principal;
(8) Any duty of the Payee to advise Borrowers of any
information known to the Payee regarding the financial condition of
any other Borrower and
9 PROMISSORY NOTE
all other circumstances affecting any other Borrower's ability to
perform its obligations to the Payee, it being agreed that Borrowers
assume the responsibility for being and keeping informed regarding
such condition or any such circumstances; and
(9) Without limiting the generality of the foregoing or any
other provision hereof, any rights and benefits which might
otherwise be available to Borrowers under California Civil Code
Sections 2787 to 2855, inclusive.
(c) Subrogation. Borrowers understand that the exercise by Xxxxx of
certain rights and remedies may affect a Xxxxxxxx's right of subrogation against
any other Borrower or any guarantor and that Borrower may therefore incur
partially or totally non reimbursable liability hereunder. Nevertheless,
Borrowers hereby authorize and empower the Payee to exercise in its sole
discretion, any rights and remedies, or any combination thereof, which may then
be available, it being the purpose and intent of Borrowers that the obligations
hereunder shall be absolute, continuing, independent and unconditional under any
and all circumstances. Notwithstanding any other provision of this Note to the
contrary, Borrowers hereby subordinate to the claims and remedies of Payee, any
claim or other right which Borrowers may now have or hereafter acquire against
any other Borrower or any guarantor of all or any of the obligations of
Borrowers hereby that arise from the existence or performance of Borrowers'
obligations under this Note or the Agreement, including any right of
subrogation, reimbursement, exoneration, contribution or indemnification, any
right to participate in any claim or remedy of Payee against any other Borrower,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, by any payment made hereunder or otherwise, including,
without limitation, the right to take or receive from any Borrower, directly or
indirectly, in cash or other property or by setoff or in any other manner,
payment on account of such claim or other rights.
(d) Independent Obligations. The obligation of each Borrower hereunder is
independent of the obligation of any other Borrower and, in the event of any
default hereunder, a separate action or actions may be brought and prosecuted
against a Borrower, whether or not the Borrower is the alter ego of any other
Borrower and whether or not any other Borrower is joined therein or a separate
action or actions are brought against any other Borrower. The Payee's rights
hereunder shall not be exhausted until all of the obligations under the Note
have been fully paid and performed.
(e) Subordination. Each Borrower subordinates all present indebtedness
owing by any other Borrower to such Borrower to the obligations at any time
owing by Borrowers to the Payee under the Note. Upon an event of default under
this Note, Borrowers each agree to make no claim on such indebtedness until all
past due obligations of any other Borrower under the Note have been fully
discharged. Borrowers further agree not to assign all or any part of such
indebtedness unless Payee is given prior notice and such assignment is expressly
made subject to the terms of this Note. Any payment on such indebtedness to a
Borrower following and during the continuance of an event of default under this
Note, if Payee so requests, shall be collected, enforced and received by
Borrower as trustee for the Payee and be paid over to the Payee on account of
its obligations under the Note, but without reducing or affecting in any manner
the
10 PROMISSORY NOTE
liability of Borrowers under the other provisions of the Note. Following and
during the continuance of an event of default under this Note, the Payee is
authorized and empowered (but without any obligation to do so), in its
discretion, (a) in the name of such Borrower, to collect and enforce and to
submit claims in respect of, indebtedness of another Borrower and to apply any
amounts received thereon to the Note, and (b) to require Borrower (i) to collect
and enforce, and to submit claims in respect of, indebtedness of Borrower to any
other Borrower or any guarantor and (ii) to pay any amounts received on such
indebtedness to the Payee for application to the Note.
(f) Bankruptcy; Reinstatement. Notwithstanding anything to the contrary
herein, the liability of Borrowers hereunder shall be reinstated and revised,
and the rights of Payee shall continue, with respect to any amount at any time
paid by or on behalf of any Borrower on account of the Note which the Payee
shall restore or return by reason of the bankruptcy, insolvency or
reorganization under applicable bankruptcy laws, of any Borrower for any other
reasons, all as though such amount had not been paid.
2. Understanding with Respect to Waivers. Borrowers warrant and agree that
each of the waivers and consents set forth herein is made voluntarily and
unconditionally and with full knowledge of its complexity, significance and
consequences, with the understanding that events giving rise to any defense or
right waived may diminish, destroy or otherwise adversely affect rights which
such Borrower or any guarantor otherwise may have against any other Borrower,
the Payee or any other Person.
11 PROMISSORY NOTE
